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How to Reduce Your IT Costs by Outsourcing

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Considering the complexities of running a business today, outsourcing IT support sounds like a compelling idea. But before we discuss the various aspects of IT outsourcing, we need to understand the numbers and trends that are fueling an increased adoption of third-party IT vendors.

A survey by Rackspace Technology analyzed IT cost management across ten countries by interviewing the top decision-makers of the companies. Based on their findings, they arrived at the following:

  • 80% of companies saw an unexpected increase in IT costs due to investments in new technologies. COVID-19 pandemic brought out a phenomenal rise in digital workspaces.
  • 42% of organizations plan to switch to the cloud to cut IT costs.
  • A whopping 50% of decision-makers were not aware of the right IT governance practices.

Moreover, the pandemic era has propelled the number of cybercrimes across the world. Reports suggest that the cost of cybercrimes will go up to the tune of $10.5 trillion/annum by 2025. Hence, IT security needs more attention and maintenance. But, as an organization, focusing on just one aspect of your business can divert your attention from core areas like scaling and product development.

That’s why you need to save time and increase efficiency with IT outsourcing. Let’s see how it can reduce your overall IT costs.

What is IT Outsourcing?

Outsourcing IT support refers to delegating a part or the entire IT service to a third-party IT provider. These IT services include software development, IT security management, technical support, cloud management, etc.

According to a Deloitte Global Outsourcing Survey, 57% of organizations believe that IT outsourcing can help them focus better on core activities. The same survey shows that a whopping 70% of the companies go for outsourcing to reduce costs.

Benefits of Outsourcing IT Support

IT outsourcing has numerous advantages. Let’s explore them.

Time-Saving

When you outsource IT support, you save an enormous amount of time spent on security and maintenance. You can devote that time to core business operations like new product development. Small businesses that are understaffed cannot waste critical manpower on services that a third party can easily do.

Reduced Business Costs

Deloitte’s 2016 Global Impact Report shows that nearly 52% of companies go for IT outsourcing to cut business costs. In recent years, the trend has only grown stronger. For example, imagine your system and devices require frequent security patches and firewall monitoring. When team members do this job, they need to be trained for the role. Additional training demands higher business costs. Instead, if you can outsource the support function to a managed IT service provider, you get quality system monitoring at a nominal subscription plan. 

Increased Efficiency

Usually, third-party IT service providers have a high level of expertise in IT operations. You don’t need to worry about investing extra for a better skillset. Unlike your regular staff, they do not have an additional responsibility to carry out core developmental activities. With a focus on just one aspect of IT, you can see the enhanced efficiency on a day-to-day basis.

Round the Clock Work

Usually, you can outsource IT support to either onshore or offshore partners. In the case of an offshore workplace, there can be time zone differences. The difference can be used in your favor by receiving a round-the-clock service, significantly improving business continuity.

Now that you have understood the benefits of IT outsourcing, let’s explore how you can go about outsourcing.

Step-by-Step Process to Reduce IT Costs by Outsourcing

Before outsourcing key organizational IT tasks, make sure that you have a clear plan of action ready. Start with creating goals, shortlisting the vendor, implementing an effective communication system, and finally monitoring the outsourced tasks.

Prepare Goals

To start off, make sure you set measurable goals for your organization. What do you want to achieve with IT sourcing? Do you want to save money on everyday tasks? Focus on core application development? Or improve customer service? Write down the specific goal with a timeline and number.

Ex: I want to reduce my organization’s IT downtime cost by 60% in 3 months.

Shortlist the Right Vendor

Next, you need a suitable IT partner to outsource your services. Dive deep into market research for the top IT service providers in your region or around the world. While shortlisting them, note important criteria like experience level, employee base, service quality, and cost.

Communicate the Transition to all Your Employees

IT outsourcing can expose your employees to unfamiliar situations. For example, they have to comply with stricter data privacy and security policies while communicating with independent partners. Some employees may be slower in adapting to the new SOPs. Hence, you need to communicate and oversee the transition process. When they know the benefits of IT outsourcing, they will be more receptive to changes.

Train Your Employees

Similar to communication, training is essential to encourage your employees to adapt to the transition process. For example, make them aware of data backup policies. Or help them get used to stricter password policies for organizational security. In an age where a huge chunk of data breaches and financial losses are attributed to internal attacks and mistakes, a trained workforce should save you a lot of money. 

Review Your Services Regularly

Going ahead, you need to monitor the IT services of your organization constantly. Make a thorough list of what is required, and what needs to be improved. For example, you may want to shift to cloud-based technology to replace legacy hardware and software.

Monitor Your Business Billing

The expenses on IT services can be huge. Sometimes, two applications provide the same IT service, but you may be paying more for one. Keep track of these redundant services so that you can work with one cost-effective IT vendor.

Final Thoughts: Minimize Business Costs with IT Outsourcing

Be it a small business or an enterprise, IT outsourcing cuts down business costs and enhances work efficiency. Ensure that you outsource your work to a third-party vendor at the early stage itself. In this way, you can focus time and efforts on core activities like product development.


You may be interested in: A Guide on Outsourcing For Your eCommerce Business