Advantages and Disadvantages of IT Outsourcing

The IT advancements have turned the world of traditional IT upside down. There have been so many innovations that have changed the business processes, business operations, and the way traditional business functions. Apart from leading technologies, IT outsourcing has an equal contribution to making the modern business ecosystem fast and performing. Initially, IT outsourcing was just a cost-saving method but now, IT outsourcing brings more proficient and adept resources to the company, infrastructural benefits, and also saves labor costs. In this blog, we intend to showcase all the advantages and disadvantages of IT outsourcing to give business owners a better picture of IT outsourcing. 

1. Outsourcing Software Development

1.1 IT Outsourcing Stats

  • After the COVID-19 pandemic, there has been a severe rise from 12.7% in 2019 to 13.6% in 2020 in the money spent on outsourcing services.
  • Today almost all the outsourcing markets are digitally focused. One no longer has to seek assistance from conventional services. 
  • You can get instant access to a wide pool of experienced programmers equipped with technical expertise.
  • Price has always been the game-changer and in the outsourcing industry, it seems to be no different. Software Development is the most outsourced industry sector, no two ways about it!

2. Advantages of IT Outsourcing

Now without any further delay, it’s time to consider the advantages and disadvantages of outsourcing. When we talk about a company successfully outsourced it is that you get tons of services in regards to software development, executing your eCommerce business via remote facility, conducting seamless data operations, maintenance and support.. In addition to this, let us dig in a bit deeper. Knowing the benefits well in advance can definitely assist you in making a decision. Here are the top five reasons to give this a try:

2.1 Cost Savings

Of course, I have mentioned so many reasons to consider but cost reduction, lower labor costs are some of the first and foremost reasons for companies to outsource. After all, businesses don’t have to train their existing employees on the in-house team and they get third-party reliable services with less capital. Also, outsourcing can never affect the company culture.

2.2 Improved Focus

If you think that it is the incapability or incompetency of an organization planning to outsource? Well, that’s certainly not the case! Many companies outsource to patchwork outsourced vendors with the internal team for improving their efficiency. It may quite interest you to know that Sometimes outsourcing can be done on a partial basis just to cover up for those weaker areas or assists your current in-house team in handling huge projects. On all, outsourcing is conducted so that you can focus on your core activities without any technical distractions. For example, not all businessmen can be techies so for them handling aspects like cybersecurity monitoring, enhancing networks, and installing new infrastructure could be pretty daunting. You need someone who can take care of all this stuff smoothly. 

2.3 The Ability to Focus on Core Competencies

One of the legit benefits of outsourcing ventures is that small business owners can simply focus on their core competencies. By outsourcing, they get time to focus on some other important functions of their business which are extremely important.  . Plus, you can give leverage by allowing your employees to simply work on those tasks they are especially good at and leave everything else, especially the technical stuff in the hands of the expert. 

Outsourcing works wonders especially when your company is working in a non-IT sector. Taking any business into account, I am sure you will come across one such person who is donning multiple hats within the company, one of which is IT. You see, the sector is all about effective teamwork and not just a one-man army. So choose a team of professionals who can offer unmatched services in no time. 

2.4 Easy Access to Skilled Resources

Getting things at an instant pace has become the need of the hour, fast food, fast connectivity, fast outcomes, and instant access to skilled resources. Like I said there is a larger talent pool out there and outsourcing service vendors with varying specializations, now feels like a cake-walk! Even if you peek into the entire organization, you might come across one or two individuals working on-site depending on the specialization you are looking for. But if you outsource, then the sky’s the limit! 

2.5 Security Benefits

Another compelling reason among the business world to consider outsourcing service providers in the changing cyber threat landscape. In addition to legal services, no hidden costs, low-cost labor pools, improved efficiency, high-end IT infrastructure, and successful outsourcing includes high-end security. Outsourcing gives you access to solutions such as infrastructure management and remote monitoring just to make sure there is no issue with your network. Because network failure increases downtime and reduces overall productivity. In comparison to in-house, outsourcing does provide expected quality up front and security.

3. Disadvantages of Choosing an Outsourcing Company

So those were pros of choosing an IT outsourcing company, now every coin has two sides – the good side and the bad side. The aforementioned were all the good sides now let us explore the aspects that can negatively affect company culture. I am sure you must have heard of the phrase “one rotten apple spoils the whole barrel” Similarly, choosing any random offshore outsourcing company could adversely affect the pleasant company culture.

Of course, with the help of a reliable internet connection, one can easily win the outsourcing argument but there are never all the advantages, there are certain disadvantages as well. Let us explore what are they!

3.1 Losing Control

Imagine being partnered with the wrong service provider just for the desired competitive advantage. You might get compelled to make certain decisions that aren’t actually required at that stage. Generally speaking, this happens because they are professionals and they know exactly what needs to be done. So if you want to build trust start looking for their client testimonials. Now with the evolution of technology, it is no longer a concern. Outsourced vendors give you access to dynamic and intuitive platforms which will help you keep track of work and simplify project management.

3.2 Intellectual Property, and Security

Another major issue or con of outsourcing service providers is trust issues, the safety of intellectual property, and confidential data security. After all, you are sharing everything right from the procedures- how you conduct businesses to information about your end clients and third parties. Chances are pretty high that your information technology service providers might use such crucial sensitive data and defame you. In the worst cases, they might end up releasing your idea in their name. So security risks are a major concern here. By incorporating all security protocols you can avoid losing sensitive data.

3.3 Unexpected Costs

Like I said before, there are no hidden costs but who knows what’s going on in the mind of your chosen tech partner.

In fact, there are times when the development process can go wrong in the sense, that you have certain needs and requirements but the developers are facing trouble in adding those features and functionalities. This definitely results in additional costs. 

So think twice, thrice, ample times before making a hiring decision.

Now, these were the advantages and disadvantages of IT outsourcing. It’s time to unveil how to choose a reliable partner to manage the company’s operations.

4. How to Choose the Right Outsourcing Provider?

In the world of outsourcing, you are filled with a plethora of options. Working with the right IT outsourcing partner helps companies to align their organization with a flexible talent pool of people, skills, and cost-effective services which empowers them to transform their business outcomes. The biggest question is how?

4.1 Choose a Provider with an Established Track Record

This is the first and foremost thing you must look into. Start looking for a provider with an established reputation specific to the organization’s niche. Also, seek out strategic, long-term partnerships. Make sure your provider is highly knowledgeable and has relevant experience. 

4.2 Infrastructure and Technology

Imagine what if the infrastructure isn’t relevant or up to the mark? ,. Just ensure that not just the infrastructure but also the outsourcing company does keep a backup plan just in case anything goes wrong! 

Other significant boxes that must be ticked here include:

  • Meets the latest industry standards
  • Easily accessible
  • Mobile-ready

4.3 Communication

Of course, above all communication is something you must rely on when it comes to outsourcing services. And since most of the outsourcing service providers are located in Southeast Asia (e.g. Vietnam) or Far East Asia India, Philippines, where English is a native language used in daily life.

Fortunately, we have skype, google meet at our rescue when it comes to maintaining seamless communication. 

5. Conclusion

More or less, organizations must consider an outsourcing partner who wants to do more than just build the product; the ideal partner will want to work alongside the organization to elevate its brand in the marketplace in the long term. Plus, they must have a keen eye on the ongoing IT outsourcing trends. I hope the following blog on the advantages and disadvantages of IT outsourcing did provide some help. In case there is any query or doubt, feel free to mention that in the comment section below.

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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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    1. Helly

      This article mentioned every factor you need to look at when you are going for IT outsourcing. It mentioned every aspect and how to choose the right IT outsourcing partner. Not all factors will affect organizations the same, as each organization has its unique requirements and needs. Understanding the risks involved with IT outsourcing is crucial when deciding on what to outsourcing.