What is IT outsourcing and what are its advantages?
Did you know that IT outsourcing can provide great advantages for companies or even become a necessary measure for their growth?
Investment in Information Technology in Brazil has grown above the world average, demonstrating that, above all, national companies have recognized the importance of technology for growth. On the other hand, this makes organizations afraid of delegating IT services to another company.
However, amid the constant advancement of the industry, especially with the consolidation of mobile and Big Data, it is natural that the outsourcing of IT services is being considered, since maintaining a well-trained team of professionals with knowledge in new technologies and fully capable of meeting the needs of the business, can cost a lot of money.
In this article, you will understand what IT outsourcing is and what are the advantages of opting for this business model. Let’s get started?
What is IT outsourcing?
Outsourcing is the strategic practice of hiring an external source for the provision of secondary services, aiming to optimize the corporation’s processes. Companies can outsource several sectors, among them: accounting, marketing, human resources, security, and IT.
IT outsourcing is nothing more than the outsourcing of IT services, solutions, and infrastructure. These services can include the supply of specialized professionals, project management, development of strategic and technological innovations, infrastructure management and maintenance, among others.
What is the difference between BPO and BTO?
IT outsourcing can be done in two ways: BPO and BTO. Both are capable of adding value to the business. The choice between one and the other will depend on the maturity of the processes, the desire or need for evolution.
This is the acronym for Business Process Outsourcing. This alternative is designated for carrying out processes that are outside the company’s core business, but that, on the other hand, are extremely important for its operation.
The development of BPO involves a deep analysis of the business methodologies already executed by the IT sector. Based on this information, the service provider company will be responsible for the operation, availability, and monitoring of a team complete with qualified professionals to perform the activities determined by the contracting party.
Acronym for Business Transformation Outsourcing. This other model brings a great evolution in relation to traditional outsourcing, because, in addition to the activities performed by BPO, the contractors add a set of knowledge to the routines with the objective of transforming the processes that, in the end, will generate significant improvements for the sector.
Just like in BPO, the contracted company carries out a detailed analysis to identify the client’s main difficulties. The difference is that, after this analysis, the contracted company will suggest several improvements that, strategically combining people and technologies, will provide a transformation in routines and processes in order to make them totally optimized and customized for the contractor’s needs.
What are the types of IT outsourcing?
After opting for BPO or BTO, it is necessary to decide the location where the outsourcing service will be deployed. There are basically three options:
This model is characterized by the outsourcing of IT activities to a company based in another country. One of the reasons for choosing this alternative is the possibility of outsourcing activities to companies located in developing countries with lower labor costs, such as China and India. This guarantees a greater return on investment for the sector, especially in times of national economic instability.
When choosing this model, it is important to be a little careful, since linguistic and cultural differences, and the fact that the contracted company works in a different time zone, can cause some obstacles, making communication between the parties difficult.
The main advantage of this outsourcing model is that the service is provided by a company that is based in the contractor’s country. This model may not be the most advantageous from a financial point of view, since labor is usually more expensive when compared to the Offshore model.
However, since it is based in the same country, communication problems (which are one of the biggest problems of Offshore) will be minimized, since there will be no language and cultural barriers, and both companies will be working in the same time zone.
In the Nearshore Outsourcing model, the corporation counts on the services of companies based in nearby countries with more advantageous economic scenarios. This alternative can be considered a middle ground, since the company will not have as many problems with language and time zones compared with Offshore, and a higher return on investment compared with Onshore.
When should you invest in IT outsourcing?
There are many factors that lead a company to invest in IT outsourcing. If your business goes through the situations listed below, the adoption of this service can be a good choice, since the company will have less difficulty in dealing with market demands and achieve goals without having to dramatically increase operating expenses. Among the indicators that can indicate the right moment to invest in outsourcing, we can point out:
- limitations in infrastructure;
- need to reduce costs;
- search for greater competitiveness;
- directing resources for IT maintenance at a high level;
- search for greater focus on core business;
- temporary expansion of the IT team;
- need to optimize spending.
When the business needs to deal with these challenges, IT outsourcing can be the best choice. This service will provide the basis so that the company can act in a strategic way, meeting customer demands and executing the area’s routines with better use of available resources. Thus, the entire company will gain in competitiveness.
What are the advantages of IT outsourcing?
There are several promises of improvements for those who decide to invest in IT outsourcing, but you must be wondering how it will act in the internal processes of your company and what the results will be. Below, we highlight some advantages that can be obtained when investing in IT outsourcing.
Focus on core business
Taking care of the IT area demands a lot of time and knowledge. Incidents happen and your company may end up spending more time on solving problems than on activities related to the core business. Do you have any idea how much this can negatively impact your business?
Organizations that invest in outsourcing do not have this problem. By outsourcing IT activities to another company, all these problems will be handled by your specialists. Thus, you will have more time to devote to the activities that are really important for your business and will have much more chances of succeeding in the market.
Professionals with expertise
Forming a qualified team for the IT department, without disregarding cost reduction, is not a simple task – certainly most IT managers agree with this, starting with the fact that hiring involves different levels of knowledge, which must be proven through selection processes, besides, of course, the higher salaries that involve the hiring of experienced professionals (including labor costs).
When an outsourcing company is hired, it makes available a team of professionals with expertise in their field, which eliminates all the work and other expenses to count on the best in the market.
Hiring services on demand
This advantage is aligned with the quality of the professionals that outsourcing companies offer. Imagine the following situation: the company hires a highly qualified programmer with many years of experience. However, it only needs a programmer of this level to complete a few projects.
In the end, the company has to choose between keeping a great specialist to work on functions that can be performed by a less experienced professional, or simply dismissing him and hiring a cheaper programmer.
With the “as a service” model of hiring, the company can rely on specialists of a certain level only when needed. In the above situation, it would be enough to request an expert in the function until the completion of the projects and nothing more.
Access to the latest market resources
Having access to the latest hardware and software technologies is not part of every company’s reality. Among the main reasons for this are the financial costs themselves and the lack of qualified personnel to work with these resources.
The big references in the IT outsourcing market usually work with the latest technology, precisely to offer the best possible solutions and thus provide a competitive advantage to their customers. A good example of this is the implementation of cloud computing technologies, which are increasingly necessary for all companies that depend on IT services.
Instead of acquiring expertise, training, and hiring new employees to be able to support the changes, you can simply delegate this work to outsourced specialists and plan, together with your partner, how the adaptation should be done.
Optimizing operational costs
Maintaining a qualified IT staff, as we have said before, is very costly for the company, since the team is usually very large – programmers, system administrators, web designers, analysts, software engineers, architects, and so on.
Imagine that a new technology is to be implemented in your company and the entire IT staff needs to be trained? This would undoubtedly take a lot of time and money. All this cost is significantly reduced with the help of IT outsourcing, because the contracting company will be paying for the services and not for the employees (who are already trained and have their salaries paid by the outsourcer).
Because it is flexible, IT outsourcing can be applied to various scenarios. It allows the business to have the support of specialized professionals to improve the execution of activities such as
- data center management;
- updating corporate processes;
- application of digital security policies;
- user service and support;
- systems integration;
- network monitoring.
The outsourcing of IT services must always involve a Service Level Agreement (SLA), in which a minimum standard of quality is foreseen and which must be guaranteed by the outsourcing company.
However, it is worth pointing out that quality assurance will hardly exist if a company without experience in the market is hired. Therefore, before closing the partnership, consult the clients of the outsourcing company you wish to hire and obtain as much information as possible about how the employees work, if there is a certain level of commitment, among other relevant factors.
Gain market reputation
The company’s image directly influences its success in the medium and long term. Every business wants to create a good reputation with its consumers, suppliers, and business partners, as this is crucial to maintain continuous revenue streams.
In many cases, the best way to achieve this goal is by structuring a set of high-quality routines, in which services are performed at a high level of performance. And this is what the company gets when it outsources its IT routines: as the professionals will have a greater focus on the processes directed to the core business, the infrastructure and user support will be continuously optimized.
From the moment that the infrastructure presents fewer problems, all internal processes that depend directly or indirectly on technology will have quality gains. Teams will be more integrated and have a smarter workflow. In addition, the performance of IT tools will always be within the level expected by employees.
How to implement IT outsourcing?
The adoption of IT outsourcing makes the company more competitive in the market, but before making this investment, there are a number of precautions that must be considered. See below how you can prepare yourself:
Identify the business needs
This is one of the basic steps in hiring an IT outsourcing company. You must evaluate the company’s goals in the medium and long term and the points that need improvement. It is essential that you know your business processes intimately to be able to identify where adjustments should be made. What causes the failures in the operation? What is hindering the sector’s performance? What can be improved?
Evaluate the suppliers
It is currently possible to find several companies that provide IT outsourcing services. Therefore, it is important to be very careful when choosing the right partner for your business. Look for a specialized and recognized company that can supply your demands with excellence and safety, so as not to put IT at risk. A tip is to analyze the success cases of this corporation.
During the evaluation, be sure to check whether the service provider has certifications and quality seals in methodologies such as ITIL and COBIT. Both are ways to ensure that it has a high-quality set of routines that meets the performance standards expected by the market. Therefore, by choosing a certified IT outsourcing company, you reduce risks and increase the return on investment.
Define an SLA
Before closing the partnership, it is essential to define an SLA (Service Level Agreement) to direct the responsibilities of both parties.
The SLA is the document that governs the business relationship between two companies and has a series of standards, indicators, and rules that serve to avoid conflicts and improve the work performed. These indicators and targets will direct the pace of work and help the IT manager to identify the quality of the service provided. It is also important to define fines, if the supplier does not comply with what was previously agreed.
Do a good change management
One of the most important steps in the implementation of IT outsourcing is to have a good change management. When the outsourcing company starts to develop the pre-established projects, changes will certainly occur in the company’s processes, which will cause employees to change their ways of working.
To avoid any negative impact in this transition, it is necessary that the company and its employees are always aligned and well trained to adopt these changes.
To know if the partnership is promising, it is essential to evaluate and monitor the services that are being provided to ensure that they are aligned with the defined SLA. Measure the performance results and the positive impacts that the partnership is bringing to your company.
In other words, investing in IT outsourcing may be the key for your company to achieve better results in the medium and long term. The business will have more agility in the resolution of demands and more focus on customer routines. Thus, it is possible to eliminate bottlenecks and have more capacity to achieve goals.