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It is considered that IT outsourcing reduces costs and allows organizations to concentrate on their core business. That is why the rapid development of the IT-outsourcing market is caused mainly by the fact that IT-outsourcing enables the companies to reduce indirect costs on average 30 %. However, not everybody agrees with this. According to the data of different researches, in the world practice not more than 75% of the companies believe that use of outsourcing allowed them to achieve significant savings. Recently in Europe about 40% of the telecommunication companies have refused IT-outsourcing services due to the problems and inconsistency of price/quality criteria.
An IT outsourcing provider can take on complex functions of IT departments. What are the main reasons that companies are striving to expand the staff of their IT departments and assigning more and more functions to them? Usually they do so for the following reasons:
- Efficiency (the ability to respond quickly to user requests);
- Security (minimization of risks of information leakage);
- quality (in-house specialists are more experienced with internal business processes and have a better ability to control and influence the outcome of work);
- lower cost (no need to pay the rate of return, laid down by the contractor).
Certainly, the first supporters of outsourcing are already appearing among the managers and owners of Russian companies, but it is still risky to completely abandon your own IT division, and it often simply leads to the withdrawal of the division into a separate subsidiary company. However, for the parent company this kind of “outsourcing” as a rule results in the increased expenses because not only IT specialists have to be financed but also the administrative staff of the established IT company, and the company itself with no customers in the external environment is most often unable to survive in market conditions.
The principles of outsourcing in IT
The main reason to use dedicated development team services is cost. It is obvious that IT department is an auxiliary service for the organization not specialized in IT services provision, and currently the main market players are actively promoting the outsourcing concept in IT services provision.
IT outsourcing gradually changes the duties of an IT director, narrowing them down to the choice of the contractor and control over his work. In fact, an IT director does not get into the details of automation, but controls the contractor’s work by results and level of satisfaction of the key users, whereas previously he was obliged to delve deeply into the internal activities of the IT department to provide efficient management.
Currently there are two models of IT process outsourcing: evolutionary and revolutionary. Under the evolutionary model when outsourcing the processes and services are allocated successively one by one to third party contractors, while the employees of the unit remain in the company’s staff and gradually transfer their functions to external contractors, concentrating on the tasks of vendor selection and control of the results. Using a revolutionary model, the IT-unit, along with its processes, is separated into a separate legal entity (usually a subsidiary) and is able to provide services both to external customers and to the company.
So, we can say that the main motive of outsourcing is to get the necessary quality IT-services, having paid less for them than in the case of using the internal resources for that. We should speak about outsourcing if a contractor performs regular actions, aimed at obtaining the results required by the customer. And the performance of these processes requires constant interaction between the contractor and the customer, considering the need to improve the process for a particular customer. Thus, we can say that the company uses outsourcing if there is a constant availability of the process, which is given to the contractor for execution, and this process has a relationship with the main business processes of the customer. By outsourcing the process, the following benefits can be achieved:
- Obtaining a higher level of service;
- reduction of expenses for IT-infrastructure;
- transfer and minimization of operational risks of the process;
- attraction of external investments for certain tasks;
- concentration on core business processes.