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IT Outsourcing Pros and Cons

Information Technology (IT) is needed to integrated software and hardware platforms into the daily duties a business needs to complete. For small businesses, the cost of having on-site IT professionals can be beyond what they can afford, yet there is still a need for help in this area. Where can you turn for IT solutions when you’re on a tight budget? Through IT outsourcing.

There are many benefits to consider with IT outsourcing, but certain disadvantages must also be considered before signing any contract. Here is a look at the pros and cons of outsourcing IT requirements in today’s market.

The Pros of IT Outsourcing

1. It is a way to receive instant expertise.
A small business trying to do things on its own isn’t going to have much IT success unless someone in that business has a background in the field. By outsourcing this requirement, small businesses gain access to a team of experts who are working to find quality IT solutions every day. This means the quality of work can improve for the small business, down times can be reduced, and the cost savings can be so high at times that the outsourcing becomes a neutral expense.

2. It is a cost effective method of managing technology needs.
Even just having one IT professional on staff can easily cost a company close to $100,000 when salary and benefit obligations are considered. When outsourcing this need, the costs of salary, office space, and benefits goes away in exchange for a rate to have services rendered. Lower costs almost always come from outsourcing, especially for the small business with few resources.

3. It allows businesses to become more flexible.
The current business environment is one that is almost always changing. This means an IT need must be able to quickly respond to the demands that customers demand. When small in size, a business may not have access to the resources that are needed to adapt to these changing circumstances. When IT needs are outsourced, however, the vendor in question should have many more resources and skills at their discretion to use.

4. It provides the current staff with better job security.
Outsourced workers tend to be a buffer between the changing business environment and the regular full-time workers of a small business. These contracts can be added and dropped as needed as times change so that the regular employees aren’t as affected by the increasing and decreasing flows of information. It even allows the small business to foster its relationship with these full-time workers because the IT outsourcing is handling the changes instead of the executive team.

5. Time zone differences can help to create additional productivity outside of local regular business hours.
With the right IT outsourcing relationship, it is entirely possible to create a 24/7 presence for small businesses thanks to time zone differences. Even if someone on the West Coast of the US outsources to an East Coast provider, the three hour difference means an 8am start time in the east is a 5am start time in the West.

6. Different cultures can provide different perspectives.
Sometimes going outside of the local sphere of influence can be a great thing. People in different cultures may have different perspectives on your IT needs. This can allow a small business to become even more competitive within their field and potentially help them compete with companies much larger than them.

The Cons of IT Outsourcing

1. It exposes sensitive data.
For IT outsourcing to be effective, businesses must allow the third party contractor to have access to their information systems. Many affordable IT outsourcing options are located in a different country. Both issues increase the risks of a data exposure occurring. If a data breach occurs at the outsourcing site, there is nothing the small business can do to prevent a loss of information. The end result can be a loss of reputation, a negative financial outlook, or the total destruction of the company.

2. It is common to have unexpected fees.
It is necessary to carefully read all IT outsourcing contracts before agreeing to them to avoid unexpected fees. Many agencies allow a specific number of assistance calls and tasks within an arrangement. If that number is exceeded, a per incident cost may occur that would be billed on a monthly basis. Certain tasks and consultations may also have fees associated with them that can add up rather quickly and can be problematic if the contract signed is measured in years instead of months.

3. It is a field that is consolidating.
The world may be coming closer together than ever before thanks to the internet, but for IT outsourcing, this isn’t necessarily a good thing. Vendors and takeovers are consolidating the market, creating scarcity within a market that is driving up prices. There are fewer choices and higher prices in 2015 than there was in 2010, which makes it more difficult for a small business to find a solution that fits within their budget.

4. There is a loss of control.
Even the fastest IT outsourcing response isn’t going to be as fast as a response that happens internally. There is no control over the speed of a response, which means there will always be a possibility of down time even with a vendor that has a solid reputation. Add that loss of response control to the loss of data control and the risks may be too great for certain small businesses to assume.

5. It can be bad for employee morale.
There are times when IT outsourcing makes sense. There are other times when it can send employee morale into a devastating negative spiral. Once one function is outsourced, employees often fear that their responsibilities could be outsourced because someone else can do it for a cheaper price. Once employment security becomes a concern, employees will begin to spend more time looking for work than paying attention to tasks that need to be completed while they are at work.

6. Your outsourced worked might be outsourced.
You might discover that your IT outsourcing just got outsourced to a subcontractor. There isn’t an issue if quality controls are in place, but often there are not. The outsourced agency simply relays the work on without checking it, essentially receiving a free paycheck in the process.

With enough due diligence and open communication with current employees, IT outsourcing makes a lot of sense. It is an easy way to save money, improve IT services, and potentially improve a market share. Consider these IT outsourcing pros and cons carefully, read every line of a contract before signing it, and you’ll be able to find the right solution that meets your needs.

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