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Outsourcing IT services is the "new normal." But is it for you?

April 11, 2019 / 4 minute read

Whether you need to augment staff, complete a one-off project, or farm out an entire IT function, outsourcing can be a stroke of genius or a huge mistake. Is strategic outsourcing right for you, and how do you leverage it?

Strategic outsourcing is becoming mainstream for organizations wanting to move IT functions, tasks, or jobs to external third-party service providers. Reasons for outsourcing are varied, but the most common are to save money, augment or bridge skill gaps, or speed up strategic initiatives. Occasionally, it’s a combination of all three. But, outsourcing can be good or bad depending on your reasons for doing it and your organization’s ability to manage the operational and cultural challenges that go along with it.

If you’re considering IT outsourcing but are unsure if it’s right for you, these FAQs will get you started.

What are the main types of IT outsourcing models?

We see these four models used most in IT outsourcing:

Outsourcing noncritical or nonvalue-adding IT functions can enable IT to focus on initiatives that deliver business value.

What are the advantages to outsourcing parts of my IT function?

What are some of the disadvantages I should be aware of?

It’s important for both parties to clearly understand the limitations of the outsourcing arrangement.

What should I do before approaching vendors?

We recommend the following four-step process to prepare your organization for IT outsourcing:

  1. Clarify the business goals that IT needs to support. Before deciding to outsource, make sure you clearly understand the wider business context in which your IT services operate. In what areas is your organization planning to grow? How will IT support that vision?
  2. Understand the structure of your IT organization. Next, review your IT department’s organizational chart, and clearly identify the main areas or “towers” of service provided. Determine how each tower contributes to your business goals, and understand the relationships and dependencies between them so you can determine the impact of outsourcing. This is also a good time to consider what you’ll do with freed-up resources (money, people, or both) and how they will contribute to the business goals.
  3. Determine which areas to outsource. Place all service towers on the table, set aside the ones that are core and strategic to your business, and examine the remaining items for outsourcing.
  4. Choose an outsourcing model. Consider your needs, evaluate the different outsourcing models (staff augmentation, project-based, function-based, or a hybrid of these models) and choose what works best for your situation. Remember: The objective should be to divest or outsource commodity types of services that add little business value to your organization and keep the areas that are considered core competencies in house.

What if I need help?

Taking the first steps toward outsourcing can be time-consuming and overwhelming. A strategic partner can help you navigate the labyrinth by creating a decision framework to identify areas that can benefit from outsourcing, help define the scope of services, assist with preparing service-level agreements, and support the vendor solicitation process.

In summary

There’s good outsourcing, and there’s bad outsourcing. If outsourcing part of your IT workload enables your IT department to concentrate talent on core business initiatives, a well-executed outsourcing plan can pay huge dividends. But, if you outsource critical strategic technology in an effort to save some money, you could be giving up valuable intellectual property and quality control — which can negatively affect the value and even viability of your business.

To find out whether IT outsourcing is right for your organization, give us a call.

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