Outsourcing 101
In order to address how to outsource IT services, we must first clarify the definition of outsourcing in the context of information technology. Outsourcing in IT is the practice of employing external services from third-party specialists to operate the information technology tasks that would typically be conducted internally. These include, but are not limited to, software development and support, data and network management, and help/resource functions. And this partnership isn’t necessarily a long-term commitment. Often, companies turn to these third-party specialists for specific projects, which tend to speed up the delivery of results because all focus and efforts are dedicated to one matter within a short timeframe.
Benefits of Outsourcing
We’ve seen IT at the top of the list of most outsourced business functions for many years, but why is that so?
Cost-Effectiveness
Outsourcing reduces/eliminates the recruitment, training, and salary costs associated with housing a full IT staff. As a company lowers its operational costs of IT, they’ll have the capability to strategically reallocate those funds to core business development efforts. A Deloitte study shared that this popularity of implementing an outsourcing strategy as a financial tool waned in 2018. In that year’s survey, the key objectives of outsourcing were more about performance:
- enabling speed to market
- scaling faster
- enhancing user experience
- achieving competitive advantage (Stoler & Underwood, 2020, p.6)
But the economic uncertainties brought by Covid-19 shifted most companies’ perspectives, bringing cost benefits back to the forefront of their priorities.
Scalability
Sending IT functions to a specialized service provider allows for more flexibility not only within an organization’s operations, but also within the work they deliver. Instead of employing extra staff members as projects grow, the outsourced team can provide greater flexibility, adding and taking away as needed. This will allow focus on overall project management instead of the tedious, time-consuming hiring and training process.
Security + Disaster Recovery
With greater focus and specialization, external providers can monitor, maintain, and protect company assets. Keeping up to date on network activities and software developments are crucial to every company’s security. Outsourcing these responsibilities protects and gives continuity to vital tech infrastructure in case of a disaster like a major breach, system failure, etc.
How to Outsource IT Services
So the company’s decided to go through with the initiative, but the question remains: how is it done? The outsourcing process can be divided into three main procedures: the internal decision-making process (setting goals, requirements, and expectations), the selection process, and the onboarding process.
Internal Decision Making
Meet with the team and point out weak areas, red flags, etc.
- Where/how would a specialized provider be of use
Selection Process
- Create a short list
- Assess partner options(strengths vs weaknesses)
- Do they excel in areas addressing goals and objectives?
- Budget and forecast
- Select target partner
- Request quote
- Negotiate and sign an agreement
Onboarding Process
- Introduce the business context
- Set the goals, timelines, and expectations developed in the internal decision-making process. Also share the current standing of the company, project, etc.
- Plan Transition
- Share documentation and existing processes
- i.e. source-code repository and backlogs (sharing current or future process requirements)
- Set a post-onboarding plan
A successful outsourcing partnership is built over time as trust and communication strengthen. Operating with transparency and clarity from all parts is key to creating a synergistic workflow and ecosystem.
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