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What Is IT Outsourcing and What Services Do They Offer?

Outsourcing your IT is one of the simplest ways to keep up with all the innovation and digitalization of the business world. You see, in order to run an efficient in-house department, you would have to either possess an in-depth understanding of the field or find a manager that you trust completely. When looking for an outside agency, you can trust their industry reputation instead.

The concept of outsourcing is there to make your job substantially easier but is this always going to be the case? What are the benefits of IT outsourcing? What types of IT outsourcing are there? Let’s look for answers to some of these questions!

1.      Benefits of outsourcing

The reasons why people decide to outsource are numerous. This way, they get a higher quality of service at a lower cost, which is the most cost-effective course of action in this situation. Second, they get an increase in efficiency, access to skills, and resources that they would have to pay for a far heftier sum otherwise. Then, they get the accelerated time-to-market, etc.

This is especially the case when the field is highly specialized, so finding specialist IT-managed service providers could make a huge difference in your enterprise infrastructure.

Sure, there are also some risks and downsides involved. There’s a lack of control, as well as a potential time zone difference (with offshoring, which is something we’ll discuss in a bit). Keep in mind that by finding the right agency to work with, it will become a lot easier for you to mitigate these downsides.

2.      Offshore, nearshore, or onshore

Outsourcing comes in three different forms, based on the physical proximity/distance of the company’s headquarters. For instance, if you outsource your IT services to a company that’s halfway across the world, you’re offshoring, while if you do it in your own country, you’re nearshoring. So, what are the benefits of these trends?

  • Offshoring: Provides you with a chance to get more competitive pricing for the services. While we are living in a globalized society, the thing is that purchasing power parity and wage standards aren’t the same in different regions. So, you can get a higher quality of service at a lower cost. Other regions may also have agencies offering a higher level of expertise.
  • Nearshoring: Nearshoring usually provides you with a similar cultural environment as your own, while still allowing you to collaborate with an international agency. It is a middle ground between offshoring and onshoring.
  • Onshoring: Onshoring usually gives you a higher quality of service, better language alignment, and a superior cultural alignment. The problem is that it usually comes at a much higher cost and that you reduce your talent levels.

Since each has its advantages and disadvantages, opting for one option against others is never a clean-cut decision.

3.      Project-based outsourcing vs. out-staffing

Another division of IT outsourcing is the one based on the specific circumstances of the outsourcing. Namely, you have project-based outsourcing and out-staffing. Project-based outsourcing is a scenario where the company handles your entire IT, while out-staffing happens in a situation where you buy time of employees of another agency. The latter is usually used when you already have your own IT department that needs some extra help. It’s like renting out the IT workforce for a while. The latter is not as popular mostly because of security concerns.

4.      Which IT services are most commonly outsourced?

There are several IT services that are commonly getting outsourced. Most commonly, these are things like web development, app development, technical support, or telecommunications. In some cases, these are also the infrastructure (both hardware and software setup), as well as networking and communications.

IT security is another concern, which is why it is usually outsourced to agencies that specialize in it. On some, rare and unfortunate, occasions, companies may also be in need of DRaaS (disaster recovery). Overall, depending on your needs and specific circumstances, the IT agency that you’re outsourcing to could provide end-to-end support.

5.      What makes it so cost-effective?

Several times already, we’ve mentioned that IT outsourcing is more cost-effective than any of its alternatives but why is this the case? First of all, you need a significantly smaller initial investment in order to start working with an IT agency than to start your own in-house department. This means hiring specialists, providing them with expensive hardware and paying for software licenses, etc. Just managing this in-house can be quite difficult.

Second, you get 24/7 support, without having to pay for overtime. Remember that in some countries overtime is 140% the cost of a regular hour and a regular hour of an IT specialist is not cheap either. This way, the 24/7 support is already included in the price.

In conclusion

The last thing you need to understand here is that IT outsourcing might be the only way to handle your current digital requirements. Still, this doesn’t restrict you nearly as much as you would expect. You still get to choose whether to nearshore, offshore, or onshore. You also get to choose what kind of outsourcing you’re about to engage in. Having options is always a good thing.

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