IT Outsourcing is the practice of using external resources, or subcontracting, some or all of the information technology (IT) functions required by a business. These functions might include infrastructure, software development, directing strategy, maintenance, and running the service desk and other functions.
IT outsourcing vendors can provide either a fully managed service, meaning they take full responsibility of all IT maintenance and support, or they can provide additional support for an internal IT team when needed, which is known as co-sourced IT support. A company using IT outsourcing can choose to use one provider for all their IT functions or split the work among multiple providers. Specific IT services typically outsourced include:
- Application development
- Web hosting
- Application support
- Database development
- Disaster recovery
IT outsourcing benefits
Companies choose to outsource their IT functions for varying reasons. A few are listed below.
Reduced IT costs
Outsourcing IT functions turns fixed IT costs into variable IT costs, meaning you only pay for what you use. The cost associated with hiring a full-time IT employee is eliminated, such as training, insurance, employment taxes, and retirement plans.
Resources and skills that may not be available to hire locally can be in abundance elsewhere. Outsourcing allows for a global outreach of IT professionals. In addition, there may not be anyone internally in the company who can manage all the IT needs. Outsourcing is a feasible alternative.
An IT outsourcing provider has the resources and expertise to start new projects immediately. This means implementation of new technology is done quickly and without worry that it was done incorrectly.
Compliance and security
There are a lot of compliance and security standards a business has to keep up with, such as the PCI compliance standard, up-to-date firewalls, and DMZ installation. Hiring an IT outsourcing vendor will allow a business to minimize the risk associated with maintaining client data, sensitive information, and security protocols.
IT outsourcing disadvantages
IT outsourcing can be difficult if there are language barriers. When a clear explanation of a problem or solution is required, both the employee and vendor are affected by unclear communication. In addition, different time zones add another barrier to communication and coordination. There is also a chance of a loss of quality unless a lot of time is invested in screening IT outsourcing vendors.
Types of outsourcing
IT outsourcing functions offer several types:
- Offshore outsourcing: IT-related work is sent to a company in a foreign country, meaning costs are lower and the economy is stable.
- Nearshore outsourcing: IT-related work is sent to a company that shares a border of your own, meaning travel and communication between the outsourcee and outsourcer is easier.
- Onshore outsourcing: IT-related work is sourced within the same country, whether remote or on-site.