IT Outsourcing: What is it and why should you consider it?
Before taking the plunge and deciding to incorporate IT outsourcing into your company, it’s worthwhile to understand the concept of IT Outsourcing, also known as staff augmentation, its advantages, potential disadvantages, and to what extent this service can be useful and applicable to your business.
WHAT IS IT OUTSOURCING?
Let’s start with a simplified definition: IT Outsourcing encompasses a set of models proposed for outsourcing activities in information technology services that some companies have recently adopted. Delegating these operations to a specialized company with trained professionals is an alternative to save energy on specific IT issues, which would otherwise require a significant amount of time and effort from your employees, diverting them from more urgent tasks. Moreover, the outsourced services are provided in a scalable manner, addressing the needs and potential issues that may arise within the company’s technological sector.
According to Claudia Fortuna, Business Manager at Meta IT, “the main benefit of hiring this type of service is cost reduction, as there is greater predictability of expenses related to professionals. Additionally, it is extremely flexible, allowing hiring only for specific projects.”
Speaking of it this way, it may seem like the perfect path, right? Indeed, it offers numerous advantages. But hold on, could potential inconveniences also arise and hinder plans for increased productivity and improved delivery processes? Let’s analyze the types of IT Outsourcing and gain a better understanding of how advantageous this model can be for an organization.
TYPES OF IT OUTSOURCING
It is clear that each company, depending on the sector in which it operates, size, number of employees, and stakeholders, will need specific IT services. Additionally, each company proposing solutions and the implementation of certain software, applications, and technological resources will have a specific profile.
Therefore, these aspects must be considered when choosing the outsourcing partner and overseeing the implementation of solutions. There are various types of IT outsourcing and different nomenclatures, depending on the service provider or the service itself to be introduced. To explain further, there are three basic types of outsourcing providers and distinct operations that these companies can offer.
Before starting the hiring process, it is important to conduct a thorough analysis of what your business is seeking: an update of existing tools or a digital transformation that completely changes the technological structure? Perhaps you simply want to operate in a specific point in the value chain or optimize the final stage of delivery to the consumer. Only an analytical perspective and a decision-making process based on concrete data can help make the right choice.
So, we will now explain the different forms of IT outsourcing, whether they are related to who provides these services or related to the type of service being performed.
IT OUTSOURCING COMPANIES
- i. Offshore: The outsourcing partner responsible for operations is in a foreign country, for example, India, China, Germany, among others. While these countries have many highly skilled professionals capable of handling various situations and challenges in the IT department, cultural or linguistic issues may hinder clear and quick resolution, not to mention differences in work practices and the risk of intellectual property violation.
- ii. Nearshore: In this situation, the outsourcing company is also based abroad, but in a neighboring country. We have a similar scenario to offshore, but with a much closer time zone, and generally, neighboring countries in South America, for example, may offer some cost-effective advantages. However, potential issues are like those mentioned in offshore, including international legal matters.
- iii. Onshore: Located within national borders, onshore operations make it easy to deal with cultural factors and use local currency and familiar payment methods. Laws and contracts follow the country’s rules, making direct exchanges smooth. This helps maintain better control over the tasks carried out by outsourced employees and contributes to improved results in a company’s digital transformation. Another advantage: no conflicts with labor issues, and audits can be done quickly if needed.
In any case, when it comes to hiring an outsourcing company, inquire about its credibility in the market, the operations it has previously conducted for other companies, its expertise in the specific area where your company requires assistance, and its availability to provide technical support in urgent situations. Don’t forget to check the information security policies and compliance. That’s why the preliminary analysis is so crucial: it will also help you discover whose hands your business will be entrusted to and who will carry out the necessary digital transformation.
IT OUTSOURCING SERVICES
As mentioned earlier, there is a wide range of activities in the outsourcing of technological operations, with various nomenclatures. Therefore, let’s focus on the main services commonly used by companies today.
- a) Communication Outsourcing: Here, there is support and facilitation for sharing data between company departments and the introduction of applications or software for direct communication among employees, optimizing the time spent on exchanging information crucial for an increase in delivery speed and productivity. The immediate result: agility and efficient customer service;
- b) Data Analysis Outsourcing: Many companies dedicate long hours analyzing data and patterns, which can be extremely exhausting. At this juncture, an outsourcing partner can handle this task often deemed “tedious” by many, making decision-making easier and facilitating the implementation of measures that positively impact the final outcome.
- c) Support Outsourcing: : In emergencies, system failures, or glitches, the outsourcing partner is ready to resolve issues promptly. Moreover, employees from non-IT departments receive explanations and, if necessary, training and guidance to handle new tools or their updated versions.
- d) Software-as-a-Service (SaaS) Outsourcing: SaaS is software developed by a IT provider or made available by an outsourcing company, used for data storage (cloud computing), including large volumes. The advantages of the “cloud” are many: access from any computer while keeping data well-protected with security patches, automatic updates, and remote installation.
- e) Security Outsourcing: In this model, the maintenance of security patches occurs, protecting information and ensuring confidentiality. Moreover, there is special care and checking for compatibility between implemented and existing/updated applications and software, preventing data loss, errors, and other issues that can be serious when delivering to the end customer.
ADVANTAGES OF IMPLEMENTING IT OUTSOURCING SERVICES
From the previous section, where we specified the main services offered by an IT outsourcing company, it’s possible to understand the variety of benefits that can result from implementing this systems and IT infrastructure management model. These include reductions in operational and fixed costs, innovation, high quality, agility, ease, and expertise.
However, it’s essential to highlight other equally relevant elements. The first is the investment in qualified professionals to address specific issues in this field. Claudia Fortuna emphasizes: “Investing in the training of professionals is expensive,” so if the client delegates this task to another specialized company, “it is no longer the responsibility of your own company, allowing you to focus on the core business of the organization.” The burden of career management, conflicts, or rapid replacement of employees falls on the outsourcing company, which includes not only professionals in exact sciences and computer science but also psychologists, consultants, business partners, trainees, and other specialists.
Another strong point to mention is the flexibility of deadlines. With this ace up its sleeve, everything happens according to the client’s needs, particularly the digital transformation processes that involve preparing employees to acquire skills with new technologies.
Performance monitoring is also crucial. Claudia Fortuna illustrates how the process works at Meta IT: “We don’t just deliver to the client; we also monitor the performance and indicators of the professionals involved,” both internally at the management level and in their specific niches.
Of course, not everything is perfect. It’s essential to mention potential challenges and difficulties for those who decide to take this path.
DILEMMAS, CHALLENGES, AND DISADVANTAGES
It is possible to maximize the advantages of IT outsourcing by conducting a thorough analysis of the company’s conditions beforehand, identifying areas for improvement or implementation, and determining the current stage in digital transformation.
In this way, managers, leaders, and employees must coordinate to identify blind spots and assess the conditions before opting for IT outsourcing. Otherwise, the impact may be counterproductive to expectations.
This principle also applies to outsourcing companies. Clients must, as suggested earlier, conduct a comprehensive investigation to understand the service provider. Essentially, any outsourced company must have strong management skills, especially when offering allocation contracts often required by large corporations.
Financial health is a crucial point, and it is vital for the outsourcing company to fulfill its obligations to its employees to prevent negative impacts on clients due to disruptions. If the outsourcing company faces debts and labor issues, the contracting company may face significant challenges that could have been avoided by keeping the in-house team in the IT department, even in the face of challenges and obstacles.
It is common to find IT outsourcing companies that offer speed in implementing or updating systems but provide slow and bureaucratic responses. In addition to frustrating the client and delaying the race toward digital transformation, there is a probability that the jointly initiated work will be genuinely harmed.
On the part of the contracting company, it is essential to always follow IT quality standards, data security measures, and applied metrics to assess services, avoiding the loss of trust in the service provider at any stage of the process. By closely monitoring what the outsourcing company proposes and executes, the client stays informed about everything that happens and avoids the risk of conflicts due to not understanding or verifying any actions on the part of the contracted company.
Overall, after a careful examination of all these aspects, the implementation of IT outsourcing in your business tends to be very positive, especially for companies focused on digital transformation. To illustrate, we present the case of Olist, a success story from Meta IT.
SUCCESS CASE WITH META IT
An exemplary success in the implementation of IT outsourcing services can be highlighted through the project carried out for Olist, a unicorn startup operating in the e-commerce sector, primarily through marketplaces.
The partnership began with a planning phase for the sales channels, and subsequently, Meta IT stepped into Olist with the mission to turn technology into a growth accelerator, reevaluating the entire company’s architecture.
Over a span of two years, leveraging the expertise of Meta IT’s professionals and their management capabilities, Olist managed to grow by over 200%, triple in size, and enhance the integration efforts for a new marketplace on the platform by approximately 95%. This accomplishment earned Olist the titles of “new unicorn” and “fastest-growing company” in Endeavor, the network of entrepreneurs leading the world’s most rapidly growing scale-ups.
This collaborative effort serves as a clear example of how IT outsourcing can work seamlessly and delivered a result that surpassed expectations: the dream of any leader or entrepreneur brought to fruition.
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