Business and commerce across the world has changed rapidly since the emergence of the internet in the late 20th century. Ways of offering goods and services to consumers, and providing post-sales support have undergone a massive transformation with the growth of internet-based digitization. Now, companies rely on Information Technology (IT) services for a range of processes – from reaching out to new customers, to creating virtual storefronts, to providing them with customer support. The global IT industry is expected to reach a valuation of $5.2 trillion in 2020.
With more and more businesses of all sizes and across all sectors moving online, especially in the wake of the ongoing COVID-19 pandemic, they have some key decisions to make in terms of how to access IT services – should they develop an in-house IT department or should they outsource it to third-party service providers? The answer to this question lies in the scope and scale of IT services that a business requires. For giant organizations with massive amounts of data to process and other IT-related needs, having a dedicated IT-department is a worthy investment, but for smaller businesses, it is more pragmatic to outsource IT services to third-party service providers. Here are 10 ways in which IT outsourcing can help a business –
- Infrastructure-related cost savings – Setting up in-house IT services requires investments in infrastructure such as storage – physical or cloud, workstations, extra office space and software. For small companies, these capital investments can be infeasible. However, if they outsource their IT services, they can save on these costs.
- Recruitment of personnel – In-house IT services require businesses to hire qualified and trained personnel. This task can be especially difficult for those businesses that do not already have members with knowledge of IT who can help them determine the suitability of candidates for their needs. By IT outsourcing, companies can avoid getting involved in making such decisions.
- High level of expertise – Third-party IT service providers are made up of teams of IT experts who are adept at handling a wide range of processes. Since their core operations are related to IT, they have in-depth knowledge of their field and experience at handling complex problems. Outsourcing IT enables companies to avail the services of top IT talent without having to hire them full-time and keeping them on company payroll.
- Focus on core business – For companies whose core business is very different from IT, investing resources in setting up an in-house IT department and managing it can divert their attention from what they sell. Thus, outsourcing IT works in the favour of companies as they can focus on their business and delegate their IT problems to experts outside their business.
- Upgradation of infrastructure – In the IT sector, technology keeps upgrading frequently. For companies whose core focus is not IT, doing these upgrades can be expensive and infeasible. However, outsourcing can save companies the effort and expenses of these upgrades. Also, these companies do not have to bother with disposing off obsolete hardware.
- Flexibility of Services – Very often, companies are unable to define their IT requirements. In that case, investing in IT infrastructure and talent can be a risky affair as a company may realize later that it needs something different than what it has. Outsourcing solves this problem as third party service providers often provide solutions that can be modified as per the needs of the company. Furthermore, companies can easily opt for larger service plans during times of peak loads and switch to leaner plans during low business seasons.
- Mitigation of Risk – No business can absolutely eliminate uncertainty. Weather conditions, political instability, epidemics, etc. are factors that can create a high level of uncertainty for businesses. By outsourcing, businesses can reduce their capital investments, and consequently, minimize their risk.
- Regulatory Compliance – The focus on protection of user data and financial information has multiplied in the last few years after major technology companies were found to be handling this information irresponsibly. For companies, this translates into taking measures, dedicating staff and implementing tools for ensuring IT security. Outsourcing transfers this responsibility to third party service providers, thus helping businesses save costs and efforts.
- Optimal Use of Resources – For businesses that require very limited IT services, investment in an in-house IT department will lead to wastefulness of resources as the dedicated systems and staff will be underutilized. Instead, businesses can allocate their systems and staff to other responsibilities where their potential is utilized optimally.
- Enhances competitiveness – For small businesses that require IT services, but cannot afford to invest in setting up in-house departments, outsourcing helps them retain their competitiveness in the market and even compete with big businesses.
Thus, businesses, especially smaller firms with limited resources, can avail several benefits from outsourcing IT such as cost savings, optimal utilization of resources and regulatory compliance. They can remain competitive in an ever-changing market by adapting to it with the help of third-party IT service providers.