Blog: IT Outsourcing

5 IT Outsourcing Considerations: Benefits & Challenges Explained

March 17, 2020 - by Synoptek

Computer Economics, an IT research firm focusing on the strategic and financial management of information systems, reported that the total budget is spent on IT outsourcing increased to 12.7% in 2019 – hitting a five-year high. But before we understand why organizations have started outsourcing more – let’s understand what exactly IT outsourcing is.

IT outsourcing is a process where enterprises contract vendors (organizations or individuals) specialized in one or many IT functions for their in-house or customer requirements. Depending on the enterprise’s preference and budget, the vendors could be local or international. Over the years, IT outsourcing has become popular as a business practice not only for large, but also medium and small size enterprises.

The Top 5 Benefits of IT Outsourcing

IT outsourcing provides several types of benefits – the most tangible benefit is labor cost-saving, but there are additional benefits such as access to the specialized workforce, faster turn-around time, wider business outreach, time-on-hand to focus on enterprise’s core competencies, and many more. However, if we must choose the top benefits that enterprises derive from outsourcing IT functions, the ones listed below are most frequently cited:

1. Flexibility to Contract Skilled Resources for Time-Bound Projects

A growing need for specialized technical resources is one of the key reasons for organizations to consider IT outsourcing. Not only does outsourcing give organizations instant access to a talent pool that is spread across the world, but it also helps them scout for people with niche technical skills. If an organization has a 2-year-long project that requires a team with a certain technical skillset, it does make sense to contract the work to a vendor that already has a team trained, experienced, and immediately available to be deployed for the project – instead of hiring and training new employees.

2. Considerable Savings on Labor, Infrastructure, and Related Costs

When organizations outsource projects, they aren’t liable to pay for the labor and associated costs such as hiring, training, medical insurance, and retirement benefits for the contracted vendors. In fact, in most cases, organizations also save on infrastructural costs such as maintaining multiple workspaces, providing requisite hardware and software, or the Internet. Setting up off-shore offices with requisite infrastructure or human resources could otherwise mean huge investment – both from a time or finance point of view.

3. Internal Resources Exclusively Dedicated to Core Business

Not all organizations in the world have their core business wrapped around IT and IT services. For such organizations, involving employees hired to focus on the organization’s key business area in IT-related work means compromising on their core work. In fact, for such organizations, hiring and maintaining a large dedicated IT team also means additional time, effort, and investment.  By outsourcing IT functions, employees in such organizations can single-mindedly focus on their core work and not worry about deploying or managing IT infra and systems.

4. Streamlined IT Processes and Faster Turn-Around Time

Seasoned IT vendors come with efficient processes that they further customize according to the needs of each organization. Efficient processes lead to better prioritization, clearer channels for escalation, faster turn-around time, and lesser downtime. Seasoned vendors also bring in focus to IT requirements and integrated processes that have been overlooked by organizations because of a lack of time and expertise.

5. Additional Edge to the Small and Medium-Sized Organizations

Often, small and medium-sized organizations can’t always afford to maintain a specialized IT talent pool. However, by outsourcing their requirements, they can immediately bring in a specialized talent pool for a defined period to meet specific customer requirements – without putting a strain on their budget.

Common Challenges with IT Outsourcing

Benefits are often accompanied by challenges. While there are innumerable benefits of IT outsourcing, some challenges are also commonly observed. Being aware of these typical challenges helps in addressing them in time before they become problems. Some of the most well-known challenges are:

Lack of Complete Control

To make effective utilization of the skilled resources and their expertise, organizations need to hand over control of their IT function to the vendor. This might lead to minor altercations, stemming from the feeling of lack of control, which if handled skillfully, settles with time. Seasoned vendors also help organizations set the right expectations about the control and processes during the handover procedure.

Language Barriers

When working with vendors that are non-native speakers of the English language, some communication challenges inevitably arise. However, such issues can be easily addressed by avoiding the use of words or jargon loaded with cultural connotations. Seasoned vendors always train their global resources to communicate effectively with people of all geographies.

Lack of Face-to-Face Conversation

Most people prefer face-to-face conversations over virtual communication. However, due to lack of geographical proximity and time zone differences, face-to-face conversation isn’t always feasible. Lack of clarity or delay in response over virtual modes of communication, sometimes, leads to frustration at both ends – vendors as well as customers. However, with clear service level agreements, training, and processes and a structured engagement approach, even this issue can be easily put to rest.


When IT outsourcing was established as a business practice, the intent was only to reduce the cost in an organization. Today, the drivers for IT outsourcing are more strategic – such as adding a new set of competencies, quicker turnaround time, and allowing the core resources of the organization to focus on the business niche. However, to leverage the perks of IT outsourcing, it is important to engage with experienced vendors who have a proven success record and are willing to work towards a seamless cultural and process integration.

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