What is IT Outsourcing – A Detailed Overview

Before we define IT outsourcing, let us first explain outsourcing itself. In the simplest words, outsourcing is a business practice wherein a business hires a third party to handle specific tasks, entire business functions, or provide services on its behalf. For example, a business may wish to outsource its whole legal function to a third-party law firm. Another example would be where a business specialises in automobile services. One of the services is to pick up the car from the customer’s premises and deliver it back. Instead of hiring resources, a company can hire a third party to provide these services on its behalf.

What is IT Outsourcing?

Every business depends on IT nowadays, irrespective of its nature. It is how crucial IT has become. It is said that IT is the main driver behind innovation. Without innovation, no company can survive. IT outsourcing refers to using external services providers to deliver IT-enabled services. The most commonly outsourced IT services include:

  • App Development
  • Technical Support
  • Website Development
  • Networking
  • Security
  • Servers
  • Data Storage

Reasons for Outsourcing

A business may outsource for several reasons. Let us review a few of them.

Reduce Costs

The primary reason for outsourcing is to lower costs. Instead of acquiring resources for a particular function, the organisation can outsource them. It helps save considerable costs. Suppose that a business requires a server for data storage and other purposes. The costs of acquiring, installing, and managing a server are considerably high. Instead of having the server in-house, the organisation can outsource it. It can save money this way.

No Need for Training

Technologies keep changing. It means that businesses need to arrange for training for their employees frequently. It is a significant overhead for any business. It would be better if the business outsources the function to a third company. The business no longer needs to pay for the training and other associated costs. It can avail of the services by paying a fee and need not worry about training.

Expertise

Suppose that your company offers digital marketing services to businesses. The company specialises in social media marketing. It plans to launch a product that automates some of the services. Undoubtedly, app or product development is not the company’s expertise. It would need to hire the resources.

It would increase the costs. Secondly, it would not know if their work is up to the mark because it does not specialise in this field. In such cases, it is better to outsource. The marketing company will share the requirements with an app development company, and they will do the rest. It will save them time, money, and the headache of developing an app.

Focus on Core Business Functions

Another reason companies outsource services or functions is that it allows them to focus on core business functions. For example, a company excels in offering managed IT services to its other businesses. It is its primary source of income. Instead of allocating resources to manage marketing, the company can outsource it. This would allow them to focus on improving their services and target more clients.

Regulatory Compliance

Businesses need to comply with regulatory requirements. Otherwise, they risk considerable fines and other legal challenges. However, it can be challenging to ensure compliance with each regulatory requirement. In that case, it is better to outsource the relevant function to companies that are experts in this field. It will transfer the risk from your business to the third company.

Conclusion

Statistics reveal that 74% of organisations globally outsource their IT services. It shows that there are multiple benefits to IT outsourcing. Otherwise, why would organisations outsource them? If you wish to outsource any aspect of your IT, please contact us. We offer numerous IT outsourcing services.

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