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How to Come Up with an Effective IT Outsourcing Strategy for Your Business

25/03/2023

How to Come Up with an Effective IT Outsourcing Strategy for Your Business

 

IT outsourcing refers to the process of collaborating with external service providers to ensure compliance and develop critical IT functions for the business. This support may include support, infrastructure, consultation and development. In today’s digital era every company wants a versatile digital presence which not only creates awareness about their business but also adds value to their service by improving the overall customer experience. This not only allows them to strengthen their connections with the customer but also endows them with the flexibility to optimize their scaling process when it comes to meeting customer expectations as well as the fluctuating market demands.

 

In today’s times, software development companies and IT firms are following the footsteps of leading tech giants in the industry. They are becoming increasingly focused on improving the technical acumen of their internal staffing to propel innovation and minimize costs by pulling in talent from diverse IT backgrounds to support their business. However, there are several small to mid-sized businesses which are in the perfect position to outsource their IT functions to a third party. This gives them access to an array of benefits such as avoiding the cost of cloud storage, reducing tech infrastructure costs, and easing the process of hiring developers to cater to the business’s digital transformation requirements. But companies need a solid IT outsourcing strategy to realise their goals and objectives to generate greater revenue on investment.

 

What is an IT Outsourcing Strategy?

 

An IT outsourcing strategy is a long-term roadmap which entails planning which functions should be retained in-house and which IT operations should be assigned to an IT outsourcing service provider. It is also important how to delegate these tasks to improve productivity and reduce costs. There is a myriad of IT outsourcing strategies. However, all of them have a similar end goal which is to delegate the operations incurring the lowest possible costs while increasing revenue generation on income.

 

A robust outsourcing strategy may also require the coordination of various departments such as Finance, Human Resources, and IT departments in-house. They collaborate to successfully determine the functions which should be delegated to external service providers.  A sound IT outsourcing strategy allows you to carefully steer away from immature business decisions. This virtually means that you don’t have to incur unnecessary financial losses while saving time and money when coming up with solutions. You can evaluate your risks, identify the trends involved and select the perfect vendor to cater to the accomplishment of your business objectives.

 

Curate Effective IT Outsourcing Strategy for a Business

 

There is no one right way to curate effective IT outsourcing strategies for a business. However, with the growing complexities of the business world, a few commonalities can be unfurled. A few of these steps to curate an effective IT outsourcing strategy are mentioned in the paragraphs below. 

 

Decide when to outsource

 

One of the most integral things to remember is that you should know when to outsource your IT operations. You should be careful enough to notice the initial signs of the need for intervention through external expertise. This can be when certain departments underperform or fail to deliver results.  Hence it is recommended that you outsource the non-core business functions to external service providers when it is necessary.

 

Plan your budget

 

It is quite essential to lay down a transparent and comprehensive budget for outsourcing your IT operations because financially unplanned outsourcing may cause the business to incur more unforeseen expenses. Yet, the business should be ready to bear both expected as well as unexpected expenses if the need arises. Planning a budget and setting up a contingency fund are of paramount importance in this regard. It also helps businesses employ the right technological tools and outsourcing service providers.

 

Find what to outsource

 

Businesses are not always well equipped to take up technological challenges although the digital revolution has already had a sustainable impact on the industries. Moreover, businesses often try to cover all the major time-consuming tasks by themselves which increases the deadtime for all the tasks. You can outsource specialized tasks which the business cannot handle and maintain focus on the core business processes that generate direct revenue. This helps improve the rate of productivity and the overall efficiency of the business. 

 

Decide your outsourcing goals

 

Businesses should evaluate what they want to achieve by outsourcing their daily operations. This helps stay ahead of the competition in the space and avoid any gaps, errors or redundancies. Carefully consider the business objectives, each step at a time to be in a better position while selecting the right service provider to augment the requirements for your business. By precisely delineating its objectives businesses can optimally utilize your in-house IT staff while increasing productivity and saving money along with the possibility of accelerated scaling.

 

Select the right IT outsourcing model

 

There are several IT outsourcing engagement models to choose from depending on your business requirements. In this regard, there are three outsourcing plans which are most popular among businesses with IT outsourcing requirements. They are as follows:

 

 

  • Staff augmentation model: This process of outsourcing entails hiring external employees with particular technical skills to look after a certain project while following the objectives and orientation of your company.
  • Project-based model: This model of outsourcing involves outsourcing an entire project from scratch to be delivered within a stipulated turnaround time by an external technical service provider.
  • Dedicated Team Model: The third type of outsourcing model is about hiring a team of specialized personnel to expand in-house faculties. In this kind of model, the focus is usually on core business processes while a team of dedicated hired personnel work on specific projects under your business roster.

 

Reduce Outsourcing Risks

 

While outsourcing IT functions have multitudes of benefits, there are also a handful of risks involved in the process. By closely monitoring these risks, most businesses can mitigate the possibilities of financial and professional losses. A few of these risks are discussed in the paragraphs below:

 

 

  • Control and Trust: You will have to accept that managerial intervention will be hindered when you outsource your IT operations. Your HR team could learn carefully about the service-providing agency, communicate with previous clients and portfolio companies, and ensure that the vendor has no issues with the outsourcing methods used by the business. These basic steps can help foster clear communication and transparent coordination with the third-party tech vendor which in turn reduces redundancies and reduces the time taken for project outsourcing


  • Quality issues: When a business loses operational control, there is an opportunity to oversee the entire process and outsourcing always entails certain quality risks. This can be avoided by collaborating with external service providers who have consistently demonstrated a commitment to quality in their portfolios. Moreover, it is also recommended to understand that outsourcing doesn’t always have to be hands-off. 


  • Confidentiality and IPR: Intellectual property rights are one of the most prominent ongoing issues with outsourcing any project or business process. These rights should be protected whether it is copyright, patent, or trade secrets. Hence the legal and financial teams may be skeptical about the additional outsourced responsibilities and staff. You can prevent this by entering into NDAs and ownership agreements with the service providers to protect your intellectual property rights.

 

 

Shortlist the right outsourcing service providers

 

When you start researching a business’s prospective service providers, there are a few things you should keep in mind. When all your top prospects meet most of your requirements, your next step would be to shortlist your top 5 prospects and select the one that best fits your organisation. It is imperative to remember that the more choices you have, the better you can analyze and reach a more fitting conclusion which will in turn help your business select the best outsourcing service tailored for the needs of the business.

 

Build a Communication Plan

 

Regular communication with your offshore team of developers will keep both your business and your outsourcing client on the same page. Doing this will keep your project on schedule and help the client meet their milestones. Maintaining a transparent channel of communication is also integral to ensuring that there are no stop-gaps in the project. It can also provide more clarity on roles of responsibilities and targets to be achieved.

 

Concluding Remarks

 

There are many ways in which a business can come up with effective IT outsourcing strategies. While not all such strategies suit all types of businesses in all domains, there are a handful of steps and common grounds that all of them deal with. Most businesses are deeply concerned about confidentiality, intellectual property, trust, transparency and quality issues. Moreover, planning, budgeting, reviewing the technology market and tools, and selecting the right model, among others, are essential in this process. Connect with a technology expert at Focaloid Technologies to know more about effective ways to curate IT outsourcing plans that work for your business. 

Published:25/03/2023

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