What is IT Outsourcing?

This can be defined as the use of external service providers to effectively deliver IT-enabled business processes, infrastructure solutions and application services for business outcomes.

IT outsourcing, which also includes software-as-a-service, cloud-enabled outsourcing and utility services, assists businesses to have the right sourcing strategies and vision, choose the right IT service providers, develop the best possible contracts and have the best deals for a sustainable win-win relationship with the service providers.

IT outsourcing assists businesses to reduce costs, improve time to market and capitalize on the external expertise, assets and intellectual property.

Drivers of IT outsourcing

IT outsourcing is part of business process outsourcing (BPO). The main reasons for IT outsourcing include cost reduction and lack of resources. IT outsourcing is also known as IT enabled services (ITES) outsourcing.

The risks

There is always a risk whenever you handover responsibilities for an aspect of business to another person. There will be always some questions running through your mind whenever you give another person or vendor the control of your business. These questions include:

  • Did I hire the right vendor for the job?
  • Will they do whatever they are required to do?
  • How will they relate with the existing employees?

Anyone considering IT outsourcing should be aware of the following risks:

  • Some IT functions are not easily outsourced – IT plays a major role in organizations, from the simple tasks done every day to the technical processes. Business owners should ensure that the vendors are qualified to offer support for all these functions.
  • Loss of control – outsourced vendor will never be effective like full-time employees so long as they are under the same management as other employees. Therefore, they will be required to work independently, under minimum supervision.

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