IT outsourcing guide – what is it, pros and cons and providers

For those considering whether to take their IT off-site, we guide you through the basics as well as the pros and cons of IT outsourcing

In a post COVID-19 world, businesses will be looking at ways to sustain revenue and growth – this could include outsourcing.

Businesses can outsource a number of functions: think accounting, marketing, customer service and HR. IT is one of the most common as it is a cheaper way to do technically difficult jobs which the business owner doesn’t have the expertise to do effectively.

We give you the lowdown on IT outsourcing, with the info you need to decide whether or not it’s right for you.

What is IT outsourcing?

Firstly, lets establish what outsourcing is.

With outsourcing, you move part of your operations away from the hub of the business to a third party. This can be:

  • Offshore (outsourcing to a foreign country with favourable tax savings and lower costs)
  • Nearshore (outsourcing to a bordering country for easier communication)
  • Onshore (outsourcing within the company’s base country)
  • Cloud computing (the third party would provide IT-related services over the net such as software as a service or platform as a service)
  • Managed services (such as call centres, virtual private networks and firewalls)

In this case you’d be moving your IT off-site, allowing your company to grow without major risk or investment. Plus, you may not have to maintain your own storage devices and facilities.

Pros of IT outsourcing

There are certain perks to outsourcing your IT.

Slash your labour costs and IT costs

If you outsource, you have the expertise of IT but without the cost of in-house salaries. Some specialists offer niche services that fit your industry (more on that below).

Fewer security threats and quicker recovery from adverse happenings

IT providers know how to recover from a disaster – be it a terrorist incident, natural disaster or a global pandemic – so that you’re less likely to lose your company’s work. IT providers are well clued up on vital legislation such as GDPR, potentially saving you from a few scrapes, especially in terms of customer data protection. They’ll likely know it better than your staff and be able to provide consistent training based on rule changes.

More energy to focus on the business

By worrying less about the daily stresses of your IT, you have more mental capacity to focus on other elements of your business, like securing funding.

Could save you from high turnover in the IT department

Employing an in-house IT department could mean a higher turnover of staff and higher recruitment costs for you. An IT provider would deal with this side of things on their end, giving you a seamless IT experience.

Up your company productivity

Rather than having one or two people to deal with a growing company’s IT issues, an outsourced IT team made up of several members can help your staff. They’ll have remote access to their machines, giving them a clearer idea of what’s going on.

On top of that, IT providers can set up new systems that will speed up everyday operations.

Cons of IT outsourcing

Of course, there will be downsides too.

Their turnaround times will be longer than someone who works in-house

As the IT team are not in the office, it’s not as convenient to ask them for check-ins or off-the-cuff requests. Projects may also take longer to complete as they’ll be focusing on work for other clients.

Less control over the outcome or final product

Your IT provider might not be familiar with how your business works and carry out tasks with inconsistencies. Again, rather than making quick suggestions for tweaks to projects, you’d have to make suggestions based on the firm’s capabilities.

Can be difficult to get hold of them and communicate

Furthermore, if your only contact with the company is by phone or email, it can be more difficult to reach them. This is especially true if you want to make a last-minute adjustment to a project with an imminent deadline.

Different standards if you’re outsourcing to a company based in another country

This is important if you’re considering offshore or nearshore outsourcing. The country that you’re outsourcing to may have different labour, ethical or legal standards to your company, which could clash with your values and corporate social responsibility document.

Lower staff morale

If your staff see departments being outsourced, they may be worried that you’re going to outsource more in the future, increasing anxiety and uncertainty in the security of their jobs.

Who should I go to for my business IT?

It’s trickier to offer up well-rounded reviews of companies that have IT outsourcing services. Each one is bespoke and dependent on the needs of your business. Most firms will outline what industries they typically work with and what specialist services they can offer in each.

We’ve listed a handful of IT providers and their vital stats to give you an idea of what’s available.

ScoriaTech

Base: UK

Key industries: Retail; charities; events and publishing; property developers; talent agencies.

Tata

Base: Worldwide (UK locations in England, Scotland and Wales)

Key industries: Banking and financial services; communications, media and technology; Hi-tech, life sciences and healthcare; public services; consumer goods and distribution; energy, resources and utilities; insurance; manufacturing; retail.

Cognizant

Base: UK (in England and Scotland)

Key industries: Banking; capital markets; communications, media and technology; consumer goods; education; healthcare; information services; insurance; life sciences; manufacturing; oil and gas; retail; transportation and logistics; travel and hospitality; utilities.

Capgemini

Base: Worldwide (UK locations in England and Scotland)

Key industries: aerospace and defence; consumer products; distribution; media and entertainment; public sector; travel and transportation; automotive; banking and capital markets; energy and utilities, manufacturing and industrial products; retail; telecoms.

Accenture

Base: Worldwide (UK locations in England and Scotland)

Key industries: Aerospace and defence; automotive; banking; capital markets; chemicals; communications and media; consumer goods and services; energy; health; hi-tech; industrial equipment; insurance; life sciences; natural resources; public service; retail; software and platforms; travel; utilities.

Should I outsource my IT?

It’s really your call depending on your business’ needs and plans. If you’re intending to grow your business and can comfortably move your IT off-site, then it’s worth considering. Do some reflective work to make sure that you can afford it and that outsourcing would indeed make your team more efficient. Remember that you can choose to outsource part of your operations, keeping the most crucial elements in-house.

Peruse some of the third-party IT providers on the market to see what they can offer. If outsourcing isn’t right for you at this point in time, you can always revisit it later when you have a better idea of what’s to come.

Read more

How to get started with outsourcing SMB processes