IT Outsourcing: Benefits vs. Risks

Some are saying it’s a blessing while others call it a curse. But views on outsourcing seem to have landed on extreme ground especially after the recession. Outsourcing, one of the most business-changing phenomena in globalization today, is now being scrutinized in developed countries including that of the U.S.

Yet, despite the heavy criticism, IT outsourcing continues to grow. Here are some of the most known benefits and risks associate when outsourcing IT today.

Benefits in Outsourcing

Outsourcing may not be something for every business, but if properly carried out, you could see yourself spending less while retaining quality work.  Here are the benefits that come with IT outsourcing.

1. Reduced stress

Managing the whole in-house development team is tiring and it can be twice exhausting when dealing with teams from the other side of the globe. Fortunately, a majority of outsourcing firms offer project managers a guide of the whole project, instead of depending on a company that employed them to take over. This lessens the workload for the consumer, which in return, minimizes stress.

2. Core function concentration

Less projects to deal with will give you more time to concentrate on other activities including marketing and business development. Usually, when you manage an in-house team, especially if it’s a smaller firm, your time is spent on managing instead of focusing on other business goals. Letting someone take over will leave you an open schedule to go after other core areas that may need improvement.

3. Limited liability

Outsourcing equates to no direct liability on employees at firm you employ. If you’re not happy with those working on your current project, you can easily have them replaced with a better team without suffering any setbacks.

4. Small infrastructure investment

If you plan on outsourcing your IT development, don’t force yourself to make technology and infrastructure investments that will rob off a chunk off your capital. Instead, you can use the money to develop other core areas of your business.

5. Risk recognition

Outsourcing companies typically specialize in risk mitigation factor analysis. There are specific aspects you may not be aware of that a firm can easily spot and repair. Analyzing and curbing potential risks is critical to achieving success in your business.

Risks and Restrictions in Outsourcing

Outsourcing is in its experimental stages, where new approaches are constantly replacing older ones to craft a potent and reliable service. Here are some areas in IT outsourcing that needs a bit work:

1. Confidentiality risks

Prior to employing services from an outsourcing firm, do a bit of homework. Ensure their references are checked and their history has no leaked information. Also see if they deploy the necessary legal measures to prevent misusing your personal data. It’s better to be safe than sorry!

2. Quality deficiency

This frequently occurs when you end up with a vendor who doesn’t possess the right development methods or has little experience. Those experiencing this end up going after cheaper outsourcing firms, which could end up hurting you in the long term and making you less cost efficient. Browse through the portfolio of your potential vendor to view the kind of work they do and know the complexities involved. This will give you an idea of their work experience and capabilities.

3. Poor customer support

Outsourcing firms with poor experience in handling outsourcing relationships may end up providing poor customer support. If they’re catering for more firms than they can actually afford, you won’t receive enough attention leading to disappointing results.

4. Unseen charges

While outsourcing is widely popular for being cost-effective, hidden charges could happen during the development phase. These costs result from unforeseeable changes that occur on any quick or last-minute adjustments. Setting a transparent outline in terms of cost and possible upfront charges should be made prior to any contract signing.

5. Interaction and cultural divide

Not understanding the cultural differences between a company and an outsourcing firm may lead to issues in terms of communication. Set out what you want to expect for both parties to prevent this happening.

If you’re seriously thinking of outsourcing your IT, ensure you’re aware of its benefits and risks. Opting for an efficient and honest vendor with a good track record is the most essential factor that will determine the success in outsourcing.