Craig Allen, Head of Information Technology Advisory at qwerti, digs into the reality of IT outsourcing and the importance of ensuring that any move to this model delivers long-term value
More than $460 billion. That’s the combined revenue of IT outsourcing across the key segments of administration, application, web hosting, SaaS and adjacent services in 2023. This vast, sprawling market designed to lift and shift the burdens from organisational shoulders has grown considerably over the past year. On a par with the trends of artificial intelligence, blockchain and cloud computing, IT outsourcing has slipped into the cracks and fixed the gaps for IT teams and organisations.
Companies can tap into a network of talent to move away from the risks of over-investing into staff and IT departments. Many organisations were hit by this threat post-pandemic when they had to undertake massive retrenchments because positions became redundant and economic complexity meant cutting costs just to keep the lights on. Now, four years later, companies are hesitant to over-invest into staff members and IT talent is expensive.
However, what organisations want from their shift to an external service provider is more than just desktop or server support, they want value. They want to know that there is added value brought to the table and that the business can feel the benefit of this partnership beyond a firewall or network device. This value conversation isn’t just down to cost, either. There will always be that careful balance between the IT team and the outsourced organisation. Value lies in finding shared growth and collaboration as service providers enhance business operations and the role of IT.
This is particularly relevant at a time when new technologies and trends are constantly reshaping the organisation. Change is a constant and pivoting has become essential, making it a complex task for companies to stay up-to-date, find the right talent and ensure IT teams are provided with opportunities for ongoing learning. If a service provider can’t step in and take on the burden, then they aren’t delivering any value.
Yes, outsourcing brings all the advantages of cost-efficiencies and skills and scale, but what other areas of your business is your service provider supporting? Do they have different strengths and can they bring different skills or services to the table when your outsourcing needs evolve? Companies don’t just go for outsourcing because it is a stop gap in complex times or until the economies of scale tip in its favour. You’re paying a premium for this service because it offers you access to an ecosystem of talent and support that helps you to manage your ERP, CRM, websites, networking equipment, servers, conferencing equipment and more.
There isn’t one person who knows everything and who can support the organisation across every one of these touchpoints. This is a scale of work that three, even four, talented employees wouldn’t be able to handle. For some enterprises, moving to an insource model makes sense as they have the economies of scale that allow for them to bring all the talent indoors. However, for smaller companies it makes financial sense to outsource IT to a company that brings a plethora of skills to the table. It cuts the costs and the risk.
When talking of risk mitigation, outsourcing also brings with it a layer of trusted quality. The company invests into certifications, skills development, and KPIs – many service providers require that their talent undergo quarterly certification to ensure they stay ahead of the technology curve. Value is in lock-step with constant education as companies know that they have access to skills that are relevant and on a par with global standards of excellence. Instead of the company paying for internal skills development, their premium pays for talent that arrives ready made and ready to resolve challenges.
So, going back to the question as to how a company knows if it is outsourcing its IT properly? It is answered by a service that extends beyond box ticking and banality, instead opening the doors to a pool of talent and expertise that can help your internal teams thrive through skill transfer, reduce your costs and optimise your organisation.