Benefits and Issues of IT Outsourcing

Many small businesses are known to outsource most verticals of their business specifically human resources and information technology. While, this is an excellent way of cutting down on the costs, is it the only reason for outsourcing? What are the benefits that companies derive from outsourcing is another question that deserves an answer. Let's take a quick look at the why before going into the benefits and issues associated with information technology outsourcing specifically.

Top Reasons for Outsourcing

Reduce Operating Costs: One of the major reasons associated with outsourcing would be reduction in hiring and operating costs. When you hire an employee, you need to include costs related to that employee which include training costs, health insurance costs, taxes and retirement plans. With outsourcing you can negate these costs

Increase the Company Focus: With outsourcing, you can focus on the core competencies. This will help further your business, and direct it in a better way

In-Depth Knowledge and Expertise: You gain access to in-depth knowledge and expertise related to the IT field if you outsource. Now, you have a collective knowledge base which you can utilize to further your business

Availability of Internal Resources: If you have outsourced the IT vertical, then you can utilize the available internal resources for functions that help grow and develop your business. You should ideally utilize this opportunity to develop your brand and product frame

Invest Capital Funds on Core Functions: When you outsource the non-core verticals of your business, you make funds available for the core functions that matter to your firm the most. You can now spend on some of the core functions

Risk Reduction: If you were to handle this vertical internally, you may not indulge in all the best practices. When you outsource it to the right people, they know how to function and will ensure you don't have to invest a lot of time or money

Risks Involved

There are certainly risks involved when you are transferring a whole vertical to someone else. You need to figure out if you have hired the right person or not. You will need to ensure that you have made the right decision, in terms of expertise and budget. Here are some of the risks that are typically involved with IT outsourcing

Not Easy to Outsource: All IT functions affect the organization as a whole. There are simple functions as well as complex and complicated functions involved. You need to make sure you can outsource all the functions, and the company to which you outsource is capable enough to handle them all in a well defined manner

No Control: Among the many concerns that is derived with IT outsourcing, one of it would be data and disaster recovery. The other would be control on the different aspects of outsourcing. You will need to hire a person from the organization to manage the outsourcing affairs

No Documentation: Let's say the person to whom you have outsourced your IT functions does nto document their work. What will happen in that case? You are "locked in" with the vendor. You don't know anything about the system or the network, and you cannot move out now.

Benefits Associated with Outsourcing

Here are some of the benefits associated with outsourcing IT as a vertical.

Access to Current Technologies: It is important to be able to access the current and new technologies. It is impossible for a single person to keep up with the ever changing technology. So, outsourcing would give you this accessibility, as it is the core competency of the company to which you have outsourced your IT

Improved Staff Quality: You get high quality developers and staff who have IT as their core competency. This will help you gain from their experience and expertise, and further your business in the right perspective

Flexibility: When you outsource, you gain access to flexibility in terms of resources

Cost Savings: That is the most important benefit that benefit that you may acquire from outsourcing. You can go for bulk purchasing or even leasing options for hardware and software thus saving costs. The overhead costs are considerably reduced in this process.

Conclusion:

While there are risks associated with outsourcing, it is definitely beneficial for those companies where IT is not core strength. Outsourcing works for small and medium businesses, where budget is a main constraint in hiring resources. Semaphore Software offers Offshore Development Services, and has considerable expertise and experience in meeting your IT needs.

Deepa is a technical writer with Semaphore Software.