IT outsourcing refers to external hiring. That is hiring an independent firm or individual to offer IT services which can as well as be provided by internal employees. Many organizations outsource these services from experienced firms or individuals, who mostly don’t operate within the organization’s premises.
IT outsourcing trend is set to rise as organizations continue to concentrate further on their core businesses and technology continues to grow and become complicated. Some of the common outsourced IT services include: software development, data center operations, disaster recovery, ecommerce, software application services and desktop and help desk support.
However, IT outsourcing has its advantages and disadvantages. This article will present some of the pros and cons of IT outsourcing.
Advantages
1. Implementation of new technology
Sometimes it takes weeks or months for an organization to implement new technology. This is because the organizations have to spend considerable time in hiring the right people, training them and providing them with the necessary support they require for them to implement the technology.
However, outsourced IT organizations have the resources to start the new projects immediately they are contracted. Also, these companies have experienced employees, which is a factor to be considered when it comes to implementing new technology.
2. Level the playing field
Small businesses find it hard manage in-house IT staff that larger and well-established organizations have. However, IT outsourcing enables smaller companies to enjoy the services and expertise that large companies enjoy. This also gives the small businesses a competitive advantage.
3. Access to skilled employees
Organizations won’t have to invest in recruiting and training employees. Outsourced IT organizations take care of this on their side by ensuring they hire only the best and skilled employees. The organizations ensure that their employees are well trained in their specific specializations to handle the business needs of their clients.
4. Cost advantages
The most visible benefits that IT outsourcing brings about are the cost advantages. IT outsourcing helps your organization to get the job done at a cheaper cost and at a better quality at the same time.
Disadvantages
1. Loss of managerial control
Once you sign the contract to have another organization or individual to manage the entire IT department, you basically turn the management and control to them. You will have the contract, but the IT department will be monitored by another entity.
Most of the outsourcing companies don’t operate on your company’s standards, mission, and vision. They are just driven by the desire to make profit from their services, like the ones offered to your company.
2. Hidden costs
Most IT outsourcing contracts cover the details of the services you expect to be provided. At times companies with outsourced IT services are forced to pay additional charges for the services not covered in the contract. Also, you are forced to pay legal fees for the lawyers you hire to review the contracts.
You should understand that the outsourced company is a business like yours and they are responsible for developing the contract. So, your business will be at a disadvantage when the negotiations begin.
Security and confidentiality threats
Information is the “blood” that keeps a business running. So, if you have critical data which is supposed to be transmitted to the outsourced company, there is a risk for its confidentiality to be compromised.
Also, you might not be assured about the security of the information. So, it is important to evaluate the outsourced company to ensure that your data will be well protected. Also, it is advisable for a penalty clause in case an incidence occurs to be included in the contract.
Quality problems
Since the company you are outsourcing is just a business like yours, profits will always be their motivation. Since the contract has a fixed price, the company will be forced to decrease expenses to increase profits.
You will always be required to pay as long as the company meets the conditions in the contract. Additionally, the business will lose the capability to respond to rapid changes in your business quickly. This means that the services you receive will not be as expected.
