IT Outsourcing and Its Pros and Cons
IT outsourcing is a very rapidly growing industry and it poses a valuable solution for several companies. Every type of company from big multinationals to young startups leverages the benefits which are derived from the outsourcing of their businesses. This practice lets businesses cut costs and gain a higher competitive edge.
Definition of IT Outsourcing
IT outsourcing implies moving out of the software development sector of a particular company outside of the in-house facilities to save costs and take control of the rest of the processes. It is the handing over the implementation of the task of an outside partner while keeping an eye on the proceedings.
The practice of IT Outsourcing can be implemented either inside the country or beyond the borders according to the needs of the firm. There are 3 types of outsourcing depending on where the service is provided.
- Onshore: This refers to the process of hiring professionals who are located in the home city or someplace nearby. It is a good option for keeping everything under control and also keeping with the budget constraints at hand if any.
- Nearshore: It is the practice of outsourcing the IT department to neighboring countries having similar time zones. When this option is chosen, you will be able to communicate directly with the developers, and this option is not always highly profitable.
- Offshore: It is the term used for the practice of outsourcing to a far-off foreign country. This type of outsourcing allows companies to save up the most.
Advantages of IT Outsourcing
Gaining of Essential Functions
The term outsourcing misleads people into believing that it only involves labor. The third-party providers essentially provide other options such as data storage and security monitoring. These services can be easily integrated into the organization without the need of investing capital into the functions.
Improvement of security
The practice of outsourcing allows the organization to have an access to additional; security services like data protection and backup. They provide essential cybersecurity services. This helps the company save capital while not letting dangerous gaps develop in cybersecurity.
Scaling Staff
Bringing in a new staff in the IT sector often has its challenges and it involves a lot of time and capital. With the usage of outsourcing, experienced IT experts can be integrated into various projects to create successful projects. When the need for the staff ends and there is a lesser number of projects, you can easily reduce the staff according to your needs.
Cost advantages
One of the biggest and the most obvious benefits relates to the savings that the practice of outsourcing brings about. The business can get a better quality job at a lower cost. Due to the difference in the wages of different countries, some kind of work can be done in the outsourced country at a lower rate. Thus, the lower cost does not mean lower quality as that is the standard rate in that particular country.
Improvement in focus
While a company outsources the IT department, it does not mean that it cannot have IT personnel of its own. Sometimes, this is done to patch up the weaker areas of an organization to help in the thriving of the more essential projects. This gives liberty to the onsite staff to focus on their areas and work towards their goals.
Disadvantages of IT outsourcing
Less Control
One aspect which often leads to the idea of outsourcing facing opposition is that you have lesser control. When the organization uses third-party services, it uses a different set of personnel to the one they have hired themselves. This often leads to having less control of the situations and this might lead to some situations going out of control.
Lower Quality
Depending on the people the service has been outsourced to, the quality can differ massively. While some of the organizations in this sector provide a great quality of service with great infrastructure, some organizations may not be up to the mark. One should be aware of the experience of the provider to whom the service has been outsourced.
Communication
A very important factor to consider while outsourcing is there can be instances of serious lapses of communication. Very outstretched periods of inquiries may often be problematic and this will result in a downgrading of the products. Faster communication is always necessary for the arrangement to work.
Morale
The practice of outsourcing may affect your existing staff as well. No one would like to have it in their head that their job might be on the line next. Depending on the size of the operation, morale is a serious aspect to consider. Frustrated staff may want to work less and which can result in a loss of quality.
When should you use IT outsourcing?
Now that the advantages and disadvantages of IT outsourcing have been discussed, one must know when to start practicing IT outsourcing. The usage of IT outsourcing can be a top-notch approach when you are one of the domain experts with a solid idea. Here in an organization, your main goal will be to enter the market and test the solution to the problem statement quickly. A team of outsourced personnel will help in the validation of your idea, check the hypothesis, and implement any changes to the product if needed, according to the needs of the market. This will help the organization save a lot of valuable time and lets them solve the problem quicker.
It is also a good idea to use the aspect of IT outsourcing if you have an early-stage startup. Early-stage startups lose money easily and this is one of the primary reasons why a startup fails. It is a better idea to hire a group of outsourced personnel while the business is living on the money provided by the investors.
Conclusion
IT outsourcing is an important aspect of a whole business operation and can significantly affect the proceedings of a firm. All the pros and cons of IT outsourcing must be kept in mind and applied and check for their organization. If the whole aspect fits the bill on paper, then only should a company move forward with the proceedings otherwise it is best to stop at the correct time before it starts to affect the organization.
