IT
Outsourcing: The Reasons, Risks and Rewards
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As
the owner of a small company, you have probably entertained
the thought of outsourcing some aspect of your business.
The benefits of outsourcing seem obvious, touted by experts
across numerous industries as the answer to cutting costs
for business functions ranging from information technology
to accounting, marketing and human resources; it seems possible
that you could run an entire company without ever hiring
a single employee.
In this article, we'll discuss the 3 R's of outsourcing:
Reasons, Risks and Rewards, specifically as they relate
to information technology (IT). And, as a bonus, we'll provide
some tips to help you manage successful relationships with
your IT service providers (whether they are full-time staff,
or outsourced).
The
Reasons
According to the Outsourcing Institute's Outsourcing Index
2000, there are many reasons why companies outsource. Here
are some of the top reasons:
- Reduce
and control operating costs. When you outsource,
you eliminate the costs associated with hiring an employee,
such as management oversight, training, health insurance,
employment taxes, retirement plans etc.
-
Improve
company focus. It is neither practical, nor possible
to be a jack of all trades. Outsourcing lets you focus
on your core competencies while another company focuses
on theirs.
-
Gain
access to exceptional capabilities. Your return
on investment is so much greater when you outsource information
technology to a firm that specializes in the areas you
need. Instead of just the knowledge of one person, you
benefit from the collective experience of a team of IT
professionals. Outsourced IT companies usually require
their IT staff to have proper industry training and certifications
as well.
-
Free
internal resources for other purposes. You may
have someone in your office that is pretty good with computers
or accounting, but most likely these were not the jobs
he or she was hired to do. If they are spending time taking
care of these things, who is doing what they were hired
to do? Outsourcing allows you to retain employees for
their highest and best use, rather than wasting their
time on things that may take them longer than someone
who is trained in these specific areas.
-
Resources are not available internally.
On the flip side, maybe you don't have anyone in your
company who can manage your IT needs, and hiring a new
employee is not in the budget. Outsourcing can be a feasible
alternative, both for the interim and for the long-term.
-
Maximize
restructuring benefits. When you are restructuring
your company to improve costs, quality, service, or speed,
your non-core business functions may get pushed aside.
They still need to be handled, however, and outsourcing
is an optimal way to do this. Don't sabotage your restructuring
efforts by failing to keep up with non-core needs.
-
Function
difficult to manage or out of control. This is
definitely a scenario when outsourcing to experts can
make a big difference. But don't make the mistake of thinking
you can forget about the problem now that it's being "handled."
You still need to be involved even after control is regained.
8. Make capital funds available. By outsourcing non-core
business functions, you can spend your capital funds on
items that are directly related to your product or your
customers.
-
Reduce
Risk. Keeping up with technology required to
run your business is expensive and time consuming. Because
professional outsourced IT providers work with multiple
clients and need to keep up on industry best practices,
they typically know what is right and what is not. This
kind of knowledge and experience dramatically reduces
your risk of implementing a costly wrong decision.
The
Risks
Anytime you give someone else responsibility for an aspect
of your business, whether a full-time new hire or an outside
vendor, there is risk involved. Did I hire the right person/company
to do the job? Will they do what they are supposed to do?
How will they "fit" with existing employees or
departments? These are the questions that nag owners of
small businesses when handing over the reigns to a new employee
or vendor.
Business owners who consider outsourcing IT functions need
to be aware of the following risks:
-
Some IT functions are not easily outsourced. IT affects
an entire organization; from the simple tasks employees
do everyday to the complex automated aspects. Be sure
the outside vendor are qualified to take care of your
greatest needs.
-
Control
may be lost. Critics argue that an outside vendor will
never be as effective as a full-time employee who is under
the same management as other employees. Other concerns
include confidentiality of data and disaster recovery.
However, a supervisor that is knowledgeable in managing
an IT staff member will usually be required.
-
Employee
morale may be affected. This is particularly true if you
will be laying off employees to replace their job functions
with an outsourced firm. Other employees may wonder if
their job is at risk, too.
-
You
may get "locked in." If the vendor does not
document their work on your network and system, or if
you've had to purchase their proprietary software, you
may feel like you can't go anywhere else or take back
your network. Many outsourced companies require you to
sign a year to year contract which limits flexibility.
The
Rewards
Still not sure whether to outsource or not? There are many
rewards you can expect when you outsource your company's
IT functions as well:
-
Access to the latest and greatest in technology. You may
have noticed how rapidly software and hardware becomes
obsolete in this industry. How is one staff person going
to keep up-to-date with everything? Outsourcing gives
you the benefit of having more than just one IT professional.
And since it's the core competency of the company, they
can give you sound advice to put your IT funds to work
for you.
-
Cost
savings. Outsourcing your IT services provides financial
benefits such as leaner overhead, bulk purchasing and
leasing options for hardware and software, and software
licenses, as well as potential compliance with government
regulations.
-
High
quality of staff. Since it's their core competency, outsourced
IT vendors look to hire staff with specific qualifications
and certifications. You may not know what to look for
if you're hiring someone to be on staff full-time, so
you may hire the wrong person for the job.
-
Flexibility.
Vendors have multiple resources available to them, while
internal staff may have limited resources and capabilities.
-
Job
security and burnout reduction for regular employees.
Using an outsourced IT company removes the burden from
your staff who has taken on more than he or she was hired
for because "someone needs to do it." You will
establish a better relationship with your employees when
you let them do what they do best and what they were hired
to do.
Conclusion:
Now that you have seen the risks and rewards associated
with outsourcing the IT function of your business, there
is a lot to think about. Whether you choose to outsource
or hire internally, one thing is certain, you must know
how to manage successful working relationships with your
IT service providers. Let's face it, they're not always
the easiest people in the world to understand and deal with,
right? Here are some tips:
-
Clearly form and communicate the goals and objectives
of your project or business relationship.
-
Have
a strategic vision and plan for your project or relationship.
-
Select
the right vendor or new hire through research and references.
-
Insist on a contract or plan that includes all the expectations
of the relationship, especially the financial aspect.
-
Keep open communication with all affected individuals/groups.
-
Rally support and involvement from decision makers involved.
About
Total Computers
Total Computers is a professional outsourced computer service
company serving small businesses in Mumbai Our specialties
are network planning (network consulting), network projects,
and ongoing network/computer maintenance. We pride ourselves
on not only delivering the results you expect, but also
being knowledgeable, systematic, accountable, trustworthy
and easy to work with. To speak with a Support Advisor about
the the computer support provided by Total Computers email
us at
info@total-computers.net
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