Information technology needs are among the most commonly outsourced non-core business functions. Frequently outsourced IT services are application/software development, web development/hosting, infrastructure, technical support, database development/management, application support/management, and telecommunications.
In the past decade, we’ve seen how IT outsourcing has emerged as a method for businesses to meet their IT needs. The global IT outsourcing sector is worth billions – and continues to grow. But in recent years, we’ve also witnessed many companies bring back previously outsourced IT functions work to their in-house staff, known as insourcing.
Which is the best way to meet your IT needs: outsourcing or insourcing?
Even though majority of companies realize the importance of IT in their business operations, not all business owners and managers know whether to outsource or insource IT. To help you decide, let’s take a look at these two manpower models.
What is IT outsourcing?
Widely accepted and implemented by organizations across different sectors and industries, outsourcing is a cost-saving manpower strategy that enables businesses to focus on their core competencies while ensuring that all other non-core business functions are met.
IT analysts at Firewall Technical note a steady growth in the number of companies working with them. This reflects the findings of the 2018 Global Outsourcing Survey conducted by Deloitte wherein 74 percent of companies currently outsource their IT needs and 87 percent are planning to maintain and/or increase the level of outsourcing.
Benefits of IT Outsourcing
- Team of IT specialists will manage your IT support needs. They understand your existing IT systems and infrastructures but are also adept with the latest technologies that may boost your IT capabilities.
- A broad source of IT support for your business. Instead of just hiring one or a couple of IT professionals to handle your IT needs, you will have access to a team of technology professionals. Their shared expertise can definitely mean better services.
- Enable you to focus on more important business functions. Knowing you have a team of IT specialists ensuring your IT systems are working perfectly, you can focus on essential aspects such as marketing, sales, and other revenue generating activities.
Drawbacks of IT outsourcing
- Lack of control on your IT personnel. Since the IT team is not directly under your supervision, you don’t have supervision over what they will do.
- Output is limited to the services included in the contract. The outsource provider only renders services that are specifically indicated in the terms. They will not perform any tasks beyond that.
- Lack of motivation for business to develop its own IT team’s capabilities. Relying on outsourcing will not challenge your business to grow and improve its own IT personnel.
What is IT insourcing?
As mentioned above, IT insourcing is the practice of bringing back in-house IT aspects that had been previously outsourced. Quite recently, big companies have unveiled initiatives aimed to repatriate outsourced business processes. Barclays, Delta Air Lines, AT&T, and Chrysler are just some of the high-profile organizations that have started insourcing some IT functions.
Basically, companies that use insourcing are those that require a more sophisticated IT system and infrastructure to meet rapidly growing IT needs. Businesses that also have unique and progressive IT needs are also keen at insourcing.
Benefits of IT insourcing
- Cost-efficient approach. Since you are hiring organic team members, you can assign to them tasks and projects, something that can’t be done with third-party team of professionals.
- Direct supervision and monitoring. As company employees, you have the ability to monitor the progress of their work. In case of poor outcomes, you can do necessary measures to get them working.
- Better communication. Miscommunication can arise especially when the outsourced IT support provider is not physically available.
- Shared goals, mission and vision. As part of the entire team, your in-house IT team shares your business values and works alongside everyone else in the company towards achieving business goals.
Drawbacks of IT insourcing
- Difficulty hiring qualified IT professionals. Attracting and retaining experienced IT specialists can be a great challenge, especially that there are lots of other lucrative opportunities around.
- Management control on IT aspect of business. Repatriating IT functions requires the management to continuously monitor the outcomes of the team. If the top management lacks expertise in managing IT resources, the company will have a huge problem.
- Possible difficult handling critical IT needs. In case of a major IT incident, such as a security breach or outages, the insourced IT team might lack the necessary experience, technology and manpower to properly manage the crisis.
Every business has unique IT needs. When deciding whether to insource or outsource the IT aspects of your business, it is vital to evaluate your specific needs and complete a thorough cost analysis.