The business arena has undergone a profound transformation over the past decade, primarily fueled by the widespread digitization of companies across all sectors. In this digital age, the presence of a robust digital infrastructure is no longer merely advantageous; it has become an absolute necessity.
Businesses are increasingly turning to digital acceleration processes to swiftly bolster their digital capabilities, enabling them to adeptly confront and adapt to new challenges as they arise. With technology now playing a pivotal role in determining a company’s success, an increasing number of businesses are discovering that outsourced IT services provide a natural and effective solution.
Understanding Outsourced IT Services
According to Gartner, IT outsourcing is the use of external service providers to effectively deliver IT-enabled business processes, application service, and infrastructure solutions for business outcomes.
These partnerships often involve working with a Managed Service Provider (MSP), who becomes an extension of your team. These MSPs handle a wide range of tasks, from network security and software installation to ongoing network monitoring, offering proactive solutions to maintain a stable IT environment. Unlike the traditional “break/fix” approach where technicians are called in to resolve issues as they arise, MSPs establish long-term relationships with their clients, ensuring ongoing support and a more dependable IT environment.
The global IT Outsourcing market reached a valuation of $520.74 billion in 2019 and is projected to sustain a robust Compound Annual Growth Rate (CAGR) of 7.7% by 2027.
This rapid growth is a direct reflection of the fact that technology, data management, and cybersecurity have become integral components of every business operation. As these domains continue to advance and grow in complexity, managing them single-handedly becomes increasingly unattainable while ensuring consistent support, performance monitoring, service improvement, and stability.
Types of IT Outsourcing
When contemplating IT outsourcing, you have several models to choose from, each tailored to specific needs and scenarios:
1. Managed Services: This model encompasses outsourcing network management functions, including IP telephony, messaging systems, call centers, network monitoring, and more.
2. Cloud Computing: In this model, you hire an external service provider to deliver IT-related services virtually. This includes Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS).
3. Onshore: Onshore outsourcing involves partnering with an external service provider within your own country. This model offers the advantages of language, time zone, and cultural alignment. However, finding the right talent can be challenging due to the skills shortage.
4. Nearshore: In this model, you outsource IT work to a company in a neighboring country. This facilitates communication and collaboration. However, it may limit your options based on geographical proximity.
5. Offshore: Offshore outsourcing entails hiring an external company located in a foreign country. This approach often offers cost savings but may introduce time-zone challenges.
Typical IT Services Outsourced
The beauty of IT outsourcing lies in its versatility. Virtually any IT-related function within your business can be outsourced. This is particularly feasible given the widespread adoption of distributed teams and remote work. Common IT services that are frequently outsourced include:
- Software Development
- Web Development
- Mobile Development
- Network Management
- Quality Assurance (QA) and Testing
- Technical Support
- Infrastructure Management and Support
- Datacenter Management
- Cybersecurity, Data Backup, and Recovery
- Disaster Recovery
- Tech Road Mapping and Planning
When to Outsource Your IT
While IT outsourcing services can be leveraged at any point, there are specific scenarios where they offer a distinct competitive advantage:
If You Lack In-House IT: If your company is too small to maintain an in-house IT department or you wish to save costs, outsourcing your IT to an MSP is an ideal solution. MSPs offer superior services at a fraction of the cost of hiring in-house IT staff.
If You Have In-House IT: Even if you have an in-house IT department, MSPs can complement your existing team. They handle routine IT tasks, such as software updates, security patches, and regulatory compliance, allowing your in-house staff to focus on core business operations.
If You Want to Save Money: Outsourcing IT can lead to significant cost savings, as MSPs offer high-quality services at a lower monthly expense than hiring in-house IT staff.
If You Want the Best Support Technologies: MSPs use state-of-the-art technologies, ensuring that your business benefits from the latest hardware and software without the need for in-house staff to manage complex tasks.
Talent Shortage: If you’re grappling with challenges in finding IT professionals with the requisite expertise, outsourcing opens the door to a global talent pool.
Hard-to-Find Roles: Some projects necessitate hyper-specialized professionals that you can’t find in your area or that you don’t need on a permanent basis. Outsourcing can help you find them and add them to your in-house team in no time.
Tight Deadlines: Scaling up your team during critical phases can be the defining point between a successful project and a disaster. By outsourcing IT, you can quickly add essential roles to your team to speed up your development or face increasing workloads.
Struggling Projects: If you are working on a project that has stalled or that has hit a dead end, you can find the solution in outsourced services. The right professionals can guide you through different ways to put the project back on track and even add more value to the resulting product.
Budget Constraints: IT solutions can be costly, especially if you keep their development and maintenance in-house. Outsourcing a part of your IT requirements can help you alleviate costs and stay within your budgetary margins.
The Benefits of IT Outsourcing
The decision to outsource IT needs is underpinned by a multitude of compelling reasons, irrespective of the outsourcing model or type chosen. Some of the key benefits include:
1. Access to Top IT Talent: The cornerstone of any digital acceleration initiative is a team of seasoned engineers with diverse expertise. Outsourcing opens doors to a vast pool of professionals, ensuring that you can handpick the best-suited talent for your projects.
2. High-Quality Delivery: Expert IT professionals play a pivotal role at every stage of your projects, ensuring smooth execution and on-time delivery. Reputable outsourcing companies are committed to delivering high-quality results consistently.
3. Optimized Workload: Outsourcing IT requirements alleviates the burden of handling everything in-house, freeing you to focus on core business activities while leveraging the industry’s best IT professionals.
4. Shorter Time to Market: Digital acceleration is all about swiftly responding to evolving demands. Outsourced IT teams can swiftly tackle projects, providing optimal solutions to keep your business moving forward efficiently.
5. Reduced Risks: Although all IT projects inherently entail risks, outsourcing to a reputable provider significantly mitigates these risks. Outsourcing teams offer flexibility, agility, and high-quality output, facilitating prompt adaptation to changing demands.
Why Outsource IT Services
The adoption of outsourcing, whether in finance, software development, accounting, or various other services, has become a norm in the business landscape. Outsourcing not only simplifies budget planning compared to maintaining in-house staff but also significantly reduces recruitment costs.
A Deloitte survey found that 59% of businesses cited cost reduction as a key motive for outsourcing IT specialists. Outsourcing allows companies to focus on core business functions, with 57% stating that it enabled them to do so. An additional 47% confirmed that IT outsourcing addressed capacity issues.
Outsourcing provides access to unavailable in-house skills, facilitating the discovery of specialists to enhance productivity, propose innovative solutions, and alternative approaches. In a time where a tech talent shortage is prevalent, outsourcing provides a solution to skill gaps.
Growing IT budgets are another motivation for organizations to outsource their IT needs, providing a cost-effective alternative to hiring in-house employees to keep pace with capital investments. Maintaining the right balance between outsourced and in-house employees is key to ensuring steady growth and productivity.
Outsourcing delivers flexibility. It allows businesses to scale their operations efficiently during busy periods and rapidly revert to an entirely in-house team as required. Beyond these advantages, outsourcing accelerates business processes and improves workload management, granting companies the option to optimize their use of internal resources. The availability of Tier Data’s skilled professionals ensures that excellent services are accessible to you at various price points.
In the world of IT outsourcing, it’s not just about what you pay for; it’s about who you choose to work with. Top-tier professionals are now easily available, and making the right choice can lead to high-quality, efficient services.
Best Practices for IT Outsourcing
To make the most of IT outsourcing, consider these best practices:
1. Choose the Right Project: Not all projects are suitable for outsourcing. Focus on projects with specific requirements that are unrelated to your core business.
2. Select a Trustworthy Provider: Your outsourcing provider should align with your objectives and industry knowledge, building trust in the partnership.
3. Adopt Agile Development: Agile methodologies offer flexibility and speed, making it easier to implement changes and updates in your projects.
4. Don’t Solely Focus on Price: While cost savings are essential, prioritize expertise and service quality when selecting an outsourcing provider.
5. Outsource Research and Development: R&D outsourcing can expedite product development and provide access to tools, technologies, and expertise.
6. Document Your Project: Maintain comprehensive documentation to track progress and facilitate project maintenance after the contract ends.
7. Own Your Project: Treat the outsourced project as if it were in-house, closely monitoring progress and maintaining open communication.
8. Define Your Scope: Clearly outline the parts of the project you intend to outsource and the specific skills you require. This provides a solid foundation for discussions with potential outsourcing partners.
9. Establish Project Scope and Scalability: IT projects usually involve future scalability. Define the project’s starting point and its potential future requirements, enabling the outsourcing service provider to design solutions accordingly.
10. Consider Workflow: Deliberate on your preferred workflow, including the outsourcing model, type of outsourcing, collaboration tools, and the overall schedule. Think about your project’s unique requirements before researching potential companies.
11. Conduct Thorough Research: Gather detailed information on IT outsourcing service providers, including references, portfolios, reviews, proposals, and direct discussions. Weigh all these factors to make an informed final decision.
By partnering with an MSP like Tier Data, you can reduce costs, streamline operations, and ensure that your IT needs are met with expertise and reliability. With the evolving nature of technology, outsourcing IT services can provide a competitive advantage and allow your business to focus on its core strengths while leaving IT tasks to qualified professionals. To learn more about how outsourced IT services can benefit your business, contact Tier Data today.