Updated: Jul 14
We are witnessing an exponential boom in the digital footprint.
The internet is being made accessible in every corner of the world.
Almost all businesses are dependent on the Internet directly or indirectly.
Major companies across the world have their own in-house IT teams.
But not every business has this, so, they choose to outsource it.
Even major organizations may outsource their IT requirements from time to time.
We're going to talk about the ins and outs of outsourcing-
👉 Why do businesses need to outsource their IT needs?
👉 What are the advantages of outsourcing?
👉 What are the risks and concerns regarding outsourcing?
👉 What's the solution to the outsourcing dilemma?
In this article, we're going to answer these questions and talk about getting your outsourcing right.
So, let's start with the fundamentals of outsourcing and uncover more details.
Why do businesses need to outsource their IT needs?
Let's talk about the company "Specter Inc".
It has 10 employees and is in the legal services industry.
They are finally expanding their team and moving into a new office.
But now they need someone to set up their IT infrastructure.
Everything from emails to client databases and other cybersecurity systems.
They have a choice to hire people for their team or outsource it.
From the hiring angle, they will need several highly skilled professionals.
Since the data they are dealing with is sensitive.
The professionals they need to hire would be more than their current workforce.
So, they take a decision to outsource it all to an IT services company.
On the other hand, "Ross Inc" is another legal entity.
But they have over 1000 employees in their workforce.
So, they decided to have their own in-house IT team.
They would set up and maintain the data servers and service all other IT requirements of the company.
However, it's not only about the company size.
There are several factors to be considered while taking this decision.
In the next section let's see why companies like Specter Inc would choose to outsource.
What are the advantages of outsourcing?
First and foremost, it's for lowering expenses.
In our above example, it would cost Specter Inc a fortune to hire an in-house team.
Meanwhile, outsourcing it would save on training and hiring costs.
Not only that, but it would also save time by bringing in specialists.
It also offers a wide range of services.
Imagine if 4 different technologies need to be implemented in the IT systems.
Would companies go about hiring different professionals and then release them once the job is done?
That's not only immoral but also impractical.
"Outsourcing brings in a variety of services from specalists and a fraction of the cost compared to having in-house teams"
That's where outsourcing comes as in as a smart business decision.
You can avail of a variety of services and keep up with evolving technologies.
However, it is not a new concept, this has been done for decades now and it's an ever-growing industry.
Let's put some numbers to understand this.
The service-based IT companies are making a huge business with worldwide IT spending projected to be about $4.5 trillion in 2022. (SOURCE)
The behemoths like Microsoft, IBM and Accenture are leading this industry.
So, it's clear that outsourcing is not going anywhere.
With internet expansion and next-gen technologies coming in, outsourcing is going to continue to be a cost-efficient and competitive option.
However, it's not all bright and shiny, let's explore the flip side of the coin.
What are the risks and concerns regarding outsourcing?
There is a cost associated with outsourcing your IT requirements.
Let's highlight the most impactful factors -
1) Lesser Control
The organization isn't going to have control over the operations or projects.
There are many factors including the geographical distance that comes into the picture.
And with the current scenario, the tasks are bound to be distributed globally.
This makes monitoring and collaboration difficult.
They are almost completely reliant on the outsourced organization for effective delivery or management of their product or service.
2) Hidden Costs
The hidden costs don't necessarily mean that the organization is pulling something sneaky.
There is an agreement of services but unforeseen costs can pop out.
It could include new software, project upgrades or extra services that were not previously considered.
With the crux of outsourcing being cost-effective, this can be a major blow to the organization's finances.
3) Communication Barriers
This notorious issue plagues every industry and IT services are not immune to it.
With outsourcing and remote teams, knowledge transfer among companies and within teams is tougher.
The lack of communication might lead to some misunderstanding and rework too.
This would cost the organization time, and money and may risk the quality of the end product or service as well.
If several teams are involved, it could amplify the difficulty.
Pair this up with lesser control and you have a problem in hand.
4) Privacy, Compliance and Security Concerns
The foremost risk surrounding IT outsourcing is security concerns.
What if there is a significant cybersecurity attack or security breach?
The private and confidential data of their employees and clients will be at risk.
Now, what in the case of a regulated industry? How will the compliance be strictly followed?
Moreover, an organization's intellectual property is a prized possession, so they need to also make sure there are no leaks.
A data leak might lead to billions in damages.
Finally, add the privacy laws of the countries involved in remote teams and it gets even more perplexing.
All of these above factors have individual solutions to reduce the probability of risks.
But it can be completely mitigated through in-house IT teams.
The organization would have full control over them and the above factors will not be relevant.
But, not every company can afford or should utilize in-house teams.
Even major giants understand that it is more cost-effective and logical to outsource work to talented specialists.
So, let's see how we can get outsourcing done the right way.
What's the solution to the outsourcing dilemma?
Choosing the wrong vendor to outsource your cybersecurity needs to is a nightmare.
The vendor might fail to deliver the product/service on time or with the expected quality.
This might lead to disastrous consequences.
So, it's crucial to do your research before outsourcing any IT service, especially from a cybersecurity point of view.
When trouble arrives, it's the parent company and not the vendor who will face most of the consequences.
One of the most important and day-to-day services that we use is email.
However, most organizations outsource this to other services like Gmail or Office 365.
These emails are not only not private but not encrypted either, so they can be read in case of a leak. (READ MORE)
However, MailSPEC's product EasyCrypt makes sure your emails are truly secure.
And can be used by regulated industries with strict policies.
Moreover, we are ANSSI Certified which gives our products and services credibility.
This is just one example of service, but the bottom line is, to choose wisely because the entire organization is at stake.
But what about the situation 25 years from now? Let's have a fact-backed discussion.
What is the future of outsourcing?
AI is taking the internet by storm and many people think it may lead to lesser outsourcing.
But service-based IT companies are catching up to incorporate the new-age tech.
For example, OpenAI, which has released ChatGPT is backed by Microsoft itself.
The Artificial Intelligence market is expected to go twentyfold to 2 trillion by 2030. (SOURCE)
With this growth, the IT industry will only expand to provide better services and products to its customers.
And the IT industry in general is keeping up with its upward growth trend.
As per forecasts, worldwide IT spending will grow by 5.5% in the year 2023. (SOURCE)
Businesses are going to keep growing and would continue to outsource IT services for the foreseeable future.
It is critical to ensure that this does not compromise the risk factor associated with it.
Especially when it comes to confidential and critical communications or services.
"Business need to adapt and evolve with changing technologies or they will cease to exist."
IT outsourcing services are bound to grow exponentially over the years to come.
And the risks associated with it will stem up too.
It's essential for organizations to do their due diligence before outsourcing.
Choose the right experts for your IT needs and your business will thrive.
In this evolving domain, we will continue teaching cybersecurity and related technologies.
You've taken the best decision by outsourcing it to us, stay SPECtacular!