It used to be that executives took a hard line stance in regard to outsourcing. Some argued that you get what you pay for: The cost savings presented by outsourcing weren’t enough to make up for the potentially diminished service quality. Meanwhile, outsourcing enthusiasts said that it just made sense: After all, why pay top-dollar for routine maintenance and other non-value-add activities that could be better handled by outsourcing IT?
These days, however, many CIOs are softening their stance. Most corporate leaders agree that offsite services, while not an ideal solution for every technical dilemma, nonetheless remain a useful tool to manage certain IT workloads. And numbers don’t lie — studies show that businesses now are devoting a greater percentage of their budgets to outsourced functions than they were five years ago.
However, outsourcing models are unique as the businesses that use them, which is why it’s important to look at factors other than your budget when you’re deciding what tasks to move to outside vendors. In particular, you’ll want to evaluate how outsourcing IT impacts these nine areas of your business.
In some cases, using an outside vendor may invalidate certain terms within existing client contracts, particularly if your outsourcer is lax on security protocols. Before you sign a service agreement, be sure to review your current contractual obligations. Most vendors will negotiate the terms of your SLA to keep you above board with clients. Pay particular attention to your outsourcing vendor’s handling of data licenses, since you certainly don’t want to hand over client assets without guarantees. Also look into your vendor’s data security and privacy practices — especially whether or not they’ll keep you compliant with industry-specific standards.
There’s a broad range of quality when it comes to outsourcing, but no vendor is truly a “one-stop shop.” Providers often have their own areas of expertise, which can influence the quality of service you get. Most vendors offer the basics: cloud computing, networking, security solutions and IT support. But you may see distinctions in terms of the industries they serve; for instance, one company may specialize in small business and startup solutions, whereas another may have more experience with large medical providers and hospitals. Finding a vendor that knows your business will save you a lot of headache.
We talked briefly about how vendor security can impact your clients’ data. But of course client security practices directly influence your company’s assets, too. Once your information goes outside your network, you’ll no longer have the same level of control over what happens to it, so it’s absolutely imperative that you clarify your expectations for information security. For instance, you should know who has access to your data, where its stored and which security practices your provider uses, both when your data is at rest and when it’s in transit.
Where will you be in five to ten years? More importantly, how will your outsourcing model get you there? IT savings may seem attractive now, but if your vendor isn’t helping you to build a sustainable technology plan, are those savings really worth it in the long run? Most companies expect outsourcers to drive innovation, but in a task-sourcing model, internal employees may have to take a more proactive stance in planning and managing technological improvements. On the other hand, many managed services providers and IT partners consider technology planning and consulting services to be par for the course and will be much more energetic about implementing these solutions for you.
Scalability is ultimately one of the main benefits to outsourcing IT: You can bulk up when you have a large project to accomplish, then get lean when it’s time to streamline. That flexibility translates to agility, but only if you retain the intellectual capital to manage projects effectively. Ultimately, someone inside your business needs to have the technological know-how to oversee various IT capabilities and new projects.
When managed correctly, outsourcing can be a real boon to your productivity. By reducing repetitive workloads, you free up time to focus on core competencies and value-add services. However, it depends on the types of tasks you outsource. Manual, operational work always makes a good choice — handing over network and server maintenance, for instance. Other projects — including your key services and products — are better handled by internal team members. Get clear on the tasks you want to outsource before you commit to a contract.
With remote work, something always gets lost in translation, regardless of whether there’s a language barrier or not. However, your ability to communicate with providers absolutely dictates the success of outsourced operations. Set expectations before a project begins and document conversations through follow-up emails. You may not be able to control your vendor’s level of communication, but you’ll have at least fulfilled your half of the obligation.
When a project fails, who takes the blame, you or your IT provider? Many businesses struggle to identify accountability measures and maintain transparency when they engage outsourcers for a project — especially when there’s more than one vendor involved. Vendors frequently waste hours passing incidents back and forth, which is unproductive and financially impractical. A good outsourcing vendor should offer some measure of visibility into their processes as well as reports to measure their success.
Is Outsourcing the Best Model for You?
Although the word “outsourcing” is often used to refer to any sort of offsite IT provider, there’s actually a fairly distinct difference between traditional outsourcing and the solutions offered by more robust managed services providers. For instance, outsourcers might help you implement a cloud network but leave the business of managing it up to you, whereas an MSP would typically help you monitor and maintain your network throughout its entire lifespan.
Your connection with these providers is often more like a partnership than a client-vendor relationship. For certain businesses — those without the time, resources or technical expertise to closely manage outsource providers — this level of service just makes more sense. It’s worth examining all your options before you settle on a vendor, so be sure to review our e-book “Hiring an All-in-One IT Partner” to get a deeper explanation of each option. After all, the best IT model is the one that works for your company.