Outsourcing IT Services: What is it and reasons to do it?

Small businesses routinely outsource their accounting, distribution, payroll processing and many other important functions because they have no other choice. Many large companies use outsourcing to reduce costs. As a result, entire industries have evolved to meet the needs of companies' outsourcing.

IT outsourcing is the use of external service providers to take care of a company's technology issues, be it solutions management, application services or infrastructure.

Outsourcing, software-as-a-service and cloud outsourcing are options that help companies develop their strategies by selecting the right IT service providers, with whom long-term contracts and agreements are often signed. Outsourcing can allow companies to reduce costs, speed up marketing time and take advantage of the experience, assets and/or intellectual property of these suppliers.

MSP, key figure

In fact, in this outsourcing of IT services, the external managed service provider (MSP) is key. This figure can be a company that can cover everything (from network security and the implementation of operating systems to software installation and file backup) or only take care of a part of its technological needs.

It is not a company that helps you with your technology issues, but a managed IT service provider is a technology partner, constantly monitoring your network for a monthly fee. The MSPs are there to make your network work smoothly, not just to solve problems, so they have more incentives to find a quick and reliable solution if something is wrong.

Although companies of all sizes can benefit from outsourcing their IT services, small and medium-sized enterprises (SMEs) benefit the most, as the time and money needed to set up an in-house IT department is likely to be better spent on growing the business.

Types of IT outsourcing services

In the case of outsourcing IT services, we can distinguish between different types. The classification can also be done taking into account various parameters.

So, if we take into account geography, we can talk about:

• Outsourcing abroad. The process of sending IT-related work to a company in a country that shares a border with ours. This type will facilitate communication and travel between the two companies.
• Offshore outsourcing. This involves sending IT-related work to a company in a foreign country, such as the Philippines, India and China, which offers lower costs and tax savings. We must ensure political stability
• National or onshore outsourcing. This involves contracting an external service partner, located in the same country, to carry out IT-related work remotely or on-site.

If we look at the products we are going to outsource, then we can differentiate between:

• Cloud computing. Contracting an external provider to offer IT related services via the Internet, such as platform as a service, infrastructure as a service and software as a service.
• Managed services. This involves contracting an external provider to offer network management functions such as virtual private networks (VPNs), messaging and call centres, firewalls, IP telephony and network monitoring and reporting.

With outsourcing, you can choose the managed services that best suit your business to help meet specific business needs. A suitable managed service provider provides a wide range of technology services within one or more technology domains. These suppliers have a large team of IT experts to be able to offer a superior user experience, offering operational support and improvements for a wide range of IT applications and services.

Benefits of outsourcing

However, many companies do not know in depth the advantages of outsourcing, especially small companies. It is true that outsourcing can help save money, but that is not the only (or even the most important) purpose for doing so. Outsourcing IT can provide small businesses with a number of long-term benefits.

Having in-house software development teams is costly, especially for small companies that want to minimise costs. Outsourcing the IT helpdesk makes it easier for the company to access the best services and talent without wasting the costs associated with hosting in-house software development work and, in particular, staff training and recruitment. Outsourcing allows you to focus more on your human resources where you need them most.

In addition, outsourcing partners help companies eliminate the need to invest in the tools and equipment needed for successfully developing software. Outsourcing therefore turns fixed IT costs into affordable costs and can help in effective budgeting.