What Is IT Outsourcing?

IT outsourcing companies are external, third-party service providers that deliver IT-enabled business processes, application services, and infrastructure solutions for their respective clients.

Additionally, an IT Outsourcing provider also offers utility services, software as a service (SaaS) and cloud-enabled solutions.

They can take full responsibility for all IT maintenance and support (fully managed service) or they can simply provide additional support for the in-house IT department (co-sourced IT support.)

Due to the fact that the majority of businesses embraced the unavoidable nature of digital transformation to stay competitive, outsourcing continued to rise from 12.7% in 2019 to 13.6% in 2020. Especially when it comes to IT-related functions.

Experts working in an IT outsourcing company
57% of organizations say outsourcing allows them to focus on their core business activities

What Are The Different Types Of IT Outsourcing Companies?

The global demand for qualified IT services is skyrocketing. Before we list all services that IT outsourcing firms offer, it’s worth showcasing the different types of IT outsourcing itself:

  • Offshore outsourcing

Sending IT-related work to a company in a foreign country that offers lower costs and/or tax savings.

  • Nearshore outsourcing

This refers to the process of sending IT-related work to a company in a country on the same border, which ideally makes communication and travel between the IT outsourcing provider and the client company fairly easy.

  • Onshore outsourcing

This involves outsourcing a third-party service provider located in the same country as you.

  • Cloud computing

Outsourcing a third-party service provider that offers cloud consulting services and cloud solutions.

  • Managed services

Contracting a third-party company to provide network management services including call centers, network monitoring and more.

What Do IT Outsourcing Companies Do?

To achieve business goals, organizations rely heavily on IT-enabled infrastructure and office tech equipment.

Monitoring, managing and optimizing digital infrastructures can be challenging for the in-house IT department, especially in times when they’re focusing on the business’s core functions/operations.

IT outsourcing companies provide businesses with a dependable lifeline to pull not just in case of emergency, but for the planning, designing, implementation and ultimately, business success.

So, which IT services are typically outsourced?

1. Technical Support

Technical support can come in many forms, including desktop, application, mobile, networking, hosting, website and IT security. Many businesses employ an in-house team of professionals to handle IT support for their company in these areas. However, to save on costs and improve productivity, they can offload these duties to an IT outsourcing provider.

Outsourcing IT services allows businesses to tap into more substantial business technology resources, sharpening their competitive edge and expertise while simultaneously staying focused on their core business objectives/operations.

2. Data Security (Virus Protection, Data Backup & Recovery)

Data loss, whether it’s caused by a natural disaster, major power outage or data theft, is one of the most detrimental things businesses can experience. Outsourced IT providers offer complete protection with the latest cybersecurity (Firewall, cloud servers, malware, and virus protection, disaster recovery, data backups and more.)

3. Technology Road Mapping and Planning

With an IT outsourcing company’s aid, companies can establish technology strategies to “future-proof” the business. They use technology to help organizations focus on their goals and core functions while helping them grow with emerging trends.

4. Helpdesk

The function of the helpdesk is to resolve any IT issues as they occur and help boost businesses. Helpdesk can simplify management, streamline costs, improve productivity and provide accurate tracking, reporting and more.

5. Application, Software And Database Development

An IT outsourcing company can provide the right, up-to-date software/applications. They can work exactly like a software development company, assisting with software development specific to the business needs and core operations.

More than 60% of tech companies are outsourcing at least a part of their application development.

6. Network Management

As a business grows, so does its network. IT outsourcing providers can help manage the maintenance, security, downtime, productivity and costs of the technology at the client’s disposal.

Other services a typical IT outsourcing provider offers are:

  • Web development/web hosting
  • Application/software support or management
  • Database development or management
  • Telecommunications
  • Infrastructure – hardware, software, network installation & support
  • Data center management
  • Data storage
  • And more
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5 Advantages Of Working With An IT Outsourcing Service Provider

Here are several reasons why you should hire an IT outsourcing firm:

1. Control IT Costs

The flexibility that comes with working with IT outsourcing companies stems from being able to negotiate custom-tailored solutions or plan your budget on a usage basis, effectively eliminating fixed costs.

2. Reduce Labor Costs

Maintaining your own IT functions can be costly, not to mention the revolving door of hiring, training new hires. By working with an IT outsourcing firm, you gain experienced professionals without the additional recruitment.

3. Focus On Your Business

57% of organizations believe outsourcing allows them to completely focus on their core business activities.

Your time and resources to achieve main business objectives are not limitless. By working with top IT outsourcing companies, you don’t have to worry about complex IT obstacles that are outside the scope of your specific skill set.

IT outsourcing can help small to midsize companies take full advantage of technologies and expertise large ventures already enjoy.

4. Complement Your Existing Team

On the other hand, larger organizations have the benefit of an in-house IT department, but, more often than not, they can be overwhelmed with maintenance and optimizations such as software updates, password resets, etc.

Bringing an outsourced IT provider on board can help save your internal IT talent the valuable time they need to address core objectives and new projects.

5. Technical Expertise

Because of their specialized nature, in-house IT staff can come across issues unique to them so they must resort to research that often requires trial and error methods. IT outsource companies, on the other hand, can assess and resolve problems you find frustrating with ease as they possess the necessary experience and expertise.

Top IT outsourcing companies have the resources to start new projects right from the get-go. In contrast, your in-house team might take weeks or months to hire the right talent, train them and provide the support and equipment.

How Much Do The Top IT Outsourcing Companies Charge For Their Services?

There are a couple of different IT outsourcing pricing models available:

  • Fixed price: Based on a well-defined scope of work and requirements, the IT outsourcing provider estimates the workload needed to complete the project and proposes a fixed fee. The fixed fee is often made up of the volume of work multiplied by the hourly rate.
  • Time and resources: This flexible model allows parties to agree on an hourly or monthly rate per type of expertise. On average, outsourced IT providers charge between $25 and $199 per hour or $1,000 and $10,000+ per project.

How To Choose The Best IT Outsourcing Company

When selecting the ideal IT outsourcing provider to partner with, bigger isn’t always better. In other words, try to find a partner that specializes in services you need specifically and is a right fit for you, dedicated to helping your business grow.

Key factors to consider when reviewing prospective IT outsourcing companies are:

1. Established track record

You should always look for an IT outsourcing provider with an established reputation specific to your niche/industry. You may want to speak with their current and/or previous clients who have outsourced similar projects to get to know the company’s approach, level of expertise and experience.

2. Technical Skills

Whether it’s software development, network management, platform infrastructure, cloud solutions or something else entirely, there is no one-size-fits-all solution, so it is essential to look for a partner with proven technical expertise in multiple areas.

3. Flexibility

Are the services they offer flexible enough to meet your business needs? Can they tailor them to your specific requirements? Do they offer the support you seek?

Presenting prospective IT outsourcing firms with a detailed account of the levels of service you need is crucial. Look for an agency that can follow as your business needs change and whose services are built on flexibility, designed to adapt to your evolving requirements.

4. Approach

When evaluating IT outsourcing companies, you should focus on the services they provide. However, if you’re hoping for a long-term partnership, you should peek behind the curtain and analyze their case studies and their overall approach to project management.

Do they understand your needs, or care about your business succeeding?

Designing the best possible product and/or implementing an IT solution starts with a clear understanding of both parties. The ideal IT outsourcing provider will establish preferred communication channels and a clear, legible roadmap.

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10 Questions To Ask IT Outsourcing Firms Before You Hire One

Here are the top questions you should ask top IT outsourcing companies to narrow your search:

  1. What is your pricing structure? What does it include?
  2. How do you plan to tailor your services (collaboration model, team size and structure etc.,) to meet my requirements?
  3. Have you worked on similar projects in the past?
  4. Have you worked with clients within the same industry like ours?
  5. Who are your best clients so far?
  6. How will you help us adopt technologies better than if we kept IT in-house?
  7. What is expected from our team to make the collaboration work?
  8. How do we communicate regarding progress, plans and problems that may arise?
  9. What are your security and privacy policies?
  10. How do you ensure software quality? (For software development projects)

Takeaways On IT Outsourcing Companies

IT outsourcing companies handle an organizations’ IT-enabled business processes, software applications, infrastructure solutions and more.

Businesses opt to outsource their IT for the following reasons:

  • Cost control
  • Optimal collaboration
  • Focus on core operations
  • Technical expertise
  • And more

When selecting an ideal IT outsourcing provider be sure to check their:

  • Track record
  • Technical skills
  • Flexibility
  • Approach

Best of luck!

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