When deciding upon the starting topic for our blog, questions about outsourcing emerged in less than a minute – is it worth considering at all? why? where to outsource? what are the risks?.. And I guess you can easily continue the list.
Growing interest to outsourcing comes as no surprise – in nowadays life in order to handle everything and remain sane you should delegate. Let’s check our personal life – how easier it is to live when we have an option to order pizza when there’s no time to cook; or to get driver when you decided to try some alcohol cocktail at your friend’s party.
The very same applies to business – if there is an opportunity to spare some resources you would better invest in your company development, why ignore it? So let’s take a closer look whether it worth a try in IT world.
What is outsourcing
When business requires skills or knowledge it doesn’t possess within its organization, it often resorts to outsourcing. So what exactly is hiding behind this popular word?
In simple language, outsourcing is an arrangement in which one company is providing services to another company, including processes, assets and people. Looks like quite simple scheme, isn’t it?
In real life it appears to be a bit more complicated. Mainly companies outsource in one of the two following ways: either they outsource part of their daily operations, or they make outsourcing a strategic part of their business and maintain long term relationship with outsourcing company as a partner.
So, if your company contract out cleaning services, this would be an example of daily operations. On the other hand, delegating to designers’ bureau creation of design for an application you are developing is an example of the second way of outsourcing.
Nowadays the second way of cooperation is gaining more and more popularity, especially when it comes to IT companies. They are expected to be strategic partners who are investing in the success of the whole business of their client, not just the single project.
Reasons to outsource
So why one would want to rely on somebody else, you may ask. So let’s see the 5 main reasons why the company benefits from such kind of cooperation.
Reducing cost still is the top reason why people choose to outsource. Outsourcing helps a lot to cut the cost of a business project, as there is no need to hire people for a project and overheads are easily reduced.
According to study, conducted by IBM, companies which adopted outsourcing as a part of their business model were able to decrease their annual SG&A (Selling, General and Administrative expenses) by 3.5% at the first year of such experience.
The outsourcing company usually is better skilled than the client’s company in performing specific tasks. And logically better experience raises revenue. It is common case when companies decide to outsource highly specialized services – such as creation of lead generation, sales calls, software development or design. Following that logic, Slack has hired a design firm MetaLab for refining its product.
Some companies decide to perform more services or produce more products they are capable of at the moment. So they choose to keep part of the business internal and outsource other parts. That is an excellent way to survive in highly competitive market.
Partnership with an outsourcing company enables your business to scale up or down, based on existing demand. Some businesses could have high and low seasons, or just the peak of activity. In such cases outsourcing allows to accomplish all tasks without compromising the level of service delivered or product quality.
Stimulated by huge competition, suppliers are as creative and professional as it is possible to be. Especially, when it comes to IT sphere. A great example of it is a competition between Android and iOS.
Benefits from outsourcing
Let’s imagine you decided to outsource and you have already implemented it as your business strategy. What benefits would you expect to get?
First of all, companies that outsource routine tasks get an opportunity to focus on their own core competencies. So company’s internal resources could be used for activities that are critical for company’s mission. This could easily result into increasing of productivity. For example, Microsoft has outsources its patent filing work, as their patents have become too big business.
Next thing to mention is an access to newer technologies all over the world in order to raise the level of productivity and quality. Moreover, companies that decided to outsource find their infrastructure expenses decreased significantly as some functions moved to other vendors.
And last but not least benefit your company receives from outsource is access to the world class capabilities. Hereby, you can engage into your project teams that have expertise in any domain you need.
Outsourcing starts now
Whether your company needs outsourcing at the moment depends on the various factors. But you may definitely need to give it a try if you are asking yourself such questions as:
- Are my resources being used effectively?
- Is there any faster way to handle tasks/processes?
- Is my team qualified enough to handle the task?
- Is there any way to optimize costs?
- Are we using up-to-date technologies while performing company’s activities?
So in highly competitive environment where it is important to keep focused on the core business activities and skills, outsourcing becomes the hand of help that allows you to leave technology that runs the business to others.
Sounds interesting, doesn’t it? And if you feel curious about outsourcing in IT and how to do that better, check our next blogpost.
Looking to learn more about how InSpirito can help your business? Check our services and let us know if you have any questions.