What are the benefits and risks of outsourcing IT services?

Organizations today, from small to medium and large spheres, irrespective of the revenues and workforce, are outsourcing IT services. There must be, in fact are, some good reasons that have led the companies to have their IT related services outsourced. However, with every benefit, there does exist a risk as well. Nonetheless, it varies from one company, from which IT pertaining services are being received, to the other; if the benefits weigh more than the risks, or does the latter weigh more than the former. It, however, depends on other factors as well. Nevertheless, it always is a good idea to carry an extensive research against the company, which is to be entrusted with your IT services, and also the pros and cons, which come with having such services outsourced. That being said, before acquiring such services from some third-party, it is better to have your organization mentally prepared for any unpleasant situation that might arise as a result of the outsourcing. Moreover, outsourcing might require a certain organization to undergo some changes; finding out such changes, which would be needed, and whether the company would be able to sustain the potential change, before entering into some legal binding with the outsourced company, will be beneficial for the organization, in the long run. In a nutshell, better safe than being sorry.

We have explored the general pros and cons of acquiring third-party IT related services in this article; for having a better picture, before acquiring IT such services; depending on which, the decision to opt for outsourced IT-concerning services may be made.

Benefits of IT outsourcing services:

1. It reduces the cost

A reduction in the cost, is primarily the reason why the companies choose to have their IT services outsourced.  With the companies opting to stay with in-house IT services, have to pay a fixed cost; the problem with it is, the IT services being made to use, can be lesser than the fixed-amount being paid. That is, the cost can be more than the services being received. There even can be the days when the services relating to the IT are minimal, as compared to the expense incurred in the form of a fixed-cost.

Nevertheless, with such services outsourced, the fixed amount of cost would rather become variable. That is, the only time you will be paying is when the IT services would be required. The financial resources saved with the reduction in the expense, can instead be used in all the better ways for the company.

2. Helps you have a better expense control

Besides helping in reducing the cost, it also enables to take a better control of the expenses. Naturally, the expenses which incur while performing the business operations, are covered in the form of consumer-price. With a decrease in the cost, as a result of outsourcing, the consumer-cost also tends to get lower; as opposed to the in-houses operations, where the consumer-price is made higher to cover the expenses. Therefore, with the IT services outsourced, not only the expenses are better controlled, but the customers are also made to pay a lower cost; subsequently. 

3. Base-operations are better looked after

This one requires no knowledge of the space sciences to understand how having your IT relevant services outsourced, can help the workforce, at the managerial levels, to better focus the core operations of the company. IT services require to be looked after, time after time. Consequently, people at the managerial roles are bound to have their time and attention divided between looking after the IT services and other tasks. Subsequently, the core operations are compromised and overlooked, while trying to look after the IT services within the company. With the services, pertaining to the IT, outsourced, the core operations, as they should, are neither compromised nor overlooked, with the IT services receiving their share amount of heed.

4. Makes a company enough competitive

Organizations larger in the sphere, are also larger when it comes to having resources. Such organizations have adequate means and resources to have their IT systems, and thus the services, upgraded; in accordance to the latest technologies and the practices. However, the same could not be said about the organizations with a small or medium organizational sphere, which have limited resources; in terms of both finances and workforce, to have the latest IT related technologies adapted within their organizations.  

That said, the services providing third-parties, to which the IT services are outsourced, are continuously evolving their services, as per the digital advancements. By having IT relevant services outsourced, the companies get relieved from having their IT systems match the technological advancements. Also, with the small business IT outsourcing services, the acquired  services match the cutting-edge technologies, implemented by the large organizations, and thus empowers them to compete with the larger organizations.

Risks of outsourcing IT services:

1. Downtime Vulnerability

Probably, the first downside that comes with the idea of having IT related services outsourced, is the fear of having downtimes. A downtime, according to wikipedia is,

“ The term downtime is used to refer to periods when a system is unavailable. Downtime or outage duration refers to a period of time that a system fails to provide or perform its primary function. Reliability, availability, recovery, and unavailability are related concepts. The unavailability is the proportion of a time-span that a system is unavailable or offline. This is usually a result of the system failing to function because of an unplanned event, or because of routine maintenance (a planned event). “

With the companies choosing to have IT outsourcing services, the vulnerability of having downtimes is bound to exist. An organization, while there happens a system failure, may face a huge loss in productivity; reasoning being the downtime. The services providing partners of such enterprises or organisations, may take some time before turning to the situation being faced; let alone fixing it. Consequently, the workforce’s productivity and output is affected; subsequently leading to a monetary and production loss. The primal reason behind a delay in the heed of the services providing company could be lack of loyalty, or organizational disorientation within the very company 

2. In-house personnels vs Out-house personnels

With the IT services being provided within the company, the personnel providing such services, get familiar with the IT systems; due to their day to day interaction. This interaction may not be very much; however, the pertaining workforce gets familiar, more than the personnel which have to provide the services only, when there would be a need. As a result of this, naturally, when there would be situations requiring system maintenance or fixes, the in-house personnel’s services would be better, faster, and much efficient, than the ones providing the services outside the organizational premises.

3. Security breach risks

Prior to opting for outsourcing IT services, companies ought to check, whether or not, the company which is being considered to be entrusted with the IT concerning services, has strong security measures implemented. Nonetheless, the outsourced companies, which are off the shore, should extensively be investigated for the concerned matter. The trans-national company that is to provide the outsourcing services, should also be properly investigated, whether if it has a proper legislation or laws in its respective country; concerning the intellectual property rights and protection of privacy and data. With all that has been said, the risks of security and data breaches stays alive; regardless, whether the services provided company is on-shore or offshore. Even with the services acquired from well reputed companies, the risk would still exist.

4. Failed expectations

Enterprises seek for an IT-system outsourcing company with one expectation...outstanding results. Though some companies associate unrealistic expectations from their services-receiving partner, the ones with the realistic expectations may also get disappointed; from what they receive in the return of their outsourcing. The company may not be able to deliver what was actually expected. In that scenario, since the two companies are binded by a legal agreement, the services-receiving company may not be able to abandon receiving the services; even if it wants to, desperately. Performing, a proper due-diligence, might save the companies from later hustle.

Key takeaways:

The IT services’ outsourcing has its pros and cons; however, apparently, its pros outweigh the cons, and this might be the reason why companies are so eager today, when it comes to outsourcing IT services. Nevertheless, it remains a safe practice to know whether the outsourcing would suit the company and the company needs or not. The company, which is to be opted for acquiring the services, better have a robust security system; for data privacy and data security. The most prominent benefit of having your IT-system services, remains the two factors: low cost and the competitiveness; the others not being of much significance in general; to some companies it may, however. The major risk paused and the vulnerability surrounding such outsourcing stays the privacy and security of any enterprisation data, which may make some organizations to give up the idea of opting third-party IT related services. In general, having outsourced IT-system services may have a different effect on one organization, than it has on another.