If you look back as recently as 50 years ago, IT was almost non-existent in most organizations. These days, it is a core aspect of doing business, from accounting to inventory control, and it would be hard to imagine a world without it. Still, the transition from a world without computers to one reliant on them wasn’t always smooth. As such, it’s understandable to see a reluctance to undergo fundamental changes of a similar nature. The trend of outsourcing IT services may not be quite the seismic shift that incorporating IT was, but it is indicative of a changing world and a new way of running a business.
The world is more connected than ever, with internet speeds and coverage increasing to the point that entire networks of satellites dedicated to providing internet access are now being launched into space to meet the demands of the modern world. These changes make outsourcing IT services not only a viable option for businesses but also an optimal one. Thanks to the growing trend of using the software as a service (SaaS) rather than traditional software, it is increasingly possible to use IT vendors located all over the globe. This offers many advantages over building IT services in-house using only locally hired talent.
What Exactly Does Outsourcing IT Involve?
Outsourcing IT is simply the outsourcing of IT services to external vendors. Traditionally, these services would have been taken care of in-house, perhaps with the help of external software development companies for one-off projects. As businesses increasingly rely on software as a service (SaaS) platforms, the shift towards outsourcing IT services grows in both popularity and economic feasibility.
By outsourcing these services, a business frees up the resources and financial obligations necessary before providing those services itself. Crucially, the services they outsource are often more reliable and fully featured when supplied by the IT vendor, making it a wise business decision in almost every respect. IT Outsourcing can be used for both inward-facing services—payroll, accounting, inventory management, etc.—and outward-facing services—shipment tracking, complaints resolution, etc. In many cases, inward and outward-facing services need to work together, such as would be the case with inventory management and shipment tracking. This makes a stronger argument for outsourcing more services, as services provided by the same vendor are liable to mesh together better.
The Different Types of Outsourcing
Outsourcing IT services can come in many different forms, mostly centering around the relative location of the vendor to the company that is doing the outsourcing. We can break it down into four main types of IT outsourcing;
Offshoring—also known as offshore outsourcing—is used when a company outsources its IT services to a vendor in a distantly remote location. The most common reasons for this include taking advantage of alternative timezones, more favorable economic conditions, and access to a new talent pool.
In essence, nearshoring is very similar to offshoring. It is a term used when outsourcing IT to a remote vendor. However, this time, the vendor will not be based as far away. In choosing a vendor closer to home, a company can take advantage of some of the same aspects that offshoring provides, but with smoother communication and less cultural divide.
Onshoring is a type of outsourcing that involves using a vendor within the same national borders as the company doing the outsourcing. This can also apply to employees who work from home. With the vendor being in the same country, there aren’t typically any geographical benefits to this type of outsourcing, but the cost and resource savings still apply.
Multisourcing is the process of outsourcing IT services to more than one vendor. Multisourcing is useful for companies that are heavily reliant on their IT services and would like to diversify the risk created by having a single point of failure in only using one vendor.
What Are the Advantages of Outsourcing IT Services?
Outsourcing IT provides many advantages over the traditional way of handling IT services. These include;
Since all a vendor does is provide IT services, they can provide those services at a much lower cost than most businesses could do themselves. When a company handles its own IT services, it essentially acts as an IT vendor for a single customer—itself. It is a reality in business that it is cheaper to supply a product or service in large quantities than small ones, and IT services are no different. An IT vendor will almost always be a more affordable option than doing it in-house.
Using an IT vendor on the other side of the globe opens up the possibility of around-the-clock support since their time zone will see them active when the client business is not. IT service vendors that offer their services internationally will typically run 24-hour support, meaning the client business should see their work uninterrupted by IT issues.
Free Up Resources and Time
Outsourcing any part of your business will free up the time and resources formerly dedicated to it. With IT services handled elsewhere, a company can refocus on what it needs to focus on.
Increased Access to Talent
There is no geographical limit to where a business can outsource its IT services. The result is that an entire global talent pool becomes available to them through the IT vendors they are working with.
Ability to Upscale Quickly
IT vendors are typically very agile when it comes to capacity. In most cases, a business outsourcing its IT services will be able to upscale far more quickly and cost-effectively than a company that takes care of its own IT services.
One of the main driving forces behind outsourcing IT as a viable business option is the growing ubiquity of the internet and the sophistication of the platforms built on it. With internet speed and coverage set to increase, outsourcing will continue to be viable.