The world has changed, and as technology advances, so does the world of work. Gone are the days of organizations being large and centralized. The world has become a network of small to medium-sized organizations, communicating and working with each other through the use of technology. This has resulted in a need for IT (Information Technology) outsourcing to small organizations. IT outsourcing allows small companies to take advantage of the latest technological developments without having to make large capital investments. This means that more companies can move into new and bigger markets with greater potential for higher profits. Software development cost is high, and it is constantly increasing. The most viable alternative for companies to consider is outsourcing their software development to a third party.
In the past few years, IT outsourcing has become one of the most important means of creating business opportunities for companies. In this article, we’ll uncover everything you need to know about IT outsourcing.
What is IT Outsourcing?
IT outsourcing is the transfer of the IT responsibilities of a company to a third-party service provider. Outsourcing can be a good argument for the growth of the economy. Because it helps companies focus on the core part of their business and save money from having to pay for unnecessary costs.
The additional cost that the outsourcer charges is generally justified by its efficiency and effectiveness. The third-party service provider can focus its effort on a specific function of the company. IT outsourcing is meant to increase the productivity of the company.
What are the types of IT outsourcing?
There are two main types of outsourcing: location-based and relationship-based. Here’s a closer look at each one:
Location-based outsourcing is determined by the distance between the client and the service provider. It can further be classified into:
Onshore simply means that you and your team are working in the same geographical location as the vendor.
When the provider is in a nearby country, often sharing a border with the client’s country. This proximity can make communication and collaboration easier than with offshore outsourcing.
When the provider is based in a country that is far from the client, often in a different continent. Offshore providers usually offer lower rates than nearshore or onshore providers.
Relationship Based Outsourcing
There are different types of relationship-based outsourcing, depending on the management style and how the project is carried out. Some of them are;
The team works on the solution development from the beginning to the end.
The approach Adex takes at the company entails our staff being occupied by several simultaneous projects (for instance, web and mobile app development). This allows us to provide our clients with a comprehensive suite of services and always be available to take on new challenges.
Further Readings : FinOps Chronicles
IT Outsourcing insights
The most recent statistics show that more and more companies are choosing to outsource their IT needs. This is likely due to the many benefits that outsourcing can provide, such as access to a larger pool of talent, increased flexibility, and lower costs.
- According to Statista, the global market share of software development outsourcing is projected to reach US$395.00bn in 2022.
- The revenue is expected to grow at an annual rate of 8.26% from 2022 to 2027, which would result in a market volume of $587.30 billion by 2027.
- The average amount of money spent per employee in the IT Outsourcing segment is projected to reach US$114.30 in 2022.
According to Clutch, 8 out of 10 small companies had plans to outsource their businesses at the beginning of 2021 to take advantage of the different benefits of IT outsourcing. Among those companies, 27% specifically planned to outsource software development services.
According to the NASDAQ, a world-renowned stock exchange based in the US, it’s estimated that by 2040, more than 90% of purchases will be made online. This shift will result in income growth for various industries – with information technology being one of them.
Further Readings: Applications of Cloud Computing
When do you opt for IT Outsourcing?
IT Outsourcing is not for everyone but can be profitable for both clients and vendors in the following circumstances: IT Outsourcing is particularly rewarding for companies that have a high demand for specific skill sets, but can’t afford to develop the expertise internally. IT Outsourcing is essential for small companies that can’t afford to hire the best talent but can afford to pay the best consultants to get the job done.
What are examples of IT outsourcing?
For example, companies like Microsoft, Google, IBM, and Oracle outsource a large portion of their IT infrastructure to third-party vendors. These companies are software producers and provide support, maintenance, and upgrades for their clients.
These third parties act as a mediator between the software companies and their clients. There are several reasons why some companies prefer to outsource their IT infrastructure.
Generic Examples of IT outsourcing Types are
- Infrastructure outsourcing
- Web application development
- Software development
- Tech support
- Database management & development
- Website maintenance
- Network & Communications
- Disaster recovery
- Email security
- Data Center management
- Threat protection
Our IT Outsourcing Technology Stack
Our stack is guaranteed to deliver quality and performance. Anything on this list is a safe bet for your next project.
- DevOps Engineers
- Full Stack Developers
- Mobile Developers
- Front-End Developers
- QA Engineers
- UI/ UX Designers
Benefits of IT Outsourcing Services
IT Outsourcing Services allows talented professionals to pursue whatever work they please and serve a wide variety of clients and brands.
You can set your hours and manage your own schedule, which makes it easier to scale your income over time
- If you ever want to change directions or explore a new topic or industry, it’s easy to pivot and make the switch.
- You will be able to quickly build your dedicated development team according to your requirements and needs.
- You can cut down on recruitment time by finding the perfect fit talents for your company. No Hassle!
- Easy process: Sign NDAs & Provide -cancellable contracts at your convenience
- You are not limited by geography. This means our experts can work remotely with all of our clients.
- Renting skills can be a great way to find diverse talent from different industries or niches.
- The beauty of the expertise rental is it promotes a win-win scenario.
How Can IT Outsourcing Help Companies?
The benefits of hiring full-time employees are great, but the costs that come along with it for every task you need to be done can quickly add up and become very costly. In addition to salaries, traditional employers need to cover benefits, payroll taxes, paid time off, and more. And unless a company is hiring for a remote position, they need to provide a space for the person to work in as well. It’s important to weigh the pros and cons before making any decisions about whether or not this is the best route for your company.
Adex International— Your Reliable Partner in IT Outsourcing
At Adex, we understand that companies in all industries rely heavily on IT functions. To support these companies, we offer various IT outsourcing services that businesses can take advantage of.
Outsourcing IT services is a popular choice for many companies because it is generally more cost-effective to hire a third-party provider than to buy and maintain their own IT infrastructure. Here at Adex, we can take full responsibility for all IT maintenance and support with our fully managed service, or provide additional support for an internal IT team as needed.
Outsourcing IT FAQ’s
What are the key trends in IT outsourcing?
Since the birth of IT outsourcing, there have been several key trends have emerged. The first major trend is the rise of offshoring. As technology continues to improve, businesses can shift some of their operations to locations that can provide a more cost-effective solution. This allows businesses to save on costs while still receiving high-quality service.
Another trend is the growth of freelancers in the IT industry. As more and more businesses shift toward remote working arrangements, the need for freelancers has increased dramatically. Freelancers are valuable because they can work on projects without tying up full-time employees. They also allow businesses to quickly ramp up or down teams based on project demand.
Another major trend is the continuing rise of artificial intelligence (AI) in the IT industry. AI is becoming a valuable tool for both companies and freelancers alike. It allows businesses to automate repetitive tasks, freeing up employees’ time so they can focus on more critical responsibilities. It also allows freelancers to take on more complex projects since they can rely on AI to take care of the day-to-day tasks.
How should I set up the work with the IT outsourcing company?
1). Know what your Requirements/needs are.
2). Do your due diligence and go for one who can serve your requirements/needs the best.
3). Negotiate and sign the contract
4). Work with the team and be a sure sign of mutual understanding and trust is there.
5). Monitor the work and trust the team more.
6). Happy working.
Do IT outsourcing companies bill hourly or by project?
It depends on the company you’re working with! Some IT outsourcing companies bill by the hour, while others bill by project. It depends on your workload and the type of work you’re doing.
How can you trust your IT outsourcing provider?
Many aspects are important to consider when selecting an IT outsourcing provider. Some of the most important factors include:
1. Experience and track record: Choosing a company with experience is crucial for ensuring the project will be completed successfully.
2. Service level agreement (SLA): An SLA is a contract between you and the provider that outlines the services and uptime guarantees.
3. Team and expertise: The provider should have highly skilled team members who are familiar with the work that needs to be done.
4. Pricing: It is important to find a balance between price and quality. If the price is too low, quality may suffer, and if the price is too high, it may be difficult to keep within budget.
5. Communication channels: A good provider should have clear communication channels in place so that you can easily reach someone with questions or concerns.
What are common objections to IT outsourcing companies?
Common objections to IT outsourcing companies include:
1). Unreliable service and/or result
2). Lower quality of work and/or result
3). Slow response time to requests and/or issue resolution
4). Cumbersome approval process for the implementation of requested changes or improvements that are mandated by the client company
5). Requirement that the client company is required to sign a non-disclosure agreement (NDA) before being provided with information about the scope of work that is being performed on its behalf.