IT Outsourcing or In-house Management: What’s Right for You?

Date: 10 July 2017 Author: David Webb

If you haven’t already faced the question of whether to opt for IT outsourcing, stay in-house or pick a combination of the two, it’s likely you will at some point, as an increasing number of business functions have an IT dimension to them. Deloitte’s 2016 Global Outsourcing Survey reports that 72 percent of the 25 surveyed sectors were outsourcing IT functions, and that an overall 31 percent increase in IT outsourcing was possible. Before making the decision, here are some of the questions you’ll need to consider.

Does size matter when it comes to IT outsourcing? In short, yes. The type of IT support your organisation needs can vary greatly depending on multiple factors,with the size of business being just one. Growth in the volume and sophistication of business technology continues unabated—think website development, CRM systems and online marketing. Areas like accounting and HR have increasing IT dimensions as well, while entire organisational networks need to be maintained and kept secure. But there are instances when it can pay to keep IT functions in-house.  Start-ups, for instance, can grow their companies with a strong foundation of in-house talent and technology instead of relying on outsourced help.

In 2012, GM's new CIO Randy Mott made the decision to bring most of its outsourced  IT work in-house. His decision was in line with GM’s plans to deliver more value from IT, much faster, by moving away from a “run the business” approach to IT (mainly support and maintenance work), to increased development and innovation using in-house staff.

Do you have an existing pool of IT talent, and time to build a team of experts? One of the benefits of an in-house IT team is being able to train individuals, with special knowledge of your company, to suit your specific needs. Another benefit of investing in your own staff is the subsequent boost to morale—replacing employees with outsourced talent may leave other employees wondering if their jobs are at risk, too. One of the most positive results of staying in-house is that you get to retain the talent that differentiates your business from your  competitors.

If you already have a talent base, or are able to invest in the time necessary to find trustworthy individuals with the right skills, at the right level and at an affordable price, then building an in-house IT team is to your benefit in the long run.

Do you need to reduce operating costs? The number one reason businesses outsource IT functions is to cut costs -  about 59 percent. IT outsourcing allows you to get rid of the cost of employing new staff and the costs associated with additional staff, such as training, leave, health insurance and employment taxes. Another benefit of IT outsourcing is that you won’t have to maintain an infrastructure that can be an extra financial burden for some businesses.

Who wouldn’t want to reduce business risk? No matter how good your intentions, it costs to keep up with the constantly changing technology necessary to run your business successfully. Professional outsourced IT providers engage with many clients and typically stay on top of industry best practices. For this reason, they are in the optimal position to make the best decisions possible. By outsourcing your IT, you benefit from the expert knowledge and experience of specialists, which significantly reduces the risk to your business of implementing a wrong, and costly, decision. It also helps IT managers sleep better at night!

Would you like to strengthen your business through a good IT outsourcing partnership? Carefully research the IT outsourcer that will be a best fit for your company. Make use of references and work out the details of your contract and plan so the expectations and financial aspects of the partnership are clearly defined. Your company can reap the financial benefits of a strong IT outsourcing partnership in the form of training, cost of scale purchasing and leasing options for hardware, software and licenses, as well as potential compliance with government regulations.

Is a combination of in-house and IT outsourcing right for you? The decision to outsource or stay in-house doesn’t have to be a case of all or nothing. If you’ve answered “yes” to some of the points for keeping your IT functions in-house and “yes” to certain considerations for outsourcing, then a hybrid option might be right for you. The hybrid option continues to be popular with many companies who find that a mixture of outsourced and in-house IT management is the better fit for them. Potentially this gives you the best of both worlds and ensures solid IT delivery that gives you peace of mind.

Sometimes we all need a little help and making a decision on in-house versus outsourcing is a big one. Talk to one of our experts today, and we can help you decide what's best for your business.

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