As CIO, it’s up to you to decide whether to keep services in-house or outsource them. Outsourcing comes with its share of risks and benefits. It may save time and money, but it also means you have less control over key processes.
According to our 2023 State of IT Talent Study, 64% of businesses outsource IT functions, with cybersecurity, infrastructure, and network management being the top 3 outsourced functions.
Read on to learn what to consider when deciding to outsource IT services for your business.
What are the Benefits of IT Outsourcing?
Expertise
The skills gap is an ongoing dilemma for businesses. Technology trends are constantly changing. It is difficult to find staff that can keep up.
Outsourcing allows you to access workers that are familiar with the required technology. You won’t need to worry about hiring staff or training your existing teams.
Scalability
CIOs require technology that can scale with their company. Their products must meet demand and growth needs. They must allow businesses to generate revenue without being held back by a lack of resources.
Outsourcing provides a solution. Most companies offer subscription tiers that you can change at the drop of a hat. When demand peaks, you can update your contract to access the services you need.
For optimal scalability, partner with a company that offers multiple tiers and flexibility in contract updates.
Risk Management
Doing everything in-house means you are fully accountable when systems go down. You can disappoint customers, fail to fulfill orders and lose hours, or even days, of productivity.
Outsourcing provides a backup. If your system goes down, at least part of your company can remain functional. For additional peace of mind, work with a company that offers data recovery, data management, and data security storage services.
What are the Risks of IT Outsourcing?
Loss of Control
In-house teams give you more control. You can communicate with your workers to ensure the project is completed correctly and on time. You can conduct progress checks to see to it that things go as planned.
Outsourcing does not provide the same convenience. If you need a status update, you may be unable to reach the responsible party. You may find the finished product is not up to your standards.
Privacy and Security Concerns
Privacy and security concerns are on the rise due to the increased reliance on virtual and digital systems. Outsourcing adds additional risk.
When you work in-house, you can hand over documents in person. If communication is sent through digital means, it goes through an internal server you know is secure.
Your outsourcing company should also use secure systems, but you always run a risk when sending sensitive information through the Internet.
Cost Savings are a Wild Card
Cost savings are typically an outsourcing benefit, but not always.
Leaders may experience more upfront costs when outsourcing, but it can save them money in the long run. It may prevent them from hiring new staff members or training existing staff. It also frees up staff to focus on other, possibly more pressing, tasks.
It also saves you from investing in equipment you may need to access certain services.
However, if your staff can perform the necessary tasks without much training, you may prefer an in-house model. This option is also an investment as you can benefit from well-trained workers and avoid ongoing subscription fees.
What to Consider When Choosing an IT Outsourcing Provider
- Industry Expertise: The outsourcing company should have expertise in the services you need and in your industry. An experienced provider will offer the compliance, efficiency, and insight you require.
- Cost: Cost is an X factor. Ensure the IT company you work with will save you money in the long run.
- Risk Management: Determine how the company avoids and manages risks. Do they use secure systems? Do they have a backup in place if their system goes down?
- Service Level Agreement: The provider should offer a Service Level Agreement (SLA) or contract that clearly states the terms of your partnership. Ensure its terms meet your business needs. If you don’t feel confident signing the contract, you may have a legal professional look it over.
- Communication: You never want to be in the dark when it comes to the status of your project. Find out about the company’s availability and communication methods. Determine if someone will be there to answer your questions if your main point of contact is not available.
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Additional Resources
Maximizing ROI: Smart IT Budgeting Strategies for SMBs
The Importance of IT Governance and Compliance for Business Success
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