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IT Outsourcing: Pros and Cons for Your Company

Artur Olechowski d08c1359d2

23/03/2022 |

8 min read

Artur Olechowski

IT is a critical part of any modern business environment. However, not every company out there can access experts and resources on the same level. It might be the case of smaller capital available for investment or a lack of local talent availability, for example. Some organizations struggle to build a well-aligned in-house IT team, and that’s why they often turn to IT outsourcing

Outsourcing various IT functions is a widespread practice across all sectors. Today, outsourcing services range from cloud computing and security to virtualization and solution architecture. All in all, outsourcing allows businesses to tap into a new pool of skilled IT leaders and often avoid administrative costs related to employment. 

But is IT outsourcing the right solution for your company? Or should you instead invest in building an in-house team? 

Keep on reading this article to discover why IT outsourcing is such a game-changing practice, its advantages and challenges, and how to check whether it’s the right fit for your company. 

 

Table of contents:

  1. What is IT outsourcing?
  2. IT outsourcing pros and cons
  3. IT outsourcing – wrap up

What is IT outsourcing? 

IT outsourcing refers to a common practice of delegating a specific bundle of IT tasks to an external company. The outsourced IT service provider might be located in the same country as yours, in a neighboring country, or on the other side of the planet. This is where IT outsourcing variants like nearshoring or offshoring come into play. 

Outsourcing often becomes part of an organization’s overall IT strategy due to several reasons: lack of talent in the local hiring market, incredibly high salaries of local IT, or inability to attract the right kind of specialists due to different constraints.

Why do companies outsource IT? 

Here are a few good reasons why organizations turn to IT outsourcing: 

  • They notice a decrease in their company efficiency as projects take longer, customer inquiries aren’t resolved as fast as possible, or the company experiences downtime more often.
  • More and more security problems appear on the horizon and aren’t getting resolved on time.
  • A cybersecurity issue that leads to extensive downtime.
  • Not enough IT staff to cover all of the problems cropping up in the IT environment.
  • Top in-house experts are busy handling small problems instead of solving mission-critical tasks.
  • The business bottom line is getting hurt from the different issues in the IT organization of the company.
  • There is no recovery plan in place in case of loss of data.
  • The company doesn’t have the financial resources to invest in brand new cybersecurity infrastructure, which is putting company performance and innovation to a halt.
  • Onboarding new in-house team members takes too much time and is too expensive.

If any of these problems sound familiar to you, it’s a sign that your infrastructure might be suffering. Find one good managed service provider, and you’re on the way to solving all of these problems in one go.

IT outsourcing pros and cons

Advantages of IT outsourcing

1. Covering essential services

Third-party outsourcing providers can cover essential services like security monitoring or data storage. By delegating these tasks to another company, you can keep your in-house experts focused on what matters most: building new products, delivering new features, and driving innovation. 

This is also a good use case if you would like to use a solution that doesn’t have enough capital to make it run in-house. Depending on the provider, you might be able to integrate such services into your infrastructure for an attractive fee. 

2. Scaling your IT staff

Hiring new IT experts poses a huge challenge in many geographical areas. Sourcing, attracting, recruiting, and onboarding them takes a lot of time and is very expensive. 

With outsourcing, you can easily integrate IT experts into projects and crucial tasks thanks to dedicated IT teams or team extension services. 

In both cases, the IT staff is fully scalable. You can bring in as many new team members as you need and scale the team down when they’re not required anymore. There is no administrative overhead to that, so you don’t need to manage their tax returns, salaries or anything else. 

This flexibility gives you an unprecedented level of control over project management without having to dedicate any time to hiring and training members. 

3. Enhanced security

By outsourcing IT tasks related to security, you gain access to security services such as network management, data monitoring, protection, disaster recovery, and backups. An experienced managed services provider can help you monitor and flag unusual network activity, maintain industry best practices for cybersecurity, and keep updates to essential software like antivirus. 

All of this can be done without you having to invest any capital into building a cybersecurity infrastructure. The IT outsourcing provider will take care of that and make sure that you’re fully covered, helping you avoid downtime or problems like data breaches that cost you money and your reputation. 

4. Cost-effectiveness

Another reason why IT outsourcing services are such a popular strategy today is their sheer cost-effectiveness. Depending on your outsourcing contracts, you stand to save money across different IT and business operations.

There is no need to make your HR department find and recruit new IT professionals for your team. Moreover, you avoid all of the operating costs that come with a full-time in-house employee like workspace, administrative matters, perks and benefits, and more. 

Finally, it’s about the IT services themselves. Take infrastructure as an example. You can create it on your own – for example, build your own data center, hire people to manage it, and keep it available, healthy, and secure at all times. Or you can turn to an outsourcing provider to do it for you and provide the infrastructure through virtual services. You can’t imagine the volume of savings you get if you choose the latter. 

That’s how IT outsourcing keeps your bottom line healthy and helps you to remain competitive thanks to new IT capabilities. 

5. Focusing on mission-critical tasks

Even if your company outsources IT tasks, it doesn’t mean that you’re losing IT expertise. Outsourcing is often done to fill gaps in weaker areas or assist with larger projects. 

But the most important part is allowing your on-site staff to focus on what they do best and prioritize your goals. You can outsource your support services or service desk to an IT company. With outsourced IT support, your team can prioritize more core business tasks such as cybersecurity monitoring, optimizing your infrastructure, or software development.

6. Greater competitiveness

Suppose you don’t have proactive IT leadership at your company. In that case, the outsourcing provider can help your organization to become more efficient and agile by taking advantage of the latest technological resources. 

An IT outsourcing company can train your IT department to get people updated on the newest technologies, build innovative processes, or try a fresh business model to improve your competitive position in the marketplace. As a result, you can transform into a competitive landscape and reposition your company on the market.

Challenges of IT outsourcing

1. Lower control over IT functions

By outsourcing some IT functions, you will be putting their management in the hands of a third-party provider. For some businesses, this sounds great. But other companies might not feel as comfortable giving up the control of these functions to someone outside of their internal team. 

2. Worktime synchronization

If you outsource IT functions to a provider, it’s important to check their specialists' locations and how their working hours compare to yours. 

When collaborating with teams working across different time zones, task execution styles might be different. Understanding how external specialists will communicate with your company and develop a rhythm to make the most of the outsourcing collaboration is important. 

3. Lower alignment

It’s only natural that accurate alignment can only be achieved after many months of working together. The level of alignment you develop with your internal IT team vs. the outsourced team is incomparable. 

That’s why for some businesses, outsourcing presents a problem. Outsourcing vendors may not always fully grasp their business context or understand business requirements.

IT outsourcing – wrap up

As you can see, IT outsourcing comes with its pros and cons. Not all of these factors are of the same weight since every organization has its unique business requirements, preferences, and objectives. 

However, understanding the risks involved with IT outsourcing is important when deciding whether to bet on it or find an alternative to fill the IT gaps in your organization. 

A well-thought-out outsourcing plan and teaming up with an experienced outsourcing partner ensure that you reap the benefits and mitigate risks successfully. 

At Codete, we have many years of experience in outsourcing work for clients worldwide and have built processes for easier collaboration and delivering real value to businesses. If you’re looking for a reliable outsourcing partner, get in touch with us – we have all the skills and experience to set you on the path to success.

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Artur Olechowski d08c1359d2

Artur Olechowski

Managing Director at Codete. Master of Law, a graduate of postgraduate studies at the University of Economics in Krakow. In his daily work, he masters the combination of business strategy and technology.

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