The UK government routinely outsources the ICT support function for many of its departments and projects. So, when it comes to outsourcing IT, what are the benefits to be gained? What are the potential pitfalls? And does it make more sense for businesses of a certain size?
There are many advantages to outsourcing the IT function. The main ones are:
1. Control IT costs
Because you only have to pay for what you need, and you don’t have expensive equipment/people sitting idle, you can turn fixed IT costs into variable costs. This enables you to budget and monitor costs more effectively.
2. Reduced labour costs
Hiring and training IT staff can be expensive and time-consuming. Outsourcing means these costs and time are eliminated.
Dedicated IT support providers will ensure that all their staff are qualified, experienced, and knowledgeable. This level of expertise can be hard to find.
4. Embrace/implement new technology
Dedicated IT service providers will have significant resources that mean they can start new projects immediately and adapt to new technologies at pace. This means that your business doesn’t fall behind the curve. Doing this in-house will require training/recruiting and could cost valuable time/money.
5. Focus on core business
Outsourcing IT can help you and your business remain focused on your core business, obviating the need to worry about complex IT issues/troubleshooting.
6. Reduced risk
Markets, technologies, competition, regulations, and financial conditions all change very quickly. Each of these present some risk. Outsourcing providers will be able to manage much of this risk for you – especially security and compliance issues. Most providers will be familiar with areas such as PCI compliance and data protection regulations/laws concerning sensitive information and client data.
Despite the many benefits outlined above, there are a few potential drawbacks:
1. Hidden costs
There are some costs that are not obvious when it comes to outsourcing IT. For example, when an engineer needs to attend, they will often charge for the time it takes them to get there and back from their office. And this cost is usually payable whether or not they resolve the issue.
2. Response time
In-house IT teams can deal with emergencies pretty much immediately, whereas with an outsourced IT support function, you may have to wait until they can ‘fit you in’. This can cause loss of productivity, especially if staff can’t use other machines or devices.
3. System familiarity
In-house IT staff may well have built much of the system and will know it intimately. It may take outsourced teams a while to get to this level of knowledge when it comes to your systems and networks.
4. Employee relationships
When employees are in-house, there is a sense of familiarity and camaraderie that may be missing if you outsource. Also, you may not get the same person on the helpline or the same engineer turn up every time you have an issue, making it harder to form relationships.
Your outsourced IT company is not going to be solely dedicated to your business. They will probably have dozens of other clients. The client that gets priority is probably the client that spends the most.
Put simply, you can’t control an external company – and adding an extra layer of complexity is not always helpful. If control at a micro-level is important to you, it makes more sense to keep things in-house.
Who is it for?
Traditionally, outsourcing has been seen as an option for larger organisations. But times have changed. Through outsourcing, smaller businesses can now access the same level of expertise and technology as larger ones. This enables them to be more competitive and stay up-to-date, regardless as to their turnover.