Innovation-Driven IT Outsourcing in a Post-Pandemic World
Information technology outsourcing has become a game-changer for many businesses seeking to stay competitive in a post-pandemic world where people store tons of data in “clouds” – a touchscreen-powered world where people shop with a finger, swiping and clicking as they fill up non-existent carts, “checking out” with cash that they aren’t even holding.
The unrelenting pace of digital transformation has left many companies across industries in a “survival of the fittest” situation, where “fittest” means having a strong IT backbone to support every aspect of the business. This has triggered a surge in demand for IT professionals, such as development teams or cybersecurity engineers, and in the process, has created a wide talent gap around the globe.
But since we live in a time where a worldwide web, spun across the globe, connects people from different corners of the world, many companies have been able to access talent that was not only able to fill in the gaps of their IT functions but was also able to power them through one of the toughest periods in human history.
What is IT outsourcing?
IT outsourcing is a business strategy where a company partners with a third-party provider to handle parts or even most of their IT operations, such as infrastructure support, data security, software development, network engineering, and more.
The provider helps a company hire, train, and maintain IT professionals or even build an entire IT department.
Outsourcing can be done onshore, which can be expensive as it involves a provider within the territory; nearshore, which involves outsourcing to neighboring countries, usually within the region; and offshore, which many considers as the most cost-efficient outsourcing model because providers source talent from countries with lower costs of living.
A 2020 research by Statista shows that information technology outsourcing makes up the largest share of the industry, which accounts for an estimated overall revenue of $351 billion. The same study projects information technology outsourcing to be more convenient and affordable this year because of the developments in cloud computing, infrastructure as a service (IaaS), platform as a service (PaaS), and Software as a Service (SaaS).
Information Technology Outsourcing Models: A Comparison
When it comes to information technology, there are 3 main outsourcing models where businesses can begin with. While these models have been established throughout the years, they are just starting points as businesses can combine and fully customize the specific services that they need to get by discussing this with their chosen providers.
Staff augmentation allows companies to outsource added IT professionals, like data center administrators, to an existing internal team. This model comes in handy when you need to add manpower to expedite certain projects or when you just need a few added experts, not an entire team, to reduce the burden of your in-house IT team.
The project-based model is most useful when a company embarks on a project that needs specific expertise. For example, a business may want to outsource software developers if they seek to build a new mobile adaptive management platform that they intend to institutionalize company-wide or even sell in the future.
The dedicated team model allows companies to outsource a complete dedicated team to do entire IT functions or finish an entire project. If a company, for example, embarks on a cybersecurity project, the provider hires a project manager, developers, and information security experts to complete the whole project.
What are the benefits of IT outsourcing?
The rapid pace of technology development has turned IT outsourcing into an innovation-driven business strategy. More and more companies are tapping the services of trusted outsourcing providers to speed up their digital transformation and stay competitive in the market, which may have been very different years ago when the main motivation was solely cost reduction.
Offshore outsourcing, in particular, has become a very convenient solution to IT-related pain points that hinder a business from adopting new technologies and innovations. But what do companies actually get when they outsource IT functions? Let us take a deeper look at some of the specific benefits of outsourcing IT to reputable providers.
Access to Talent
Outsourcing providers not only provide access to qualified IT professionals but also give access to experienced experts. They have the people, technology, and infrastructure to sift through deep talent pools just to find the talent that would fit your exact requirements in terms of skills, knowledge, tool proficiency, and even personality.
In the Philippines, for example, where there are over 150,000 IT graduates a year, providers have no problems looking for talent with specific expertise that can be scarce in your region. With talent shortage being the main innovation roadblock of companies around the world, outsourcing can help you hire skilled professionals or even build entire departments.
Proficiency and Efficiency
IT is an area of knowledge that is rapidly evolving with technology. And since not all companies have the expertise to focus on IT-related functions, like cybersecurity and network operations, it may be best to delegate these processes to actual IT experts through outsourcing. The level of proficiency that outsourcing can bring will minimize risks as your business develops a robust IT infrastructure.
With an outsourced group of experts working side by side, a company can focus on its core business functions and crafting strategies. Imagine having all the luxury of time to map out the direction you want for your company, while your outsourced IT team creates systems needed to achieve these goals – that’s a level of efficiency that can truly accelerate your growth.
Access to Technology
Building a robust IT infrastructure can be costly, especially for small- and medium-sized businesses that need to focus their budget on core operations. Fortunately, current outsourcing models give companies access to the latest technologies, software, hardware, and whole data and security system used by their chosen provider.
Because outsourcing providers are in the business of providing services, remote or otherwise, they always have a budget delegated for the best IT equipment and infrastructure. Providers package their technology in their overall service offerings fully equipping their partners for innovation without necessarily breaking the bank.
Flexibility and Control
Markets can be volatile, as the COVID-19 pandemic taught us, and there will always be periods when businesses will be forced to make quick adjustments in their operations. Current outsourcing models allow companies to be flexible in scaling up or down, depending on a business’s need, in these times of sudden change.
Whether it’s about flexibility in terms of contracts or flexibility in terms of actual IT solutions, most outsourcing companies can deliver results. For example, if another COVID-19 surge forces a lockdown in a region, a company can readily run to its outsourcing partner to look for remote or hybrid business solutions for short- or long-term needs.
Security is a common concern among companies when outsourcing not just IT functions, but other business processes as well. But the level of technology today has allowed for global security compliance standards to ensure the protection of the customer’s data, such as HIPAA, GDPR, and ISO, among others. Look for these certifications and you are assured of security with your provider.
Furthermore, many outsourcing providers allow full customization of security, both physical and digital, for their partners. The best outsourcing providers allow their customers to configure user controls, connectivity and network, information security, and even hardware and software to suit their specific needs and requirements.
It is no secret that outsourcing reduces overhead costs by as much as 70%. Because outsourcing providers source talent from countries with lower labor costs, companies can expect to get premium talent with lower salary rates. Add that to savings you get in terms of infrastructure and operational costs, and you get more budget to allocate to other aspects of the business.
Moreover, businesses convert the usual fixed IT costs to variable costs when they outsource, which allows them to budget effectively. Imagine the possibilities if you spend 70% less on talent, technology, and infrastructure in an IT team that can deliver the results you need to serve your customers better and match your bigger rivals in the market.
IT outsourcing may have more benefits than the ones we listed above, especially with the fast progress in the realm of robotics, automation, and cloud technologies. The key to getting the most out of IT outsourcing is by choosing the right partner that can deliver the specific requirements and configurations you need.
Before setting out to find an outsourcing company, make sure you list down your reasons and goals for outsourcing first, as this will guide you in choosing a partner. You should also make sure to get buy-in from your people and make sure that they understand why the company needs to outsource to avoid any miscommunications.