IT Support Blog for Small Business Owners

The Pros and Cons of IT Outsourcing

Posted by David S. Mulvey on Thu, Mar 20, 2014

What does IT Outsourcing mean?

IT Outsourcing is the process of assigning a company’s business IT processes to a Managed IT Service Provider. For larger companies the outsourcer might be offshore to leverage lower labor costs. Smaller businesses with less than 100 PCs can typically gain great advantages by outsourcing to a local IT Service Provider. However, the path to a great IT Outsource engagement does come with some business risk, which can be mitigated if you know what to watch out for. Let’s take a look at IT Outsourcing and discuss how to stay out of trouble.

What are the effects of IT Outsourcing?

IT Outsourcing is the delivery of a defined set of proactive services that are remotely delivered on a fixed-fee basis and prepaid on a recurring basis. Across industries IT Outsourcing is primarily undertaken to enable companies to generate better revenue recognition and to provide them an added competitive differentiator. While always done with the best of intentions, IT Outsourcing has a telling effect on a company’s products and services, either enhancing or lowering their quality. The goal is to have the IT Outsourcing provide you with a competitive edge. And, based on how effectively the IT processes are managed and delivered, IT Outsourcing can also result in easier management and better productivity.

What are the pros and cons of IT Outsourcing?

IT Outsourcing can provide enterprises a competitive advantage by delegating their IT business process to a Managed IT Service Provider who can deliver better quality and improved IT innovation. While this is a fair picture of the desired outcome, managers need to consider the possible shortcomings and negative outcomes of the process and the corresponding impact on the company. To best analyze the opportunities presented it is essential to reflect upon the advantages versus the disadvantages of outsourcing.

The pros of IT Outsourcing

The pros of IT outsourcing often positively reflected by enterprises across industries include the following:

  • Increased operational efficiency.
  • Reduced and controlled operating costs.
  • Cost-effective access to Enterprise-level support.
  • Minimized downtime.
  • Freeing of management time, enabling the company to focus on core competencies while not being concerned about their vendors.
  • Peace-of-mind with the knowledge that the IT environment is being monitored 24 hours a day, 7 days a week.

The cons of IT Outsourcing

Often weighed with the advantages of IT Outsourcing, the following represent some of the possible questions a business owner should consider and try to mitigate, before engaging in an IT Outsource engagement:

  • How many employees does the Managed IT Service Provider have? (Watch out for just a hand full; employees get sick and go on vacations. You need more than 10 engineers if you want a true Enterprise-level service.)
  • How long has the Managed IT Service Provider been in business? (Look for longevity which demonstrates the IT Service Provider’s business skills.)
  • Does the Managed IT Service Provider have engineers staffed in the office 24 hours a day, 365 days a year? (Does your equipment break only during business hours? Look for staffed weekday nights and weekends, not engineers merely on-call or dispatched after an event is detected.)
  • Does the Managed IT Service Provider have a written repair time performance guarantee? (Look for a written Service Level Agreement that provides a written response-time and repair timeframe with a money back guarantee if the commitments are not met.)
  • Does the Managed IT Service Provider include IT consulting as part of their fixed-fee service? (You will need help budgeting and also need performance reports and risk assessments; make certain they are all included on a periodic basis.)
  • You are not an IT expert so how do you evaluate the abilities of competing Managed IT Service Providers? (Look for the audited Industry standard for IT Service Providers. They should hold an SSAE16 Type II audit, which will insure you the provider has been audited by 3rd party IT experts.)
  • The Managed IT Service Provider will on occasion have their employees at your office, so to protect the security of your employees and of your data, request to see 3rd party background checks of all of the Managed IT Service Provider’s engineers.

 6 Essential IT Outsourcing Strategies

Topics: IT Outsourcing, IT Service Provider, Managed IT Service Provider, SSAE16, IT Consulting

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