IT outsourcing models: what are they, and which one is right for your business?

If your company is a dedicated AWS partner and is utilizing cloud support services on a broader scale to manage your company’s business systems, you likely know a thing or two about IT outsourcing. After all, working as a dedicated partner with any cloud service provider involves the many nuances of classic IT outsourcing. On the other hand, numerous service models and price plans are available for companies to take advantage of, from their cloud service provider.

With convenience available within easy access, outsourcing many of your IT operations sounds like a no-brainer. However, just like any other outsourcing endeavour, even the simplest IT operations need to be carefully planned before the big initiative is made. While these strategies can be set in place by relevant folks in your team, it makes sense to take note of just how sought after IT outsourcing is.

Although IT outsourcing has been around for a long time, it has skyrocketed in demand after mass proliferation of cloud-based services. Additionally, numerous other factors have also contributed, some of which have offset from cloud-based services such as SaaS. Video conferencing solutions are a prime example, as vendors in the enterprise communication space have risen to meet the massive expectations of real-time collaboration which have practically supplanted in-person meetings.

Cloud storage and infrastructure further compound into the possibility of collaborating virtually – thereby making IT outsourcing a prime offering for agencies that already have skilled resources in place. With agencies also catering to different time zones through specific schedules/shifts in order to stay on par with their clientele, sky has since been the limit for businesses and outsourcing agencies alike.

To top it all, there’s no disputing the cost savings that come with IT outsourcing – after all, moving IT operations to a dedicated outsourcing destination (such as doing software development in Sri Lanka, which is a leading destination for IT outsourcing services) can mean significant long-term cost savings for your business. With outsourcing agencies across the world acclimatizing to cultural gaps by offering team members who can communicate in a language of your choice, adjusting to an outsourced team requires less of a learning curve than before.

With so many benefits pertaining to IT outsourcing, it’s not hard to see why companies are increasingly taking this route of hiring an outsourcing team for their business, while forgoing in-house teams and the responsibilities associated with them. But then again, it’s not absolute; nothing ever is, and IT outsourcing is no exception. Adapting to a more hybrid approach has also worked wonders for companies that have unusual requirements, but IT outsourcing has still been a brilliant solution to keep costs at a minimum, while maximizing productivity and quality.

This article elaborates on IT outsourcing, the many models it provides, as well as the benefits it can offer for your business. Choosing the right IT outsourcing team is no easy task, so this article also includes a guide on how to successfully do so. Read on to know more!

What is IT outsourcing, in the first place?

IT outsourcing offers businesses scalable solutions to delegate part or all of their IT-related operations to a third-party company. By allocating IT-related duties to a service provider that specializes in the very same, leaders have greater freedom to focus on the tasks that require their strategic and/or analytical attention, in order to grow their business.

IT outsourcing can range from delegating elementary, repetitive duties, to managing the entire IT infrastructure of a business. Thanks to cloud computing, there’s no need to hire an outsourcing team within a localized and confined geographical area; even offshoring destinations halfway round the world will be just as viable, especially if they offer a higher value for money.

While IT outsourcing has majorly been associated with company-related IT operations, cybersecurity has also been a big participant; with vendors offering dedicated services to monitor operations for their clientele 24/7 (as opposed to managing security operations solely in-house), the outsourcing model has extended far beyond routine IT operations alone. Cybersecurity in particular significantly utilizes the outsourcing model to offer services from SOCs (Security Operations Centers), especially for larger enterprises that need extensive cybersecurity monitoring services for their various operations.

What are the advantages of IT outsourcing?

Scalability.

The ability to scale up or down depending on your business’s unique needs is the greatest advantage you can offer to your team and the products/services you sell, as a business leader. With digital proliferation encouraging an on-demand culture of consumption, users want things in the here and now. Likewise, your business also needs to increase and decrease resources depending on the prevailing business climate, so you can stay in lockstep with what your customers need – and satisfy them.

Cloud computing has long since been a purveyor of this, and IT outsourcing services are also no exception. Unlike hiring and maintaining an in-house team, IT outsourcing providers can add or remove resources from your account depending on what your business needs are at any given point of time. This isn’t as easy to do with an in-house team, since full-time employees need to be hired with long-term job duties in mind. As for temporary or freelance contractors, their availability may not always be guaranteed.

This is where IT outsourcing really stands out, since your agency can increase or decrease resources without any downtime, and as per the skill sets required for achieving your business objectives – no matter how unique they are.

Wide talent pool.

 This goes hand-in-hand with the scalability quotient elaborated above. With IT outsourcing not being confined to locations within close proximity, opening your options towards long-distance providers will also subsequently open your range of options pertaining to talent pools. There will be a wider variety of highly skilled individuals to choose from, thereby increasing the likelihood of finding the right match for your business’s special requirements.

 Cost savings.

 Being one of the first benefits that come to mind when it comes to IT outsourcing, cost savings spans across different areas within your outsourced team, as well as any possible costs that you would have to directly incur as a business. For one, scaling outsourced resources up or down depending on when you need them will be the first source of savings. There’s no need to pay for resources that are idle, including retainers. Simply add them to your team when you need them.

Other than that, the entire cost of hiring, training, supervising and managing an otherwise full-time employee is something your company doesn’t need to worry about. A reliable IT outsourcing provider will do all the hard work to manage the entire employee lifecycle, while your company simply pays for the resource obtained.

What are the different models of IT outsourcing?

With Agile project management methodologies dominating the software development sphere today, IT outsourcing models can constitute a variety of such methodologies – even having Waterfall included in the mix, in some cases. Depending on the size and complexity of your project, the below models can be customized to suit your requirements.

There is no strict rule to adhere to a single model, and hybridizing can be highly beneficial to ensure your project intricacies meet your business’s objectives.

Project basis.

Great for one-off projects or repetitive projects with fixed scopes, the project-based model consists of a team from your IT outsourcing provider that puts a project plan into action, under the guidance of a project manager or scrum master. As the client, you will have limited control over the daily processes that take place, since all supervision is carried out by the outsourcing agency and you will only be updated on progress.

Dedicated teams.

As the term suggests, a team exclusively dedicated for your business is built by the IT outsourcing agency. With a dedicated team, you have more control over the daily duties of your team members, as well as the power to supervise via a one-on-one approach.

Staff augmentation.

This takes things a notch higher, by integrating a specialized team member from the outsourcing agency into your own in-house team. While this resource is technically an external one, they are made to assimilate within your existing, in-house teams for increased collaboration and smarter decision-making.

What are the different payment models in IT outsourcing?

Fixed.

With a predetermined scope, quote and agreement, payments are made either in full (at the end of the project, just before going live), or in installments, as each milestone is achieved.

Time/material based.

For projects that have a variable scope, charging based on time spent (hourly basis) or as per materials used (such as different cloud resources) resembles a pay-as-you-go model that may be most feasible for some businesses.

Team based.

Pay for services based on each dedicated team member you have for your project, or for an entire team. This payment model is great for long-term, large-scale projects that use dedicated teams from an IT outsourcing agency.

How to choose the best IT outsourcing agency for your business

As with making any business-related decision, choosing the most suitable IT outsourcing agency boils down to a combination of repertoire and competency. But how do you discern between which agencies are right for your business, and the rest?

  1. Start with an assessment.

Gather several members of your team, from those who are directly involved with the project at hand, and all the way up to a c-suite level. Ask questions surrounding the productivity and punctuality of your deliverables, and whether end goals are being achieved. Depending on what you uncover, this insight can form the basis of what your ideal IT outsourcing provider needs to address too.

  1. Speak to IT outsourcing providers you have shortlisted.

 Once you reach out to a few IT outsourcing providers, highlight the concerns you uncovered during your business assessment, to gauge the calibre of solutions they suggest. Upon further internal discussion with your team members, choose the one you think is best inclined towards reaching your goals, communicating in a timely manner, and giving a good value for money.

For example, when it comes to software outsourcing in Sri Lanka, international clients are accommodated by having dedicated team members work a shift that coincides with the client’s local timezone. This not only makes communication more accessible, but speeds up delivery turnarounds since both parties are working concurrently, albeit being halfway round the world. 

  1. Start small, then invest more with time.

Once you start working with your IT outsourcing agency, it is advisable to start with smaller, bite-sized projects and then incrementally add workloads, depending on performance.

In conclusion…

IT outsourcing has come a long way from what it used to be, even as recently as a decade ago. Thanks to video conferencing and cloud-based services, moving your IT operations to a third-party agency halfway round the world has very much become a norm. Owing to cost savings and the easy scalability of entire teams at a moment’s notice, outsourcing IT operations only makes sense. But what determines the project and payment models you will eventually use, so your company gets the best value for money without compromising on costs?

From fixed project scopes to variable, long-term endeavours, IT outsourcing is best carried out with arrangements that have been exclusively tailored for your business’s unique requirements. By conducting a business assessment and conveying your findings to your IT outsourcing provider, your team can observe whether your IT outsourcing provider is rising up to expectations.

While it isn’t necessary to stick to a specific outsourcing model, it is all the more important to ensure your model is flexible enough to adapt when the situation demands it. In a digitally oriented world that pays prime emphasis towards an on-demand service culture, evolving with your customers’ ever-changing demands is paramount for staying on par with your competition. IT outsourcing can be the solution your business needs, since the task of hiring, training and managing skilled expertise will be taken care of by your agency – while you focus on building the goals that will take your business to greater heights.

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