Many companies decide to outsource significant parts of their IT to save time and money. Particularly large and internationally active companies have increasingly
outsourced IT
in recent years and have outsourced many of their work to external service providers. But even the SME sector is now more likely to benefit from these measures. This blog post will compare the advantages and disadvantages of IT outsourcing and provide an overview of what matters.
Definition: What is IT outsourcing actually?
Information Technology Outsourcing (ITO for short) is in general terms the fully responsible transfer of IT functions, or business units with very high IT shares, to an external service provider over a defined period of time. Partly existing personnel, hardware and software, buildings or other assets are temporarily transferred to the IT outsourcing provider. By means of prior contractual agreement, the Service Level Agreements, the scope and quality of the services are described.
At the same time, the various levels of a company's performance can be involved in IT outsourcing. Services can be outsourced at the infrastructure level (eg servers , clouds , data centers), at the application level (e.g. software, websites , shop systems , intranet) or at the business process level (e.g. accounting, online marketing , digital product development).
IT outsourcing for online applications and e-commerce shops
E-commerce shops, mobile apps , intranet solutions and corporate websites must be maintained, maintained and kept up to date. In addition, the cost of infrastructure systems and IT security is added. If the main activity of a company is not in the IT sector, it is difficult for many companies to meet the high-tech requirements and continuous development at all times. Corresponding personnel must be released, trained or recruited. Also, appropriate software and hardware must be procured, set up and maintained. That brings us to the benefits of IT outsourcing.
Advantage # 1: Saving time, resources and finances
I
nstead of recruiting specialist employees and investing in technical aids, it may be worthwhile leaving the information and communication technology to an experienced and specialized IT provider. This often saves time resources and is usually more cost-effective . Even small and medium-sized companies can benefit more and more from this, as there are now highly specialized providers who offer cost-effective, partly standardized solutions.
In addition to the three key benefits of cost, time and resource savings , there are many other factors that have a positive impact on the business.
Advantage # 2: Competitive advantage through continuous development
Everyone knows how fast the development of new products and applications is going in the digital age. The requirements on the customer side for the services and products of a company change just as quickly. You need servers to store data, security on the Internet requires special firewalls, and then there's the issue of privacy . As privacy policies change regularly and IT technology evolves, the specific knowledge must always be up-to-date to respond quickly to changing needs. For example, there is currently a debate in the European Parliament on the future of cookie guidelines .
IT outsourcing vendors are aware of changes in the marketplace and have the right professionals to monitor digital developments . This is especially important in terms of new technologies, viruses, hacker attacks and privacy. If you outsource your IT areas, then you can assume that the software and hardware is always up to date. In addition, most IT companies have multiple servers. The probability of default of online applications, or e-commerce stores is thereby minimized.
Advantage # 3: Full transparency of costs and benefits
Further advantages of IT outsourcing are clear cost transparency and project monitoring . Most IT outsourcing providers work with fixed workflows and process standards. As a result, the hours invested and current project tasks can be called up immediately at any time - no requirement disappears in a black box. Services rendered are logged and recorded, which means that the costs can be traced later.
Already before the beginning of a cooperation, an IT provider can already name due to its many years of experience and expertise precise forecasts of the expected costs. Many companies lack such clear numbers when IT systems are not clearly defined and standardized.
All benefits of IT outsourcing at a glance
The various advantages of IT outsourcing are summarized here in a brief overview:
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Time savings
cost reduction
Trained specialist staff
Competitive edge
No acquisition and maintenance costs
Latest technology and software
Privacy and cyber security
Long-term planning security
Full cost transparency
Consulting
Disadvantage # 1 of IT Outsourcing: Transparency
Just as an advantage, now as a disadvantage: the transparency . Those who outsource elements of their information and communication technology sometimes transfer essential business components into the hands of another company. Of course, this requires a certain amount of trust, because the experts no longer have to sit in-house, but instead depend on the accessibility and cooperation of the partner company. If these services are business-sustaining, such things should be clarified in advance in order to hedge here. An optional 24h support should never be a problem.
Disadvantage # 2: Lack of IT know-how in house
Technical ignorance can sometimes also be a factor, as not every entrepreneur can immediately understand the meaningfulness of each individual IT service. Hardware or software licenses that must be paid, various analyzes and data evaluation, hours of project management or the production of dozens of prototypes can sometimes produce a frown instead of joy rather. Here, the IT service provider is in every case in demand by a clear cost and performance transparency for education to ensure and also for inquiries always available at short notice.
Disadvantage # 3: Who is liable for IT damage?
The commissioning company is liable for errors of the IT service provider, which can have legal and costly consequences. If, for example, sensitive data is lost due to carelessness, or if a system failure occurs, the client himself must be liable for this error and, if necessary, replace the damage incurred. It is therefore advisable to contractually secure in advance and to record all eventualities in writing . If the IT service provider then makes a mistake, he has acted contrary to the contract and must pay for the damage himself.
Tips: How to find a good outsourcing provider
A first step is research. For example, let's look at Clutch. The Clutch is more concerned with companies developing web applications and websites or doing online marketing.
Tenders can also be used to obtain offers, or you can specifically register local providers in the region yourself . The latter often have the advantage that they can be visited on site and that there are no additional costs for long journeys or journeys. So important meetings and presentations can sometimes be held spontaneously.
Another indication of the reliability of a potential IT provider can also be common certificates such as ISO 27001 for data security , or designated technology partnerships.
If it comes to the contract, it is advisable, legally relevant cornerstones to the business-carrying processes, pre-contracted hold. These include, among other things, terms and notice periods . In addition, it should be clarified in advance what happens after termination of the contract with customer data and rights (Privacy Policy). Possible legal consequences can be reduced to a minimum early on.
