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SoftwareMedia Blog | May 5, 2016

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The Risks And Benefits Of Outsourcing IT

The Risks And Benefits Of Outsourcing IT

It is increasingly common for businesses to consider outsourcing some or all of their IT operations.  As with any strategic decision, it is essential to weigh the potential benefits against the risks.  For most businesses the benefits are far greater, however there are some limitations which may affect overall business operations.

Accessibility Can Be Limited

One of the biggest risks of outsourcing IT is a lack of accessibility.  Relying on outside service carries the inherent risk of downtime during a critical system failure if the service is not available.  This is especially true for IT contractors which are extremely busy.  Not only does this affect productivity, but it also creates the potential for lost revenue.

Easier to Control Expenses

The first benefit businesses notice when they consider outsourcing IT is expense control.  IT contractors determine costs based upon specific actions or hourly rates.  This makes it easier for businesses to accurately estimate IT related expenses.  It also eliminates surprise spikes in IT costs which allow businesses to invest more heavily in core competencies.

Less Personal Approach

Another drawback of outsourcing IT is the loss of personalization.  In-house IT staffs quickly become intimately involved with core operations which lead to a greater understanding of business operations intricacies.  This can reduce the amount of time it takes to resolve problems when they arise.  It also decreases the amount of resources necessary for regular maintenance.

Business Can Focus on Core Competencies

One of the biggest benefits of outsourcing IT is it allows the business to focus on its core competencies.  Business managers can focus on goals and objectives rather than worrying about day-to-day technology requirements.  This results in more time focusing on revenue-generating tasks including innovation, personal relations, sales, and marketing.

Security Protocols Can Vary

Any time an aspect of businesses outsourced there is always an inherent security risk.  It is essential to choose and IT service which follows strict security protocols to protect mission-critical information and customer data.  This is particularly important when outsourcing services to a foreign country where data security standards may be lower.  Many foreign countries still do not have stringent laws protecting intellectual property and other types of essential data.  As a result, prosecuting any security breaches becomes increasingly difficult.

Gain Access to IT Resources beyond Normal Means

The final benefit of outsourcing IT related tasks is increased access to resources beyond the businesses normal scope.  Small businesses rarely have the budgets necessary to implement a comprehensive IT system of management in-house.  Outsourcing these tasks provides access to resources similar to the cutting-edge systems utilized by larger businesses.  The result is a more equitable playing field.

In general, the smaller a business is the more it can benefit from outsourcing IT entirely because they face greater budget restraints and less access to cutting-edge technologies.  Larger businesses primarily benefit from outsourcing specific maintenance tasks while still maintaining an in-house staff to focus on mission-critical systems.  There are many levels to outsourcing IT to choose from.  It is important for a business to determine how much it should outsource in order to maximize the benefits while minimizing the risks.

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