Information Technology (IT) or rather Information Communication Technology (ICT) is probably one of the strongest drivers for competitiveness and innovation for every business. On start-up, many small and medium businesses face many challenges among them how to cope with competition from the larger established companies that offer the same services with them. Information Technology is one of the strongest tools that such businesses can embrace in order to propel themselves to greater heights.
Most of the IT services can be done in-house but most of the small and medium businesses usually prefer to outsource to specialized IT firms. So what exactly does outsourcing of IT management tasks specifically entail? We will delve into that so as to as to see the benefits of outsourcing IT services and may be some of the disadvantages of the same.
Outsourcing of IT Services
In its plain definition, outsourcing is an arrangement whereby a company or an individual seeks services from another company that could have been provided in-house. This is a growing trend especially in the IT industry where companies focus on what they are best at while outsourcing others services which they may not have the personnel or tools to accomplish them such as server infrastructure management, IT support, software development, data storage among others. While many large organizations usually outsource only a portion of their IT functions, it makes sense for small and medium businesses to do so since they do not have the resources to do every IT function in-house.
Among the many outsourced IT functions, data management and data storage rank among the top most outsourced IT services for any modern small or medium business. Cloud computing has been the main contributing factor to this movement from in-house data storage to storing data in the cloud. This is not only cheap to maintain but it also saves the business a large chunk of money that they would have used to purchase data storage devices and to also recruit a number of database administrators. Non-technical users can also learn how to store and retrieve data from the cloud without necessarily having a background in database management or computing.
Advantages of Outsourcing IT Services
Outsourcing IT services comes with a plethora of advantages for both small and medium businesses. While a business evaluates its choices in what IT functions to outsource and which ones to do in-house, these are obvious gains to be made if they opt they go the outsourcing route. So what are some of the advantages that come with outsourcing of business functions?
- Reduced Overall Cost
This is the prime advantage of outsourcing IT functions to an external firm or an individual. A company technically eludes the need to hire professionals who would cost the company much more than they could have spent on outsourcing the same function. It also saves the company the need to purchase hardware and software materials that would be used for the outsourced IT function. - Focus on Core Processes rather than Supporting Ones
When a company opts to outsource some or all of its IT functions, they would be able to focus fully on what they have specialized. A legal firm or a medic for example, would be better placed if they outsourced their IT functions and focus on providing health and legal services respectively. Such businesses could benefit immensely by outsourcing their IT functions and investing on what would directly contribute to the growth of the business. They would be able to slash on any overhead costs and concentrate on generating revenue from their primary products. - Faster Service Delivery
IT functions are usually outsourced to vendors who specialize in their field. Accordingly, it would guarantee faster service delivery since the particular IT functions are carried out by specialized people with the right expertise and skills. - Staffing Flexibility
When IT functions are outsourced, it offers the company a great staffing flexibility. It will allow the company to hire employees on a contract basis to cater for seasonal or cyclical demands and release them when their services are longer needed. - Development of Internal Staff
In a situation where a large project is being undertaken within the company, personnel can be sourced from outside to come and help in the project. Onsite outsourcing would go a long way in providing training services for the employees of the company thus improving their overall skill-set and their ability to solve complex problems. - Reduced Risk
When IT functions are outsourced, the company would be able to shift some of the responsibilities to the outsourcing provider. In case of any risk, the vendor would bear the responsibility of mitigating the risk by themselves.
Disadvantages of Outsourcing IT Functions
While outsourcing is a perfect good way to minimize costs and drive your energies towards what you have been trained to do, it presents a number of challenges to small and medium businesses.
- Access by the Provider to Company’s Confidential Data
This is something that you would not want to mess up with especially on start-up. When a business outsources its IT functions, the provider would gain access to the company’s private information which can be used negatively against the business. The provider would be able to retrieve data about the employees and clients of the company and how they do business. Thus, it is important that an organization seeks a trusted outsourcing provider when they opt to outsource some of their IT functions. - Employee Dissatisfaction
This majorly affects people who work in the IT department. When the particular IT functions are outsourced, it could lead to employee dissatisfaction since they would have the perception that they are incapable of carrying out the outsourced functions. They can be demoralized thus leading to less productivity on their end.
Conclusion
Outsourcing of IT functions is a step that small and medium businesses should consider since they do not have so many resources at their disposal to invest in a robust IT department. However, this should be done prudently so that they do not expose the company secrets and all the important information in company’s custody.
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