IT outsourcing can help
small businesses reduce IT costs and
access new technologies. It begins understanding which IT
operations could benefit from being managed by a third party
service provider, which could be an
offshore outsourcer or someone based on-shore.
Why outsource your IT?
There are many reasons why a business might choose to
outsource part or all of its
IT operations. These include cost savings, particularly from
owning and managing an
IT estate and employing the staff to do so.
But
cost is not the only reason. IT may not be the core activity of
a small business, so outsourcing can relieve the pressure.
Also,
outsourcing can provide access to the latest industry processes
and techniques, and bring operational efficiencies. It can also
improve the firm’s speed to market for new products and
services.
Service quality can be improved through outsourcing specific
operations such as customer care and billing.
What are the drawbacks of outsourcing your IT?
There are some
potential downsides to outsourcing any operations. These
include losing control over a critical business service or
activity.
For example, if you are outsourcing your external IT support,
then your
customer relationships stand to suffer if your
service provider is not giving you a good service.
There could also be a lack of flexibility in the services you
receive. Lastly, you may have to invest time managing your
relationship with the service provider.
Which IT operations are usually outsourced?
Many IT activities can now be run as
outsourced services (NOA),
including the development and implementation of applications and IT
systems themselves.
One of the fastest growing sectors is business process
outsourcing, which is where back or front office functions are run
by a third party.
However, many non-core IT activities, which businesses have
traditionally provided internally, are now available as outsourced
services.
These include IT service desk and support, IT maintenance,
security, backup and recovery and even the
running of core business applications such as
Microsoft Exchange.
How do I outsource my IT?
Once you have decided which department or operations you would
like to be run by a third party, and made the business case for it,
the next step is to find an outsourcing partner which you are
comfortable working with.
There are large outsourcing experts like
Accenture and
Cognizant, and a whole host
of smaller and often more specialised IT services firms to choose
from.
From a financial point of view, it is advisable to understand
your existing IT estate and its cost base in enough detail to
enable you to evaluate whether the pricing model proposed by the
service provider provides value for money.
Should I look for an offshore provider or stay home-based?
Offshore service providers may be able to offer good rates but
there are many considerations involved in choosing to outsource to
a service firm located abroad.
For example, will the off-shore services be subject to the same
legal and regulatory regime as any on-shore services, for example
in relation to data protection?
Who will audit the off-shore services, and correct any problems?
Also, will the off-shore provider have a sufficient degree of
familiarity with the language and customs of your customers?
Ensuring that you get the most out of your outsourcing
relationship means you will need to have regular meetings with your
service provider, and measure their performance and targets. With
an off-shore provider, this could be an issue.
Is Software as a Service the same as IT outsourcing?
Web-based hosted software, also known as
Software as a Service (SaaS), is not strictly the same as IT
outsourcing, but it does share some of the same principles.
For example, a service provider will manage and maintain a
business application for you, offering you access to it over a
network and backing up any information that is generated from your
usage.
You will be billed regularly for the services you use, and there
will be an agreement between you and the
service provider that governs your usage and their
responsibilities to you.
The sorts of IT operations that can be provided as on-demand
SaaS services include email, finance and accounting,
human resources, and
sales force
automation.