IT outsourcing is the use of external service providers to effectively deliver IT-enabled business process, application service and infrastructure solutions for business outcomes.
Outsourcing, which also includes utility services, software as a service and cloud-enabled outsourcing, helps clients to develop the right sourcing strategies and vision, select the right IT service providers, structure the best possible contracts, and govern deals for sustainable win-win relationships with external providers.
Outsourcing can enable enterprises to reduce costs, accelerate time to market, and take advantage of external expertise, assets and/or intellectual property. IT outsourcing can be implemented both ways: outsides or within the country.
IT outsourcing vendors can provide either a fully managed service, meaning they take full responsibility of all IT maintenance and support, or they can provide additional support for an internal IT team when needed, which is known as co-sourced IT support. A company using IT outsourcing can choose to use one provider for all their IT functions or split the work among multiple providers.
Specific IT services typically outsourced include:
- Application development
- Web hosting
- Application support
- Database development
- Disaster recovery
Reasons for Outsourcing
To Reduce Cost. More often than not, outsourcing means saving money. This is often due to lower labor costs, cheaper infrastructure, or an advantageous tax system in the outsourcing location.
To Access Skills That Are Unavailable Locally. Resources that are scarce at home can sometimes be found in abundance elsewhere, meaning you can easily reach them through outsourcing.
To Better Use Internal Resources. By delegating some of your business processes to a third party, you’ll give your in-house employees the opportunity to focus on more meaningful tasks.
To Accelerate Business Processes. When you stop wasting time on mundane, time-consuming processes, you’ll be able to move forward with your core offering a lot faster.
To Share Risks. When you delegate a part of non-focus functionality by outsourcing it to a third-party vendor, you give away the responsibility and related risks.
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F.A.Q. about IT outsourcing
What are the Types of IT Outsourcing?
Project-Based Model. The client hires a team to implement the part of work that is already planned and defined. The project manager from the outsourced team carries full responsibility for the quality and performance of the project.
Dedicated Team Model. The client hires a team that will create a project for them, and they will work only on that project. Unlike the project-based model, a dedicated team is more engaged in your project. In this model, an outsourced team becomes your technical and product advisor. So it can offer ideas and suggest alternative solutions.
Outstaff Model. It's a type of outsourcing in IT when you don't need a full-fledged development team and hire separate specialists. Sometimes the project requires finding a couple of additional professionals, and you're free to hire outstaff workers to cover that scope of work.
What are IT Outsourcing examples?
The individual or company that becomes your outsourcing partner can be located anywhere in the world — one block away from your office or on another continent.
A Bay Area-based startup partnering with an app development team in Utah and a call center in the Philippines, or a UK-based digital marketing agency hiring a Magento developer from Ukraine are both examples of outsourcing.
Why You Should Use IT Outsourcing
Now that you know what IT outsourcing is, its models, and types, it's time to clarify why you need to outsource and whether you really need it. Let's go over a few situations that suggest when to opt for IT outsourcing.
- You are a domain expert with idea
If you're an industry expert with the idea that solves a real problem, IT outsourcing is your choice. In this case, your main goal is to enter the market and test the solution fast. An outsourced team will help you validate the idea, build an MVP to check the hypothesis, and implement changes in your product according to market needs. It saves you money, time and lets you reach the goal.
- You have an early-stage startup
It's a common case that young startups spend money faster than they get a solid team and a ready-to-market product. The Failory found that financial problems are the 3rd reason why startup fails. So it makes more sense to reduce costs by hiring an outsourced team of professionals while your business lives on investor's money. You may employ a full-cycle product development studio covering all the blind spots and bringing your product to life.
- You need a technical support
Even if you already have a ready solution, but it demands some technical improvements – frameworks for backend components, new language, integrations with enterprise software, UX&UI design – it makes more sense to find an experienced partner. There are many functions that IT outsourcing can cover, and again it saves you the time you'd otherwise spend on looking for qualified staff.