What are the different types of IT outsourcing services

Enterprises around the globe are considering outsourcing as a need and not an option anymore. There lie a thousand reasons why businesses would choose to take leverage from IT outsourcing services. Numerous benefits offered by different types of IT outsourcing make businesses pave their path towards success by building cutting-edge software solutions for their businesses. Our experience with businesses from almost all types of domains and industries has enabled companies to tap on high-performance and get the best business outcomes. 

With growing time, outsourcing has turned to be simple and the best part is it is not restricted to one method but there are a plethora of ways, you can perform outsourcing. In this blog, we will be exploring different ways through which businesses can perform outsourcing and gain unexpected business benefits. So, without much ado, let’s delve deeper into the types of outsourcing, why would your business need outsourcing, and what are the advantages of Outsourcing.

Table of Content

  1. Why do you need IT Outsourcing Services?
  2. Types of IT Outsourcing
    1. Offshore IT Outsourcing
    2. Nearshore Outsourcing
    3. Onshore Outsourcing
  3. Other types of IT Outsourcing services
    1. Multi-sourcing
    2. Co-Sourcing
    3. Process Specific Outsourcing
    4. Business Process Outsourcing
    5. IT Outsourcing
    6. Project Outsourcing
  4. Final Thoughts-Which Outsourcing Type Should You Choose And Why?

1. Why Do You Need IT Outsourcing Services?

The effect of globalization is deep and has manifested growth and transformation within businesses. This globalization has induced outsourcing within businesses by offering them ways through which they can get in touch with multiple businesses and boost their business. There are basically two main reasons why businesses choose to outsource, the first reason is to save unnecessary costs in designing, development, and implementation. The second reason can be to gain the expertise of other businesses and focus on their own primary agenda.

Here are some of the major reason why businesses would choose to outsource

  • To save on some extra expenses spent on hiring, infrastructure, and training resources
  • Become more focused on Core business functions
  • Scale-up and scale down resources as per the projects
  • Boost business capacity
  • Drive business transformation using the expertise of other businesses
  • Transform business shape using latest technologies
  • Lack of in-house expertise
  • Mismanaged responsibilities and services

IT outsourcing came as a rescue for businesses to take advantage of best-in-class talent and resources. You don’t have to look for resources nearby or in a specific area because offshore outsourcing offers businesses a wider scope to select a talented set of IT professionals. There are multiple ways we can do this, which we will be discussing sooner. Majorly there are three basic types of IT outsourcing services, we will be discussing each one in detail

2. Types of IT Outsourcing

1. Offshore IT Outsourcing

The practice of systematically hiring or contracting a third-party provider headquartered in an entirely different area to exploit cost advantages is known as “offshoring outsourcing.” Offshoring creates cutting-edge industry solutions by aligning market products with a company’s capability and technology superiority.

If we were to extract the meaning of the word “Offshore outsourcing” then Off means far and shore means country. So, this means offshore outsourcing is a process of outsourcing your needs to third-party companies located off the shore at a distant location, continent, or geography. Offshore outsourcing businesses, can easily get accessed to global resources their talents, and skills, and utilize them for their work.

The largest and most important element in offshore outsourcing is the cost and the availability of an internationally competitive skilled pool of resources. Offshoring is not preferred due to concerns about trust and stability. Offshoring ensures that the company reaps all of the benefits despite its remote location. The objectives are still fulfilled and the tasks are completed successfully.

2. Nearshore Outsourcing

With companies able to exploit access to newer expertise and capability, the idea of cross-border trade is attracting a lot of interest. The closest place or adjacent nation is the nearshore outsourcing location also a nearshore outsourcing model. Most of the businesses choose Nearshore outsourcing because it is near. Also, they can visit the office whenever they feel like. Moreover, there is a strong trust developed between businesses that help them work easily.

Businesses entrust their custom business requirements to the outsourcing firm and collaborate with them. The drawback is that companies will enter the nation because it is physically close by and would cost less while traveling. Say for example if your business is located in the USA then Canada and Mexico are the nearest outsourcing destinations.

3. Onshore Outsourcing

Onsite outsourcing is a form of outsourcing in which the outsourced service provider sends a team of professionals and experts to the client’s location. Time is a constraint for the onsite function. This type of outsourcing paradigm, in contrast, continues to link with an increase in workforce numbers. But the only difference here is that local or national companies are their first choice.

Normally, in this type of software development facility, the business gets restricted to one location, fewer companies, and limited talent resources and team.

3. Other types of IT Outsourcing Services

1. Multi-sourcing

Multi-sourcing is another way to integrate the resources you outsource. It usually includes a combination of IT and other company functions. Multi-sourcing, on the other hand, is a strong choice for any company that needs access to top experts, an outcome-based strategy, and transparency in its IT programs.

2. Co-Sourcing

Co-sourcing is a form of outsourcing in which the outsourcing agreement is a group agreement between several clients and one provider. It is the practice of outsourcing some service operations to just one external provider from the standpoint of the outsourcing company. Also, co-sourcing businesses will restrict themselves from giving complete responsibility to third-party businesses.

3. Process Specific Outsourcing

As the name suggests, this type of outsourcing is process-dependent. Here a business can decide on any complex process and outsource it for profitable business results. This clearly means your business does not have to choose another business for outsourcing all its services but can choose the leading one in that specific field.

4. Business Process Outsourcing

We all know that Business process outsourcing (BPO) is a type of outsourcing where an organization employs a third-party service provider to handle their one or more, existing or new, complex or simple- all types of business functions. Both functions relating to the company feature are carried out by the third party. In this type of outsourcing, businesses generally outsource backend services or front-office operations. Just like other outsourcing services, this also offers lower cost, globalization, business expansion higher efficiency and business profitability.

5. IT Outsourcing

IT outsourcing services is a process of empowering a company to get benefitted from the best IT support without investing in hiring, training, or developing their own in-house solution. The services provided by each provider can differ and will be as per the need. Cybersecurity and Custom software development and app development will be the most widely used outsourcing services. Outsourced IT help is often used in conjunction with an internal IT agency communicating strongly with an in-house team.

6. Project Outsourcing

A client outsources project management tasks to a service provider through project outsourcing. It takes control of any phase of a project from start to finish as part of its project management functions. Within an organization, project management roles are regarded individually and awarded as discrete assignments (contract-like).

4. Final Thoughts- Which Outsourcing Type Should You Choose And Why?

This is a tricky question because this does not come with a generalized process or methodology. We have finally discussed all types of outsourcing models and understood what type of services each outsourcing method is capable of offering. If you’ve figured out your choices, you’ll need to determine which tasks your organization can gain from the most and choose the appropriate resources. Then consider factors such as connectivity, efficiency, and expense to ensure you choose the best outsourcing approach for your needs.

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Itesh Sharma

Itesh Sharma is core member of Sales Department at TatvaSoft. He has got more than 6 years of experience in handling the task related to Customer Management and Project Management. Apart from his profession he also has keen interest in sharing the insight on different methodologies of software development.

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