How to Create a Great IT Outsourcing Master Plan for Your Business?
Published on: August 05, 2022
Nowadays, outsourcing your company's IT work is very important for companies to grow their business. By outsourcing, you can bring many benefits to your company, including dynamic capabilities, new technology within the market, strategic flexibility, speed, and increased process efficiency. When the outsourcing company and the business work together, it will improve many of the company's functions related to knowledge processes such as learning, sharing, incorporating, and reconfiguring. In it, we'll explain the types of outsourcing, the term "outsourcing strategies," their benefits and pitfalls, and best practices for developing and promoting a strong outsourcing strategy. Will understand. Let's see!
What Are the Outsourcing Strategies?
Outsourcing is a business system in which a company hires a domestic or foreign person or company to provide services previously provided by their team. Outsourcing has become a trend as it provides many benefits to companies.
IT companies have different fields and may not have the resources to complete the work in the best way or to use new technologies. Under such working arrangements, the service recipient remains responsible for providing the expected services for its workforce and computer systems, on-site or off-site. Now business people start searching for companies with the necessary tools and qualified staff to deal with the task within the stated time frame so that they can work within a reasonable work frame.
Types of Outsourcing: What's the Difference?
Over the past few years, the outsourcing work landscape has seen various developments. These serve some essential purposes, which can be divided into outsourcing:
You are looking to provide services to people in your own country.
Renting from neighboring countries.
Working with remote countries
In addition, outsourcing strategies are divided into many categories.
Your company lacks mobile app developers, so you decide to outsource to professionals who can fill the gap and provide your services.
Nowadays, every company needs an IT department regardless of the sector it is involved in (infrastructure, software development, maintenance, support, etc.). Hiring a third-party IT service may be cheaper than attempting to perform these specific tasks yourself.
This strategy involves hiring IT services in conjunction with other business functions.
- Manufacturer Outsourcing
If you want to produce products under your brand, you should contact a company (manufacturer) that already has the necessary equipment for your work. They should provide you with the services you expect.
- Process-Specific Outsourcing
Outsourcing means hiring a team that specializes in a narrow or specific service.
Project Outsourcing: Your company handles many projects, and you cannot complete them all at once, so you look for a company that deals with a number.
Read Also: Business Process Outsourcing: What is Front Office Vs Back Office
Facts About IT Outsourcing
- The IT services market is estimated at a CAGR of 8.4%, and the IT outsourcing market at 7.7%
- According to internet research services, the IT outsourcing market will likely grow to $806.63 billion in 2025.
- By 2025, the IT services sector will be worth $1,070.28 billion.
- 64% of companies outsource their entire business development process.
- 70% of the top reason for outsourcing is cost reduction.
- By the end of 2023, IT outsourcing spending will exceed $1.3 trillion as companies increasingly seek the help of digital transformation partners.
- Large companies outsource 66 percent more than small businesses.
- 24% of small businesses outsource to grow their business.
- 78% of businesses feel optimistic about their relationship with an outsourcing partner.
What Are IT Services Usually Outsourced?
Before implementing your outsourcing strategies, you must know which IT services can be outsourced. It will enable you to request a relevant set of services that will give you more desired results in less time. The most commonly outsourced services are:
- Web development
- Application development
- Custom software development
- Website or app testing
- Application maintenance and support
- Database management
- Infrastructure management
- Disaster recovery
- Customer Support
- Data Center management
- Data cloud storage
- Web security
- Internet research services
- web research services
- BPO Recruitment Services
Primary Advantages of Strategic Outsourcing
The outsourcing strategy has many advantages. The company can build a vast network of capabilities linked to outsourcing agreements. Thanks to essential functions such as raw materials, which can outsource components and systems, the company may form solid relationships and partner with external services to work on specific projects regularly. It promotes exchanging knowledge and experience between companies, building strong, professional relationships and communication systems for both teams. In addition, outsourcing strategies offer advantages such as:
1. Cost Reduction
It is one of the best benefits of outsourcing. By outsourcing your work, you can hire teams or individual experts from Asian countries and reduce your company's costs. It will increase the efficiency of the company. Some companies offer their services at a lower cost than US and EU companies, which have proven high quality.
Skilled and Experienced Resources
Outsourcing saves time on recruiting and training experts for your company's team. Some companies that provide outsourcing services like BPO services have highly qualified, experienced and trained experts who are able to complete your project. It turns out that outsourcing is also time-efficient, as you don't have to spend years developing the expertise you need to help your business grow.
2. Better Efficiency
By outsourcing, your company can hire experienced teams to handle complex tasks and provide the most appropriate and practical solutions. Due to their knowledge of the field and years of experience, they are more productive and efficient.
3. Focus on Important Tasks
The outsourcing service will handle all stages of the process for you, despite being kept in the loop, which will not require the CEO and management to participate in any project tasks. As a result, they will be able to focus on other essential aspects of the development of your company.
4. No Need to Invest in New Tech Tools
Outsourcing service is responsible for all aspects of infrastructure and technology. Most of the time, they already have all the tools necessary to complete your project.
Major Disadvantages of Strategic Outsourcing
There are also some disadvantages of strategic outsourcing that you need to consider. Companies face outsourcing issues, including data security concerns, disaster recovery, and data ownership issues. In addition, what can also disrupt the communication system during outsourcing can lead to slow response times, possible misunderstandings, and language barriers. You will easily avoid these problems if you find a reliable outsourcing partner. Keep in mind that before contracting with an outsourcing service, check whether it is a company with a good portfolio and customer reviews. Contact previous customers to find out how well the company has performed. By following these little things, you can avoid significant losses.
Developing an effective IT outsourcing strategy helps you overcome all potential challenges, move your internal operations, and gain successful experience. Outsourcing is done more gradually and systematically when you choose a specific strategy. Indeed, it's helpful to have a detailed outsourcing plan that you can refer to in an emergency. Nevertheless, software development outsourcing can be problematic for various reasons. Therefore, it should not be considered an easy route to take. To partner with a good IT outsourcing company, you should think. By following this decision, you can succeed in everything.