Which are the Benefits And Risks of Outsourcing IT Services?
Today, every company larger than a corner shop—and in many cases, even the corner shop—is to some degree a digital company. Although some companies are by their very nature, software development companies, most are not and need assistance.
Learn more about the benefits and risks of outsourcing IT services and what this can mean for your company below.
Forming a strategic partnership with a trusted provider in order to obtain the benefits of outsourcing can be a great way of developing custom solutions from the ground up, integrating existing platforms to specific use cases and more. There are many other processes for which many companies don’t have the expertise or the manpower to undertake, that outsourcing may actually solve.
Even companies that do primarily develop software still find it worthwhile to partner with outsourcing firms. Microsoft partners with Infosys to handle revenue assurance for its Office 365 platform, for example.
Outsourcing: The Benefits and Risks of Outsourcing IT Services
The benefits of outsourcing IT support are several. While the risks might not be as numerous, they need to be taken into account, and weighed against specific project or process objectives, and the larger corporate strategy.
How Does Outsourcing Benefit the U.S. Economy?
Outsourcing has received significant political attention in recent years, but it should be pointed out that when it comes to outsourcing, the benefits and the risks, especially when done to nearshore and allied jurisdictions such as The Americas, are definitely worth it for the United States and Canada. It’s an absolute win-win situation.
Using the United States as an example, by outsourcing with a nearshore strategic partner, domestic companies can reduce costs to their own customers, speed time to market, provide a higher level of customer service, and also prime the pump for potential business in new, nearby markets. Let’s look at each one of these factors briefly:
Cost Benefits of Outsourcing
For the same reason manufacturers may build or import products from offshore in order to offer lower prices to customers, by partnering with nearby lower-cost locations with responsive, democratic, and allied governments, US companies are able to offer the highest value to business or consumer end-users.
Time to Market
In recent years, the US has experienced record low unemployment, near the theoretical lowest possible limit of 4%. Companies under time pressure need to staff up quickly for projects or permanent processes coming online, but often these initiatives are delayed simply because the right professionals cannot be found to dedicate to the project. Gaining access to qualified, affordable IT services through a few clicks is definitely one of the greatest benefits of outsourcing.
Some companies try to bring in workers on H1-B visas, but this is time consuming, expensive, and in the recent political environment, more difficult than ever. Using a nearshore strategic partner working on a US/Canada aligned time zone can get around these difficulties legally and ethically.
Not only are your workers working in an office near the US and connected with your team, they are also able to visit for short business meetings very easily, with no work visa needed (they may not move to the US to work without the correct visa, but it is legal to visit on business trips to meet with clients and business partners).
What are some Benefits and Drawbacks of Outsourcing?
When software and technology products and platforms need support on a significant scale, customer service delivery becomes a challenge to overcome. Competent, high-level technical support and customer service agents in the US or Canada can be very expensive to find, and often, are filling such roles as entry-level or temporary workers.
On the other hand, in many nearshore countries throughout The Americas, customer service and technical support roles are seen by local populations as lucrative career positions. By opening the possibility to nearshore locations, North American companies can employ through their outsourcing partners career-minded technical support and customer service agents who see their role as a prestigious, long-term career opportunity rather than a temporary position “until something better comes along.”
A market opening opportunity
Neighboring countries, from Canada and Mexico to The Caribbean and South America are natural expansion markets for US firms (as is the US for Canadian firms). Before Amazon entered the Colombian market, it opened a 700-seat customer service facility in the country, assisting US based customers.
When the company rolled out its Prime and AWS offerings in Colombia, and began shipping Amazon.com merchandise to the Andean nation, there was already a market presence, affinity, and built in demand for the company’s products and services. When you are creating jobs in a country, it is almost always easier to enter the country as a market…at least in The Americas, where the US-aligned countries don’t present the same market entry barriers as are found in some cross-ocean jurisdictions.
Drawbacks of Outsourcing
A homeowner will from time to time need to call a plumber or electrician unless the homeowner has those skills himself or herself. Those services, integral to the proper function of a household, are being outsourced. Even when the homeowner is in possession of those competencies, he or she may have other, better uses of his or her time. Every business has its core competencies that differentiate it from competition and alternatives.
Airlines and large express freight companies generally don’t outsource flying their customers or packages because these functions are at the core of their business. Tech giants like Amazon and Google run their own data centers, but they are data companies, and their business model centers on their data handling.
On the other hand, even though a bank may be data-forward, and use its IT prowess as a market differentiator, it is a finance company built around the movement and management of money; whether treasury services for corporate clients or retail banking for consumers. Even companies like Amazon that pride themselves on high customer satisfaction, achieve this through close coordination with outsourcing partners.
When we discuss outsourcing, the benefits and the risks, we need to recognize the fact that nearly all large software companies also rely on IT outsourcing partners to meet delivery targets and adapt to rapidly changing market conditions. We already mentioned how Microsoft has partnered with Infosys.
Though outsourcing arrangements can take many different forms, part of the definition is giving up a certain degree of control at the granular level; something many companies and managers have a cultural reluctance to do. But is there really much benefit in controlling administrative functions such as payroll, recruiting, and managing office space? Not really.
Governance is key
A key to success in any outsourcing relationship lies in successful governance of the contract and the outsourcing relationship. Both partners must carefully define their Standard Operating Procedures (SOPs) and elucidate what Key Performance Indicators (KPIs) and Service Level Agreements (SLAs) will define success and establish rubrics upon which performance can be objectively and fairly measured.
To do this, objectives, methodologies, goals, and milestones must be well planned, updated as necessary, and clear, well defined channels of communications must be maintained between the outsourcing partners, and their respective teams and management.
Waterfall methodologies, where an end project is delivered almost as a “surprise package” isn’t much used anymore (there are some exceptions). However, where both partners have aligned methodologies such as Agile or even DevOps, teams will be literally speaking the same language.
A key role of the outsourcing provider partner is to provide a positive work environment, and employ policies that ensure more than employee satisfaction, but employee happiness and engagement.
Project management tools are also important, and it is ideal when such platforms are aligned, or at least compatible. On the other hand, when there is a high degree of trust and communication, one of the benefits of outsourcing is the ability to leave such decisions in the hand of the outsourcing partner.
Benefits of Outsourcing IT Support
Considering the benefits and risks of outsourcing IT services, it is important to understand that there are many different outsourcing models:
- A company might decide to outsource an entire process or project to a trusted partner, such as application development and maintenance. They don’t have in house talent available to complete such a project, so they seek a firm like UruIT to do the heavy lifting. This is similar to when a homeowner calls a plumber or electrician with the suitable expertise to do the specialized work.
- On the other hand, a company may very well have technical competence in-house, but they need additional professionals on a flexible basis “to help get things done.” Think about a mechanic who knows plenty about cars, but still outsources specialized work to a machine shop; or an expert surgeon who still calls in appropriate specialists to ensure the patient receives the absolute best care possible.
Nearsure specializes in the type of outsourcing arrangement called “staff augmentation”, which is what happens when a client firm needs additional specialists for either a project or on an indefinite basis. Some of the great benefits of outsourcing through these means are:
Carefully select the skills you want in a team member
Interview candidates as many times as necessary before selecting the best fit. They may be skilled in certain programming languages, development stacks (LAMP, MEAN, Windows/.NET, etc.) or perhaps network infrastructures, such as Amazon AWS, Google Cloud Services, or Microsoft Azure. On the other hand, platform specialists and experts may work on systems integration projects where custom development is being implemented on platforms such as Oracle, SAP, PEGA, Service Now, or many others.
Hire IT experts in a wide range of technologies
As a nearshore development outsourcing partner, Nearsure is able to supply North American firms with world-class talented teams of developers; as well as the leadership to ensure the success of your project, and the efficient functioning of your IT processes. This may include web and mobile developers, QA Automation engineers, Machine Learning and DevOps practitioners, etc.
Our remote-first model also provides an additional key benefit of outsourcing: it enables us to find the most experienced developers and programmers for even hard to find profiles, unique skill sets, and it allows us to offer a wide range of technology skills.
Same time zone and just a flight away
With Nearsure’s Americas-focused staffing and location, all team members are on the same time zone as US clients, and in most cases, a nonstop, same-day flight away when in—person meetings are called for. Our talent hails from US allied countries where populations are culturally connected to North America: Countries like Costa Rica, México, Brazil Colombia, Chile, Argentina and Uruguay.
Even those of us in South America are in practically the same culture, same time zone, and same part of the world, a flight away. We are on the phone when you need us, in the states when you need us, or as an alternative, you may want to escape the cold weather and come to visit us, though with our first-class connectivity, it won’t be necessary unless you want to.
Easy & flexible engagement
A key benefit of outsourcing through Nearsure is our flexibility. Projects may be only several months in duration, long-term, or even indefinite. We don’t require long term multi-year engagements, but offer the flexibility of indefinite engagements that are simply unavailable with traditional in-house employment.
Our low-risk engagement model means no upfront commitments to start the recruiting process, a free trial period, and the flexibility to cancel an engagement with 15 days notice.
Build a motivated team in record time
As a remote-first operating company, we usually can find suitable candidates for projects in as little as two weeks, or sometimes even sooner. We motivate our team members to stay for the long run, and led by an account manager dedicated to your success, we offer ongoing support, management and human resources functions so that you don’t have to.
So, after reviewing the benefits and the risks of outsourcing IT services, where does that leave us?
Partnering with a nearshore IT outsourcing firm like Nearsure can make sense for North American companies in a myriad of situations. To best enjoy the benefits of outsourcing, be sure to have clearly defined operating procedures and success measurements.
Communicate early and often, and get your outsourcing partner involved early in the project so that the team can be assembled and orientated towards the project goals or process functions.
As a remote-first company, Nearsure can be an ideal partner to ensure the success of your project or process. With talent based throughout the Americas, Nearsure is a quintessential American company putting American talent–both north and south–to work for you. Contact us today, let’s explore options!