The global IT outsourcing market was valued at $520 billion in 2019, and analysts predict it will grow at a 7.7 CAGR (Compound Annual Growth Rate) between 2020 and 2027. The projected growth is due to a mounting demand for more efficient enterprise IT infrastructures.
Organizations are becoming more dependent on digital assets to power daily business processes and get ahead of competitors. However, as technology evolves and becomes more sophisticated, many business leaders find it challenging to maintain their IT systems while keeping up with emerging trends. In some cases, even a dedicated internal IT team doesn’t cut it in the highly dynamic business tech world.
This IT outsourcing guide dives into the various IT outsourcing options and the value third-party IT management brings to a business. Let’s get started.
What are IT outsourcing services?
Outsourcing IT simply means delegating IT-related tasks to third-party professional service providers. You can outsource any service, from solution development, infrastructure management, and cybersecurity to IT advisory and consultancy. Additionally, you can choose to outsource all your IT processes or co-source IT support to augment your internal IT team.
There are three general types of outsourcing:
Offshore or international outsourcing refers to delegating IT tasks to contractors in a foreign country. The most common offshore outsourcing destinations include India, China, Ukraine, and the Philippines. Outsourcing IT services globally lets you tap into a vast and diverse talent pool and take advantage of low labour costs, tax savings, and social-economic stability in other countries.
Nearshore outsourcing is a form of international outsourcing but a bit closer to home. It involves outsourcing IT services to neighbouring countries. This type of outsourcing is much easier to manage due to cultural similarities and diplomatic ties between countries in the same region. Plus, you don’t have to worry about differences in time zone and sometimes even currency.
Onshore or domestic outsourcing is sourcing IT labour and services locally within the same country your business operates. In such a scenario, local IT contractors can offer IT services either remotely or on-site. When outsourcing locally, it’s even easier to communicate and collaborate with IT service providers since there are no political, economic, or social barriers between the business and contractors.
Managed IT as an outsourced service
Managed service providers (MSPs) bundle various IT services such as information security, cloud management, data processing, networking, and hardware/software maintenance into subscription-based packages. Rather than relying on a break-fix IT maintenance model, an MSP stands by, monitoring and solving the smallest issues before they escalate into big problems.
In a fully managed partnership, the MSP does a lot more than correct errors. The MSP helps you make the right IT investments and decisions to attain your digital performance goals and business objectives. Ultimately, the managed partner saves you money, improves your operational efficiency, keeps you in tune with new technologies, and boosts your bottom line.
You can outsource some or all your IT tasks to a managed service provider. But even in a fully managed arrangement, you remain in control of your IT infrastructure and can still retain an in-house IT department to handle mission-critical tasks.
How to tell if your business needs outsourced IT services
It’s not always apparently clear that a business needs to outsource IT services. But here are tell-tale signs that your business could use a hand in tackling IT challenges:
You’re spending too much on IT
According to CIO Insights and Analysis from Deloitte, businesses spend, on average, 3.28 percent of their revenue on IT. Your IT spending may be higher or lower than this, depending on your digital footprint and technical demands. However, similarly modelled businesses should spend more or less the same amount or portion of their revenue on IT. If you feel you’re spending too much on your IT compared to the industrial benchmark, it’s time you outsource some IT services.
Your in-house team is understaffed or overwhelmed
If your in-house IT department is overwhelmed by everyday IT-related tasks, you might need a helping hand to pick up the slack. Overworking your staff may result in low employee morale and reduced productivity, jeopardizing your IT operations.
Unmitigated cybersecurity risks
Cybercrime is a genuine threat to any business. If worries about cyberattacks and non-compliance with data security standards keep you awake at night, address your cybersecurity proactively. Reinforce your cyber defences with the help of a managed IT security partner. Safeguarding digital assets involves installing firewalls, protecting networks, setting up data backup and recovery systems, and keeping IT equipment updated to the latest versions. An MSP can provide the means and resources to do all these and so much more.
Your business is going through changes
Is your business going through changes that might radically affect the IT workflows, such as digital transformations, adopting new workplace styles, branching to new markets, or adding a new product/service line? If so, it helps to have a supportive IT partner to ensure a smooth transition from one stage to another. For instance, when migrating to the cloud, an experienced IT contractor will come in handy to configure the cloud environment and port data and applications to the new platform.
The benefits of outsourced IT
Any business, regardless of size and model, can take advantage of outsourced IT services. In fact, small and medium businesses without well-established technical support stand to benefit the most from outsourcing IT services. In many ways, IT outsourcing levels the digital playing field, giving organizations a fighting chance by leveraging their IT solutions to their full potential. In addition to that, here are more benefits of outsourcing:
- Cuts IT expenses in terms of reduced labour costs, lowered investments, spending efficiency, minimized operational overheads, and improved budget stability
- Frees your staff to concentrate on more important tasks
- Guarantees digital security and compliance
- Fills in skill gaps in your workforce
- Takes care of short-term, one-off, and time-critical projects without disrupting routine workflows
- Ensures all your IT systems stay up-to-date
- Relieves overburdened IT workers
- Strategically places your business to leverage emerging innovations
- Increases your business’s competitiveness
Nowadays, business IT is so complex that it takes a unique set of skills just to keep systems going. In most cases, businesses lack enough talented workers to handle all their IT operations. Outsourcing IT to an MSP solves this problem by providing extra expertise and resources that guarantee optimal IT performance at all times.
Besides expanding the accessible talent pool and IT resources, IT outsourcing also cuts costs and improves the overall business performance. You’ll greatly benefit from a managed services provider if you require an expert for a specific project or a long-term partner to guide you through IT and business growth. Remember, partnering with an MSP does not mean losing control of your IT systems. The MSP is only there to inform your decisions while carrying out the mandated tasks.
Are you sold on IT outsourcing? Get started on a value-added MSP partnership with Softlanding. We are a managed IT services provider dedicated to empowering businesses through transformative solutions. Get in touch with us and learn how to get on board with our mission.