Outsourced IT is the concept of hiring external service vendors to handle certain IT functions. Companies outsource infrastructure management, application services, utility services, cloud-enabled outsourcing, software-as-a-service and more. Some organizations outsource data storage since it is cheaper to have a third-party vendor take care of your critical data rather than maintaining their own data storage facilities and devices. In general, outsourcing IT helps businesses accelerate time to market, leverage external assets, intellectual property and expertise, and reduce costs.
What Are Outsourced IT Services?
Outsourced IT services are services that businesses avail from third-party vendors at a certain cost. There are various types of IT services that outsourced IT service providers, also known as managed services providers (MSPs), offer for both small as well as large businesses.
What Are the Types of IT Outsourcing?
When you think of “outsourcing” in a general sense, it usually falls under one of the three categories below:
Offshoring is a type of outsourcing wherein you contract with a service provider outside your country. It is primarily a budget-cutting approach wherein companies offshore their processes to service providers in countries like India, the Philippines or China, where the expenses are low and the talent pools are full.
As the name suggests, nearshoring typically refers to the concept of outsourcing your IT services to a nearby country – typically a neighboring country or one that’s in the same continent. This type of outsourcing facilitates easy travel and the opportunity to have frequent in-person interactions at a relatively low cost. It is easier to practice more control over operations with frequent visits.
Onshoring is when you outsource to a service vendor residing in another city within your country. This approach to outsourcing eliminates the issues resulting from foreign taxation policies and cultural differences.
What IT Functions Can Be Outsourced?
According to Kaseya’s annual 2021 MSP Benchmark Survey, the top five IT services provided by MSPs are antivirus/antimalware, endpoint management, server backup, OS patching and updates, and email security, in that order. That said, almost any and every IT function can be outsourced to a service provider. However, small and midsize businesses usually outsource services like:
- Endpoint management
- Help desk/service desk
- IT documentation
- Compliance management
- 24×7 threat monitoring
- Network performance monitoring
- Data backup and disaster recovery
What Are the Pros and Cons of IT Outsourcing?
As is the case with any business model/function, there are certain benefits and drawbacks of outsourcing IT functions. Let’s discuss some of each.
Benefits of IT Outsourcing
Here’s a list of some of the major benefits of outsourcing IT to a third-party vendor:
- Substantial Savings or Reduced Labor Costs — Small businesses face the problem of budget constraints when it comes to hiring skilled IT professionals. Outsourcing IT services eliminates the need to hire in-house IT professionals and saves you money.
- Comprehensive and Experienced Expertise — One of the most important benefits of outsourcing IT is getting access to skilled resources. Outsourced IT teams possess the expertise on markets as well as upcoming technologies that you might have never even heard of. As such, they are better equipped to handle different scenarios and cater to the unique needs of different types of work environments.
- Focus on Core Competencies — Small and medium-sized businesses often do not possess enough resources to provide client servicing and handle their internal IT at the same time. By outsourcing your IT to a reliable MSP, you can free up time otherwise spent on mundane IT tasks and focus on improving your core competencies. About 57% of organizations believe outsourcing allows them to completely focus on their core business activities.
- Ease of Budgeting/Cost Control — Outsourcing IT serves as a line item instead of variable costs that you can’t always account for.
- Technical Reliability — By outsourcing your IT, you can rest assured that you have the technical expertise to handle all kinds of situations. You don’t need to spend time and money on training in-house technicians to make them more technically sound.
- Qualified & Certified Service — You can rest assured that your service vendor is qualified to perform the required actions to ensure peak performance for your IT infrastructure.
- Scalability — In case you decide to scale up your level of service, it is easier to do so with the expertise and experience of a third-party service provider. You do not need to invest your resources on training your technical staff to achieve scalability.
- Increased Efficiency & Productivity — With the necessary experience and expertise at hand, outsourced IT professionals can perform IT tasks faster and more efficiently.
- Rapid Implementation — Outsourced IT facilitates faster and more streamlined implementation of new systems, technologies and programs.
- Reduced Security Risk — With your outsourced IT service provider monitoring your IT environment 24×7, you can significantly reduce the probability of potential cyberattacks and downtime.
- Compliance Regulation — Since they are well-versed in the latest regulatory standards, outsourced IT service providers help you remain compliant and eliminate the possibility of hefty penalties due to non-compliance.
Drawbacks of IT Outsourcing
Some of the key drawbacks of IT outsourcing include:
- Communication Barriers — One of the major drawbacks of not having an in-house IT team and outsourcing is that it might not always be feasible to communicate immediately with the technicians when necessary. For instance, if you’re dealing with a security issue, any communication lapses will seriously hinder your ability to minimize downtime and get back on track.
- Trust and Familiarity — Outsourcing means that you will be sharing your business information with an external service provider, which could lead to a potential security issue. Letting outsiders work on your networks and systems can be a trust issue as well.
- Objective Alignment — Having a third-party vendor manage your IT infrastructure might lead to misalignment of objectives. While you are focused on the well-being of your business, your outsourced IT service provider might not share the same urgency or passion, which could result in clashes.
- Hidden Costs — Another drawback of outsourcing your IT services might be the hidden costs of availing additional services and capabilities on top of the base cost.
- Infrastructure Requirements — If you decide to outsource your IT, there’s no guarantee that the vendor will be able to work on the systems you have in place. You might have to install or use additional software.
When Should a Company Outsource Its IT Services?
Here are some key scenarios in which outsourcing your IT might be the best way to go:
- If the skill set of your IT workforce is outdated or isn’t helping foster business growth, it might be time to consider outsourcing IT to a competent MSP.
- If managing and maintaining your IT operations becomes a problem, it’s time to start looking outside your company for the ease and efficiency of outsourcing.
- If time to market is your primary concern and you don’t have the budget to hire in-house IT professionals that possess the skills and expertise to complete critical projects, then outsourcing IT might be your best bet.
- If you want to achieve maximum IT efficiency without investing in increasing the headcount, IT outsourcing will help you streamline IT management at a fraction of the cost.
Get Superior IT Services With Kaseya
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