Whether you should do IT Outsourcing is still a controversial matter that you just can’t simply decide in a day. However, there are some cases that you should definitely consider outsourcing IT functions for your business.
Table of Contents
- 1. Outsourcing IT functions to reduce cost
- 2. Little technology expertise
- 3. Speed up time-to-market
- 4. Struggle with IT recruitment
- 5. Too much time and effort in management
- 6. Too many low-important IT functions
- In conclusion
1. Outsourcing IT functions to reduce cost
With IT Outsourcing, it is often recommended that you outsource the functions that are easy to train and easy to specialize in. It not only helps you get the IT talents with proficient skills but also saves you a great deal of money, thanks to geographical pricing.
Due to the impact of Covid-19, the economy’s main focus now is the numbers, the cost saved and the overall profit. As a result, cost reduction is becoming increasingly critical when you choose to outsource your IT operations. According to a survey of Deloitte, 70% of the participants said that their priority in IT Outsourcing in 2022 is to reduce cost. For those who have applied IT Outsourcing, the average they can save with this approach is 40%.
To be more specific, IT Outsourcing helps you reduce labor costs, recruitment costs, infrastructure costs and operational costs. For example, it would cost you about $157,570 a year, including taxes, to hire a software engineer in the US. But with an outsourcing vendor, the cost drops to $50,000 a year.
2. Little technology expertise
According to a survey from Clutch, 26% of companies outsource mostly in the hopes of working with an expert, demonstrating how expertise is a valuable commodity for small businesses.
Many businesses don’t have the time and effort to recruit and maintain IT staff as the technical work is often temporary. Especially for a company with little to no reputation, subject-matter executive recruitment is very difficult because the project may not be attractive enough, or the scope of work is small with no further expansion.
When you choose to do IT outsourcing functions, you get to access a large talent pool of great experience and expertise. These talents have already received comprehensive training and certifications for professional growth, which can provide you with the touch of an expert’s view. Besides this, you can also use a range of technologies and get assistance whenever you need it.
3. Speed up time-to-market
The current pace of the IT market is getting faster and faster. People now demand constant updates of new features, faster releases, etc. To meet these growing demands, software developers have to do something to have a faster time-to-market, and IT Outsourcing is just the answer for this.
So how can IT Outsourcing speed up time-to-market? Here’s why:
- You can outsource different functions of the IT department at the same time. For example, you can outsource the software development to one vendor, and software testing for another vendor. Since the development and testing process can be done simultaneously, the wait time is shortened, hence faster time to market.
- You don’t have to spend time on training new recruits as the outsourcing vendor has already taken care of this for you.
- You work with experts when you outsource your IT functions. Their experience and proficiency will contribute greatly to the speed of the project.
4. Struggle with IT recruitment
IT recruitment has been one of the biggest challenges when you want to build an in-house IT team. The problems that you might stumble upon are:
Limited local talent pool
The talent shortage is an alarming issue. According to the Bureau of Labor Statistics in the US alone, by the year 2026, the shortage of IT engineers will be more than 1.2M. So to recruit enough team members, you have to seek the IT talents in other regions, most ideally Asia and Eastern Europe.
Too much time and effort to attract talents
An employer has to do a lot of things to impress and hence, attract talents, including employer branding, training programs, benefits, etc. Building these can take years, and many businesses don’t have the resources and time to do this. So they outsource the recruitment process to the third party to unburden them from the hard work.
Too much cost to maintain an in-house IT team
Besides the relatively high salary, the employers also have to take care of benefits, healthcare, sometimes accommodation so that the talents will stay with them. Again, it is very costly, so many businesses can’t do it and they outsource it to a third party.
High turnover rate
Sometimes a business just can’t ensure that the employees will stay with them forever. Especially in the IT market in which the turnover rate of talents is very high, disrupting the whole project. But when outsourcing IT functions, you can replace that staff with another one in just one or two weeks. The vendor will be responsible for providing suitable IT talents for you.
5. Too much time and effort in management
What can you do when you have a heavy IT workload but most of them are non-core functions? The best answer for you is to outsource them.
For a business that is overwhelmed by the workload, outsourcing helps them move some activities to external people so that they can concentrate on the main functions. Here third parties play a key role by acquiring the tasks.
With IT Outsourcing, you and your staff will not get bogged down with non-core activities. For example, before starting a project, you would normally have to carry out technology training sessions to give the fundamental information and knowledge for the team to follow. Sometimes, this training process can take up days, or even weeks.
But with a third-party team that has well-trained staff with expertise and experience, this can be shortened to just a few days as they only need to spend time on the requirement analysis, not the technologies themselves. Now, you don’t have to waste your effort and time on something that doesn’t make profits.
In fact, it can even give your in-house team more time and energy to work on their actual job. The investment that could have been spent on recruitment or training programs now is used for other core matters such as facilities or marketing campaigns, for example.
6. Too many low-important IT functions
Technology can refer to the difficult programming languages or technical breakthroughs that can have a major impact on your business’ performance. But it can also refer to the non-core, low-important IT functions that not every business has to have for their core operations.
For example, data centers and cloud storage are often considered non-core functions that should be outsourced because these IT functions don’t have anything to do with the strategic operations of the company.
By outsourcing these low-important IT functions, your company has:
- Handled them to the experts that can actually make them work more efficiently
- Avoided the tedious and time-consuming tasks that do not bring values
- Focused more on the strategic functions
Outsourcing IT functions is a very hard decision for any business owner. But if your business is struggling with IT recruitment, IT costs, non-core operations, time-to-market, high turnover rate and subject-matter expertise, you should start considering IT outsourcing now.
Achieve competent outsourcing with Lotus QA
Lotus QA has been the IT outsourcing partner with many countries, bringing our talented IT workers to the international market. When working with Lotus QA, we always ensure:
- High Security: LQA not only follows stringent procedures of ISO 27000:01 for optimal security and international standardized process but also flexibly adapts to clients’ requirements
- Quality Human Resource: we ensure staff competency through strict rounds of interviews, on-job orientations, continuous learning & development.
- Flexibility: We provide different working models to allow clients to choose or change the plan at any time.
If you have more questions about IT outsourcing management, you can contact Lotus QA expert for more information:
- Website: https://www.lotus-qa.com/
- Tel: (+84) 24-6660-7474
- Fanpage: https://www.facebook.com/LotusQualityAssurance