it outsourcing pros and cons

IT-Outsourcing Pros and Cons

What are the pros and cons when considering IT outsourcing?

More and more companies are outsourcing processes. In the area of information technology (IT) this can be especially interesting. Taking the step towards IT outsourcing needs to be well-planned. Which “pros and cons” should be considered?

Pros

  1. Save on costs
    One of the main reasons for IT outsourcing is the cost. By outsourcing various IT processes, there is the opportunity for a huge amount of savings. As a guideline for the decision, you should calculate a potential savings of at least 20% when calculating the cost of implementing IT outsourcing.
  2. Free up your tied-up resources
    The fixed costs for the IT department will become variable costs. A company will not only be attractive to investors with more capital available, but the free financial resources can also be invested in other areas.
  3. Remain competitive
    While large companies have the resources to implement the latest technologies and services, small and medium-sized enterprises often lack the budget or employees. This imbalance is compensated for with IT outsourcing and the middle class becomes more competitive.
  4. Focus on the core business
    Time-intensive work processes are outsourced. You will then have more time and energy for what’s important: the core business.
  5. Increase quality and flexibility
    The contracted external company often has a high expertise in the field of IT because this is their core business.  When selecting an IT service provider it is important to ensure that they are specialized in IT outsourcing.  If this is the contracted company’s specialty, you can also expect an increase in quality in this area. In addition, it’s also possible to implement large projects flexibly, such as the development of an app. The necessary IT employees can be hired for this project in this case.

Cons

  1. Lack of understanding from internal employees
    If company divisions are restructured, the understanding and support of internal employees is essential for the success of this step.  You should therefore develop a strategy in the course of IT outsourcing for communicating this change within the company, also known as change management. When employees feel involved in the process and feel as if “we are all in this together”, it creates synergy effects and increases the performance of a company.
  2. Economic risks
    If the contacted external company has economic difficulties, this can lead to significant costs for the contracting company.  Therefore you should find an economically stable partner for your IT outsourcing.  The risks are minimized through short contract times and clearly formulated contracts
  3. Loss of control
    Internal company process are easier to control than outsourced process to third parties.  Many IT service providers have already responded to this disadvantage and offer transparent work processes and various control options such as online tracking and regular video conferences. In addition, you can hire a developer through outsourcing4work who will personally come to your company and work together with your project team on-site during the project.
  4. Outsource your own data
    In IT outsourcing you should always know the security standards of the contracted company. Because sensitive data might be exchanged, you should ensure this exchange is secure. You should also ensure that you regain your data safely and in its entirety after the end of the cooperation.
  5. Loss of expertise
    Instead of an increase in quality through the outsourcing of IT processes to a specialized provider, there is a loss of expertise within the company. You should carefully evaluate what the current state of knowledge regarding the processes to be outsourced is, and document the existing knowledge before realizing IT outsourcing.