When considering outsourced services, business leaders often express concerns about a loss of transparency and control. However, investing in resource in-house can prove to be both time consuming and costly. Here we look at the value of outsourcing…
According to research from the Grant Thornton International Business Report, 40% of businesses currently outsource part of their operation, or are planning to. Added to that, Computing.co.uk recently reported that IT outsourcing has risen by 15% to £3.44bn, with more strategic services being outsourced, indicating the evolution of a more mature market. Outsourcing is big business, which is reinforced by what by Gill Palmer said on FT.com, “The amount spent on outsourcing services in the UK has doubled to £88bn a year since the coalition government came to power in 2010…” This increased spend was in response to the financial crisis of 2009, whereby the government’s policy of outsourcing public sector jobs to private companies provided cheaper labour, paving the way for economic growth.
Reasons to Outsource
Outsourcing IT is an ideal solution for start-ups or businesses experiencing growth that require quick and economical access to additional resource. If your business requires access to specialist knowledge, new perspectives or support, a relationship with a strong IT outsourcing provider will be a valuable strategic resource. Furthermore, it costs a fraction of the amount it would to employ someone new, which on average costs up to £30,000. The cost of outsourcing is based on the level of service you require, and gives you the ability to scale up or down as your business demands, therefore, you only pay for what you need.
The UK economy has proved that outsourcing can increase growth, and result in savings and benefits that are felt across the board. In an article by Kunsoo Han and Sunil Mithas on SloanReview, they propose “…research suggests that outsourcing IT can also help to reduce other expenses such as sales and general and administrative costs, which are often four to five times IT costs. When managers think of IT outsourcing as a mere substitute for internal IT investments, this narrow focus hides many potential cost benefits.”
Top Outsourcing Objections
The cost of outsourcing is often a common objection, as businesses are concerned about “hidden costs”. It is for this reason that you must thoroughly read your agreement to ensure you only pay for what you need and have the ability to scale up or down when necessary, without incurring extra costs. Once an agreement has been set out, and a fixed cost has been confirmed, you will have complete sight of what you are buying in to.
Loss of control
Some believe that outsourcing their IT will leave them with an inability to execute strategies, that they will lose transparency and control of their business. Just as Dale Traxler wrote on practicalecommerce.com, “… if world-class customer support is your key differentiator, you should likely build that function from within.” You must decide whether IT is your business’ main focus, or if this could and should be managed externally to allow you to focus on your core values and strengths.
To achieve full control and transparency it is imperative that you have the resource to manage a quality relationship with your provider to ensure you obtain the knowledge you require. It is vital that you do your research, weigh up the benefits versus the objections, along with the value it could add to your business, something only you have control of.
When considering handing over access to IT systems and data to a third party, some are concerned about the security implications this may have. However, IT outsourcing providers pride themselves on identifying and eliminating risks before they have the chance to affect your business. You can rest assured that your business and data will be more secure with a whole team of IT specialists that have the latest technology to efficiently and effectively deal with threats. As mentioned previously, in order to ensure transparency and build trust, you must research your provider and communicate with them.
Should you outsource?
- Are equipment problems impairing your business?
- Are you suffering from IT failures and downtime?
- Is your workforce spending too much time fixing problems unrelated to their job role?
- Are you having a problem keeping up with, or ahead of your competitors because your staff are busy resolving internal IT issues?
- Is budgeting for you IT department a big headache?
- Is your company growing so rapidly that managing your IT is becoming difficult?
- Are your annual expenditures greater than your operating budget?
- Do you struggle to find qualified staff or have high staff turnover?
- Is it difficult keeping training up to date for IT staff?
- Are you experiencing growth and require resource now?
If you answered yes to any of the above questions, outsourcing your IT could be the right option for you. Find out more about managed IT services here.