Whether you love it or hate it, outsourcing has become a necessary evil for businesses to function smoothly. Handing over non-core operations of a company to lower cost experts can be enticing when companies have set out to search for cheaper and more effective ways of working. Several success stories that have used outsourcing to be able to save operational costs and rid themselves of expensive assets have cemented the reputation for outsourcing.
However, it is worth pausing to consider the risks that come with outsourcing before bringing in the third parties to get the job done. While the success stories might paint a rosy picture, some outsourcing deals have failed dramatically and publicly, falling short on delivering the expected benefits. So how do you avoid the cost, frustration and the pain of a failed deal and become one of those success stories? Let’s find out.
Whilst there is no definitive solution to that, a mere combination of common sense, a well-structured approach and learning from other mistakes and experiences will go a long way in achieving success with outsourcing your IT operations.
What is Outsourcing?
When you contract out a business function that involves the transfer of people, processes and assets to an external supplier, it is known as outsourcing. The term has been mostly associated with the Information Technology (IT) sector, although it is increasingly finding its application in a wide range of business process such as HR, Finance, Customer Service etc.
IT Outsourcing has off late found its footing in the global market regardless of business models. While IT outsourcing has always been a tedious exercise, it has become more of a necessity in the last two decades. When it comes to traditional IT outsourcing, difficulties arise in transferring the staff, formatting and renewing contracts and assessing the impact of selling physical assets financially.
Factors That Drive IT Outsourcing:
Typically, cost reduction and asset-liability reduction are the two major driving factors behind IT outsourcing. However, there are quite a few other factors that play an important role in supplementing the demand for IT outsourcing.
- Fast-Paced Development: A new or an existing business/company can utilise the option of outsourcing to implement its key functions much more quickly at reduced costs than opt for an in-house department from scratch.
- Adaptability: Outsourcing certain operations that are non-core can provide the flexibility/adaptability for a company/business that needs to keep in sync with the changing demand and business opportunities.
- Special Skillsets: IT sector demands extraordinary skillsets that are hard to come across. Attracting, equipping and retaining skilled employees can pose a serious challenge. Outsourcing the same to external agencies can give access to the same.
Circumstances to Consider Before Outsourcing IT:
At this juncture, it is clear that outsourcing IT operations helps companies grow their business and align their focus on its key functions that deliver fast-paced growth and superior client satisfaction. By utilising and maximising the opportunities at hand, businesses/companies can experience an accelerated growth. However, as much as things might seem hunky-dory, it is imperative for companies to be aware of certain things to consider before opting for IT outsourcing.
- It is essential that the evaluation of the necessary quality level is carried out. You need to understand precisely what you are looking for, and then you need to see if the supplier can deliver. It is feasible to outsource certain duties that do not really require a high amount of skill in order to cut expenses. Furthermore, you could also outsource a particular job because there is a specialized supplier for the same.
- While choosing an IT service partner, finding someone with an effective reporting and communication system is vital. Since there will be frequent interaction between the two enterprises and several teams on either side, a streamlined method to maximize the work output is essential. For all operations and real-time updates on all functions associated, a comprehensive documentation record must be accessible.
- When projects are outsourced, many companies go through a dip in mood. Many a staff see job outsourcing as a demoralizing factor. Clarifying the goal of outsourcing tasks and how it fits into the objectives of the company is very essential by the top management of the business/company.
- Outsourcing helps to boost the position of a company as it helps to demonstrate a broad spectrum of technical capabilities. Often, however, it may also curb the potential of the enterprise as some functions are not fully owned by them. But it is up to the management to comply tactfully with these instances. To their advantage, there have been many businesses using outsourced IT operations.
- Many companies outsource their operations to countries operating in different time zones. This is particularly beneficial as the turnaround moment every day is minimal and helps in the operations. It may be more difficult to handle these resources than one thought. Problems that arise due to variations in communication and language can often lead to mistakes. Technology advancement helps, but there are certain constraints. However, there are many local IT service suppliers who have succeeded in meeting the company partners’ requirements.
You must guarantee that the related costs are justified and that the services directly or indirectly obtained contribute to improved customer satisfaction and operational efficiency. You need to be evident about your requirements and patient with the quest to outsource responsibilities to the right partner.