Everything You Need to Know About IT Outsourcing

When it comes to IT management, several options are now available to businesses. Depending on their resources and size, organizations will not have the same approach. Smaller ones will sometimes opt for a "homemade approach’', where this function will be entrusted to an employee who, without being an IT specialist, is more interested and possess better than average computer skills. Some companies will invest in an internal team of specialists, while others will ask for the service of an external consultant. Another option is available for companies: outsource their IT. But what is outsourcing? Why this approach can be an effective solution for managing the information technologies of an organization? In this article, we will attempt to clarify the subject and answer some of the most common questions regarding this type of service.

What is IT outsourcing?

First tried by multinationals in 1989 [1], IT outsourcing has been democratized to become a viable option for most organizations. Even for SMEs. Outsourcing can be define as the means entrusting the responsibility of the IT department of a company to an external partner, and with a predefined agreement in services, costs and duration. As required, it is possible to impart all or most part of the following aspects:

• IT Strategic planning
• Architecture, connectivity and network security
• Integration, administration and infrastructure maintenance
• Hardware and software related aspects (purchasing or financing consulting services, licence renewal)
• Installation, configuration and maintenance of workstations
• Data backup related aspects to (backup solution, business continuity plan)
• Systems security and monitoring (networks, servers, softwares, security updates)

Can IT outsourcing make my infrastructure more efficient?

IT companies that provide outsourcing services generally have highly skills multidisciplinary team with a vast experience based on a diverse clientele. They propose efficient technologies and tools, but foremost solutions that have been previously tested during previous mandates. IT outsourcing business model is based on service excellence. To acquire and maintain a high standard, companies invest heavily in their own infrastructure, technologies and tools in order to benefit their clients. These ones can therefore take advantage of the latest technologies and tools which they would probably not have acquire otherwise, given the importance of the investment.

Is my computer facilities safe with outsourcing?

Outsourcing enables efficient management of critical elements such as security, computer system surveillance and data backup. Supplier-partner ensures that these items are checked proactively and continuously and that they will also be adequately planned. An agreement includes a commitment on the desired level of security while a business continuity plan can be implemented to address all contingencies (computer attacks, recovery claims). Outsourcing also allows proactive problem solving. With emphasis on monitoring infrastructure (networks, servers, etc.) through efficient systems, outsourcing corrects gaps and problematic situations before they have consequences. Also, as the service provider is committed to a fixed return for a fixed price, he will resolve any underlying issues that might affect it. For example, those relating to breaches of user standards or unnecessary complexity and diversity in the infrastructure structure.

Can outsourcing contribute to lower my IT costs?

According to an IBM study, outsourcing can help reduce IT budget expenses by 30% [2]. Lower costs are for example possible for the acquisitions of solutions and tools because IT companies offering outsourcing services usually have access to better prices with software and hardware providers due to their high purchasing volume. They can also help negotiating down the arrangements with other providers (Internet, IP phone, cabling, etc.) because they have comparative information for determining whether the price paid is acceptable in terms of services offered and the business sector. In terms of the agreement, they are usually annual and negotiated according to the needs. Outsourcing is based on a long-term partnership concept where the objective is to create value. It is more effective on the long term. This leads to a thorough planning as well as an optimized management of human and material resources of the supplier-partner that will benefits ultimately the customer. As for rates, they are calculated according to the level of services requested and the expected performance. The pricing is generally aligned to the needs and achieving objectives set by the customer.

Who manages risk in an outsourcing agreement?

In opposition to a staffing supplier who provides only the resource, a company offering outsourcing services agrees to deliver a service and results. Therefore, he assumes all risks related to his service provision. This aspect contributes to the implementation of control measures and proactive monitoring. As supplier-partner takes full responsibility for risk at a fixed cost, he will draw up specific measures to fulfill its commitments and budget. It will implement, usually, in addition, processes and tools that will support the documentation and feedback.

Is outsourcing suitable for SMEs?

Outsourcing allows company to focus on its core business and dedicate to it the majority of its investments. Small and medium enterprises can allocate a larger share of their budget on human resources on their core business instead of investing in costly internal IT resources that are not "strategic" to their operations. This allows them to devote themselves entirely to their growth. For SMEs, the flexibility offered with outsourcing is another beneficial aspect. The human and material resources can be allocated and modulated according to the objectives of growth and specific needs of the organization. There is inevitably a decrease of under or unused resources. They are optimized for current needs while they can be forecast for the long term. As you could see, outsourcing is definitely an approach to consider when it comes to managing IT in enterprise. Now available to all types of organization. This service offers advantages in terms of management, cost and performance and proves to be a solution of choice for any company looking to transform its IT into a competitive advantage. This article has raised your interest? You have unanswered questions that remains? To learn more on the subject, Patrick Hardy, Partner and Vice President Managed Services at GTI, will present a conference on "Outsourcing your IT management in 2017: is it possible to save costs?" As part of the event Stratégies PME to be held in Montreal on 23 and 24 November. Be sure not to miss it!