IT Services Outsourcing
IT services outsourcing is the most common form of outsourcing among American companies. India is the number one provider of IT outsourcing with about 70% of providers coming from India.
What Is Information Technology (IT) Services Outsourcing?
Companies will often contract with a third party provider to manage application and software development, web development design and hosting, application support, IT consulting and technology infrastructure.
The Benefits
Since there are no fixed labor costs, IT services outsourcing means a company will safe a significant amount of money. Plus a company is only paying for the specific services they contract the provider to manage.
Customer support can be available 24 hours a day without additional costs. The provider manages all aspects and can expand or decrease support staff as needed quickly.
Access to highly skilled talent allows a company to remain competitive. Foreign workers cultural view of work performance tends to be very focused and based on getting the job done efficiently. Outsourced workers are not focused on how many hours they may work per day. To a company looking to save money this translates into further cost savings. An internal staff with high salaries and over time can be a financial burden for many companies.
Disadvantages
Providers located in foreign countries, present problems with communication and cultural differences. This can make executing certain tasks difficult and frustrating.
Offshore
Typical IT service outsourcing as well as most business process outsourcing or BPO is contracted with providers located in India and Southeast Asia. The providers can be on site or offsite, or a combination of both. Businesses opt to offshore their information technology services because the costs of doing so are lower than hiring an internal onsite staff.
Statistics and Trends
There is a lot of discussion among IT professionals and the companies that outsource their IT services regarding “cloud sourcing.” Many predict that cloud sourcing will do away with the traditional IT services outsourcing business model. Google and Amazon are major “cloud players” driving the cost of services down significantly. Traditional outsource providers cannot compete.
The days when companies could almost always negotiate lower costs for services are coming to an end. The majority of providers have an abundant list of clientele. Unlike years prior when everyone was trying to get company contracts, there was a lot of room for negotiation as each provider was desperate for business. This is no longer the case, so IT services outsourcing providers are trending towards higher fees with little or no wiggle room on the price.
As clients demand more for their money, providers are beginning to move toward automating more of their processes in order to meet their clients needs without increasing their own costs. Automation also allows providers to deliver services faster.
Conclusion
IT services outsourcing has literally become lifesavers to companies trying to keep costs down and increase their profits. But as with any industry, economic changes, political issues and the possible competition of cloud-sourcing may mean that the traditional way of outsourcing will have to change in order sustain it’s current trend and growth.