It is easy to think of outsourcing as just a way to reduce costs and overhead. Organizations contract with an outside vendor to perform an IT function or to provide an IT service that they can’t, either because their own internal costs to deliver it have become prohibitive or because it no longer fits their core capabilities.
However, in today’s global market for services and talent, outsourcing is so much more than cost. Companies can create strategic advantages, build new partnerships, and implement new services, tools, and features that deliver new operational capabilities that can be hard to do in-house. Though costs will always be a critical component of deciding to enter an outsourcing arrangement, doing so can also create value for more than just your bottom line.
So if your organization hasn’t yet made the decision to outsource IT services, here are some key warning signs that may indicate it’s time.
1. Staffing constraints
Aside from cost, staffing constraints is one of the most common reasons organizations look into IT outsourcing. Whether because of a difficult employment market, a need to find a unique skill set, or variable staffing budgets, outsourcing is a great way to quickly onboard staff with the right blend of experience when you need them.
2. Difficulty reducing risk
If your organization handles data or provides services with regulatory requirements, it can quickly become a continuous, full-time effort to maintain compliance and prepare for future changes. The same can be true when implementing controls or defenses for new cyberthreats. If your organization is struggling to keep up with the technology required to keep operations running safely and in compliance, dedicated outsourcing services can help reduce your overall levels of effort and cost.
3. A need to expand into new markets
Whether because of geographic location or because of a unique product or offering, outsourcing can be a great way for your organization to expand its presence into new markets. An outsourcing partner with a data center in a different location or staff knowledgeable about a particular market or regulatory environment can assist in opening up new doors for your operations. Similarly, if a product doesn’t exist for your needs, a vendor can help supply the flexibility in staffing and equipment resources to make the design a reality.
4. Too many hardware or software updates
If your organization is finding itself frequently hampered by IT hardware or software updates, an outsourcing vendor can help to organize and manage the overall effort and then put a structure in place to maintain a proactive stance for the future.
Vendors can also assist with the implementation and maintenance of new services or features with a burst of staff, skill, and focus that your organization may not usually have available.
5. Limited IT resources
If your staff has a lot of IT tasks that are repetitive, time-consuming, or irregular in nature that are required to keep the lights on but often get in the way of working on more strategic initiatives, these functions can be ripe for outsourcing. By handing them off to dedicated vendor staff, you give your staff the ability to apply their organizational knowledge, skills, and experience to efforts that build value and help with career progression and retainment.
6. Difficulty accessing new technology
As backend hardware and software evolves, an outsourcing partner can proactively take on the necessary level of effort to test, implement, cut-over, and maintain new technology. This frees up your staff while also making sure your IT platform benefits from having the latest features and equipment.
7. Declining customer experience
If your internal or external customers are often receiving an inconsistent level of IT services, outsourcing some of your operations can help to improve their experience. Often, through contractually guaranteed performance metrics, vendors can help to make sure your customers have a consistent and reliable IT experience.
8. Reduced efficiency
Regardless of the size of your business or its industry, working with an outsourcing vendor can increase the agility, efficiency, and effectiveness of your business. For example, by enabling pilot projects, facilitating the testing of services, and delivering scalable IT functions, your business can move more quickly through efforts with lower risks if they do not pan out.
Building value through outsourcing
As with many IT services, outsourcing is no longer a one-size-fits all endeavour. As outsourcing vendors have evolved in number and capability, so, too, has their ability to help your organization reinvent its IT footprint, adapt to market forces, or refocus its spending and investments.
Although the decision to outsource or not can come down to just one or two reasons, when an organization selects the right partner, it can be less about cost and more about creating value. When you can deliver new capabilities faster and improve the user experience while also reducing costs, it can really be a win-win scenario.
If you’re thinking about making the move to a managed service provider, this guide can help you understand the business benefits of managing IT internally versus outsourcing services.