IT Outsourcing means implementation of certain functions using external sources. Hence it concerns an operation sub-contracted for another company. Nowadays, IT Outsourcing represents a global trend. Required quality of work, necessity to lower costs and need to focus on the main subject of doing business have called for this. IT Outsourcing is a modern method and trend in the field of information technology management.
For our company information technology outsourcing constitutes the main part of our business activity. Our clients are particularly those companies realizing the fact that IT is only means for reaching their main goals and not their main livelihood.
Why IT Outsourcing?
The most frequent answer to this question is that everyone should focus on the main subject of business and leave other side activities to specialists. However, not everything is the main subject business activities, and not everything is suitable for outsourcing. Side activities are useful to support the main activities of an organization and to ensure its competitive edge. Putting this process into the hands of an outsourcing provider leads to an assurance of permanent development and the company's focus on the main goal. The providers utilize qualified professionals in various areas. Thus problems with insufficient professional skills or absence of employees due for example to illness or vacation drop out. Moreover, other expenses drop out. The main reason why the client should decide on outsourcing is the fact that the client has a professional service with quality at his/her disposal, which the client would obtain by using his/her own resources at an incomparably higher cost.
Is IT Outsourcing cost saving?
A typical example of outsourcing are services in the field of IT, which clearly lead saving of overhead expenses and costs for IT management and maintenance. Unfortunately many organizations still consider the IT outsourcing as less beneficial than managing it on their own. Behind this erroneous thinking there is a wrong calculation of real expenses. What is ignored are these: overhead expenses (employee bonuses, meals, working area, energy, telephone), testing, selection of new technology, consultation services, insurance, training and professional development, employee idle time, reserve equipment or transportation. These expenses ensuring development along with the management of information systems are taken over by an IT outsourcing firm.
Advantages of IT outsourcing
1. From the financial point of view the IT outsourcing means an income because of lower management costs, coordination and elimination of hidden costs and lowering overall IT expenses. It is also important to consider that not all is only about the price, but also the quality of services is an important factor.2. Customers definitely get services of higher quality. They will have professional specialists at their disposal who otherwise the company would not only have to pay but also invest into their development. Employees of the company providing the IT outsourcing come across dozens of problems their customers have which contributes to a mutual exchange of experiences. Current information systems are so vast and complex that it is impossible for a single network administrator to master their development and maintenance.3. All year round accessibility (without vacations and leaves of absences).4. The client does not have to have his/her own employees for all services. The client, therefore, can dedicate his/her human resources to the company's main activity.5. The service provider is more flexible to react to new customer requirements on the basis of experience and know-how. The customer does not bear the risk alone, but shares it with the provider. Since the provider renders IT outsourcing also to other customers, the provider has a larger base of resources (e.g. hardware) and therefore can span and handle critical situations better.6. The customer is constantly in step with the newest technology.
Disadvantages and potential risks of IT Outsourcing
IT Outsourcing can also entail risks for the customer. These, however, can be eliminated to a certain extent:
- 1. Probably the highest risk is the ambiguous and unclearly defined range of services. This can cause a customer dissatisfaction because the latter does not get what he/she originally expected.
- 2. The helping hand cannot be found in the “next” office.
- 3. Loss of technical resources. When the contract expires, there is a loss of technical workers and their know-how. Development of a new department can then take months.
- 4. Possibility of dependence on the provider.
- 5. The possibility of misuse is a risk only at first sight, but in case of a serious provider this risk is much smaller. This risk also exists by a classical employer.