For many organizations, the objective of an IT outsourcing strategy is to afford the best possible technology to the organization at the lowest possible cost. But cost savings are not the only goal of an IT outsourcing strategy. A strong IT outsourcing strategy helps organizations decide which IT functions to outsource, which capabilities to keep in-house, and how to balance cost, service quality, risk, and business value.
Some organizations are looking at IT outsourcing as a means to support their business transformation and, as such, need to leverage outsourcing providers to assist them through the process. In the past organizations often utilized one large IT service provider to handle the complete project, but today multi-vendor situations are more commonplace.
Determining which IT functions to outsource is a subjective process and is different for every company. It’s not uncommon to see companies outsource tasks that are typically time-consuming and that can be done cheaper by another company specializing in that particular area.
So, how should organizations choose whether to outsource their IT function (or which parts of the IT function to outsource) and which to maintain in-house?
Looking at the Benefits of an IT Outsourcing Strategy
Cost savings
Building and maintaining the required underlying infrastructure & operational platforms to administer an organization’s IT systems can be difficult and costly. Upfront capital investment, staffing an in-house IT team, ongoing training, support contracts and potential downtime all contribute to the overall cost & effort to run your organization’s IT platforms effectively. By outsourcing to a service provider, your organization can often repurpose near term funds – handing over the heavy infrastructure, technology upgrades, and talent investments to the third party.
Service Provider Expertise
When you consider the cost and effort required to ensure that internal IT staff are properly trained to support critical applications and infrastructure, and are properly motivated to perform at a high level, it is often more beneficial to outsource portions of your organization’s IT environment to a service provider that specializes in areas in which your IT team may be weaker. This enables your staff to focus on the higher valued areas while leveraging the strengths of the outsource provider. The result is often better overall performance and availability of critical platforms and improved efficiency and effectiveness of the overall IT function. This also frees up funds that otherwise might have been allocated for training and education purposes.
Up-to-date technology expertise
Technology is changing and evolving daily. If your organization invests in assets, like servers and networking technologies, it is very likely that they will become outdated and obsolete in the near future. By outsourcing to a service provider, your organization can ensure that the IT assets they manage are up-to-date with the latest technologies and supported both now and in the future.
Support
When considering options regarding which area of the IT function to outsource, it is always critical to determine which systems require 24/7 support and which ones don’t. This is important when evaluating the capabilities of third parties to ensure that they can provide the type of support that matches your need.
Potential Risks to Outsourcing IT
Less Control
Some organization may feel that vendors don’t have the same commitment and dedication to their platforms or provide the type of responsiveness that they might expect from their in-house staff, mainly because an outside vendor is driven by different metrics. In addition, there may be concerns about a third party having access to confidential and critical business information. While those are valid concerns, a service provider’s platforms are often more tightly controlled & managed than an in-house environment because of contracted service level guarantees. This usually delivers better operational performance and more secure environments than internal IT functions can deliver.
Unexpected events
It’s important to make sure your organization understands the details of its service agreement, because costs and levels of service differ from vendor to vendor. Service providers’ economies of scale often permit them to offer more services and better performance/security than equivalent in-house solutions.
While outsourcing IT functions can help your organization reduce costs, save time and reallocate resources, companies do need to realize that some critical elements of the business are still better suited for an in-house operations team. As part of your decision process to outsource any or all of your IT functions, always consider and assess the actual added value of the services provided and associated risks in comparison to in-house operation. The best option for your company is not always the most obvious once all the pros and cons are laid out.
The Litcom Approach
If your organization is reviewing its IT outsourcing strategy, Litcom can help assess current capabilities, identify outsourcing opportunities and risks, evaluate vendors, and develop a practical approach aligned with business priorities.
Have any questions or concerns? Please contact Litcom at: info@litcom.ca
