What is IT Outsourcing?

IT outsourcing involves hiring an external company to provide IT services and support. For small and medium-sized enterprises (SMEs), outsourcing IT services can be a cost-effective way to access specialised expertise, improve efficiency and free up time and resources for other areas of business.

There are a few different types of IT offshoring, as well as various models offshore companies use, so this article will give you an explanation of these and when they are beneficial.

Onshore outsourcing involves hiring an external company located within the same country as the SME. This can be advantageous because the outsourcing company is familiar with local laws and regulations, and communication is often easier due to shared language and culture. Onshore outsourcing can also provide opportunities for face-to-face meetings and collaboration, which can be beneficial for building relationships and ensuring quality service.

Offshore outsourcing involves hiring an external company located in a different country than the SME. This can be advantageous because offshore outsourcing can be more cost-effective, as wages and operating costs may be lower in other countries. However, offshore outsourcing can also present challenges related to language barriers, time zone differences and cultural differences, which can impact communication and collaboration.

The two can overlap when you have an onshore outsourced IT service provider who then outsources internationally their after-hours, 24/7 support.

Another outsourcing option is nearshore outsourcing, which is when you outsource your IT systems to a neighbouring country that shares the same time zone as the one your business is located in. This allows for easier communication, however, it’s not always cheap.

Both large companies and start-ups utilise the benefits of outsourcing their IT systems, especially since COVID-19 removed the idea that physical location is needed to develop a trusting relationship in the workplace. IT outsourcing removes the need to hire an in-house IT person, or even a team, making it a cheaper alternative that also brings in industry experience to your current team.

Why is outsourcing beneficial?

Other than outsourcing your entire IT systems, like you would with a Managed Service Provider (MSP), outsourcing can also be beneficial for specific projects. You could be an industry expert with a new idea and it’s imperative you enter the market and test the idea fast. You could be an early-stage start-up that needs to reduce costs by outsourcing a team of professionals for project development before hiring a full-time employee for the role. You could also already have a solution to your problems but just need technical improvements, such as backend problems, adding new language, integrations with apps, UX & UI design, patches or app or website creation.

Companies use various IT outsourcing models that will define how you work with them, each with its pros and cons, so make sure you know what you’re hiring before you sign a contract. Here are three common models:

Project-Based Model

This is when you hire a team to work on a project that you already have planned and a project manager from the outsourced team is accountable for the goals and quality of the project. This works for uncomplicated projects.

Pros:

• Saves time for your in-house team
• Provides clear timelines for the project
• Fast hiring process and a fast result
• No micromanagement needed
• The project manager takes full responsibility

Cons:

• The company has less control over the project
• Lack of flexibility
• The result may not meet industry standards as the project manager might not be experienced in your industry

Dedicated Team Model

This model involves you hiring an entire outsourced IT team to work solely on the project where the team acts as your technical and product advisor and can offer suggestions and ideas. This model is great for start-ups that have a lot of growth ahead of them and who may not have the knowledge to deal with complex and long-term IT projects. For example, if you outsource to create an app from a company that specialised in that, they will have a dedicated team for project management, design and engineering.

Pros:

• More control over all stages of the project
• Work with a wider team of industry-specific professionals
• More flexibility
• No micromanagement needed
• The in-house team can work on other projects

Cons:

• Long hiring process
• Your business has more responsibility for the project

Outstaff Model

This model is available for times you don’t need an entire team, just individual specialists to fill gaps in your team’s experience. This works great for short-term projects.

Pros:

• No need to hire an entire team
• Fill expertise gaps in your projects
• Flexibility to hire as many professionals as you need

Cons:

• Can be a long search and recruitment process
• More time spent onboarding
• Not suitable for long-term projects as outstaff may turn over during that time

Ultimately, the decision to outsource IT services for SMEs will depend on a variety of factors, including budget, expertise and business needs. SMEs should carefully consider their options and choose an outsourcing provider that can meet their specific requirements and provide high-quality service.

Whatever work or software your business is looking to outsource, make sure they are implementing Cyber Security processes while they do so. Also, make sure you are communicating constantly with the outsourced team and ask as many questions as you need to ensure you know what you’re receiving and whether this benefits your business goals.