Outsourcing any work can be a frightening prospect for any business, substantial businesses with an ingrained culture of handling certain things themselves. For many industries, IT is quite a modern concept and one that some employees and executives will remember transitioning to when it was first adopted. The shift toward IT Outsourcing can make the initial struggle to embrace computer technologies feel like a waste, especially to companies that invested a fortune in bespoke software development.
Of course, these thought processes are very human and not the best guiding light for making business decisions. The reality is that the technologies, experience, and culture behind IT systems have evolved immensely. It is now practical—even optimal—to outsource IT services to specialist companies around the globe. In this article, we’re going to look at why that is.
Economies of Scale
The concept of economies of scale often finds its home in manufacturing environments. The basic idea is that a business can reduce the cost of X if they are doing X in large quantities. This may be more readily understood when discussing the manufacture of physical products, but the same applies to services, including IT.
Companies that handle their IT services in-house are acting as service providers for a single client themselves. Companies that manage outsourced IT services can provide those services to several clients, and the more clients they have, the more they can invest in making those services more efficient and cost-effective.
Core Business Models
For most businesses outside of the IT sector, software development and other related services are not part of this core business model. Indeed, the role of an IT department in many businesses can be boiled down to a mixture of administrative and maintenance services, which, while necessary, are all expenses. For this reason, IT departments can be seen as a distraction, drawing resources and the workforce away from the core business model.
For IT outsourcing companies, IT services are the core business model. It is their product, and providing the best possible outcome is the most tried and tested way of ensuring a business thrives. This typically means that companies offering IT services can offer them more affordable, as per above. Still, they can also provide better services than their clients could provide for themselves.
Finding a Square Peg for a Square Hole
It’s always worth remembering that there are no one-size-fits-all solutions for businesses. There will always be cases where a businesses’ needs are so unique that only a bespoke IT solution will do, though this is not the case for most companies. When it comes to things like tech support, accounting, supply chain management, and other fundamental aspects of running a business, Outsourcing is not only a viable solution; it is an optimal one that can improve efficiency and profit margins.
This contributes to the outsourcing industry growing immensely over the past three decades. Combined with the increasingly interconnected nature of the internet and related technologies, Outsourcing has become a global, multi-trillion-dollar business. It shows no signs of slowing down in the years to come. And, as more of the software needs of companies move into the software as a service (SaaS) realm, the appeal of outsourced IT will only continue to grow.