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Outsourcing of a range of business functions has became a common practice for enterprises across the world. From IT and communication to medical and health services, insurance, finance, and law; there are various reasons that a underpin company’s decision to choose outsourcing over hiring internal staff. First began in 1980s, outsourcing practice in IT (information technology) sector has continued to dominate the services-sourcing industry. As technology advances, more and more companies started to realize the advantage technology brings to the business.

For larger companies, it is often make sense to have their own IT team. However, for smaller companies with less resources, it will be more reasonable to outsourcing their IT force rather than hiring the whole team. Even so, outsourcing is not a practice that should be defined by the size of client’s company. It’s the company’s needs that should be taken into consideration.


Read First: Outsourcing Developer: Why Indonesian Companies Should Consider It?


In previous article, we have learnt about the outsourcing practice in general. Now, let’s take a look at the advantages and disadvantages of this practive.


IT Outsourcing: The Advantages

Knowing the benefits outsourcing could give to your business will help you decide whether this is something that will work for you. By outsourcing your talents, it will:


1. Reduce your expense

The main and initial reason people are began to practice outsourcing is because it basically saves money. Instead of bringing on more in-house staffs at a fixed cost, employing contracted workers means you don’t have the responsibilities to pay recruitment cost, full-time salary, investing in training, deal with vacations, bonus, and other employee benefits such as insurance or sick pay, as everything is already covered by the outsourcing company.

You can also hire the talents on a project-basis, that will give you the benefit of paying the contractors only for the work completed. Outsourcing allows you to find the right talent at the right price.


2. Give you ability to focus on core competencies

If IT is not your main product or service, outsourcing your IT function will free up your internal resources and allow them to focus on the core internal function. Especially if you are a small or medium-sized enterprise without excessive resources, shifting your IT load to a third party will give your staffs the opportunity to focus on their own specialism, and contribute in making the company an expert in delivering its core product.


3. Provide you access to larger pool of talents and specialists

Outsourcing practice especially the offshoring one allows enterprises the access to a wider pool of talents and specialists. When hiring in-house staffs, your choice is limited to a small, local talent pool and you would oftentimes have to compromise.

Even so, unless you hire an entire team of IT experts in different specializations, you may have to depend on the expertise of some in-house individuals, who will most likely become overworked. Outsourcing service providers often have a team of dedicated and experienced talents best suited for each job at hand that you can pick to suit your specific project requirements.


4. Give you competitive advantage

Outsourcing companies are often focus on providing services within very specific areas of a field. In IT field, this means that they will likely to have the latest equipment and current technology to handle your projects. By outsourcing your IT function, you can access those technology and knowledge without having to invest a big sum of money. This will put your business at a competitive advantage to rival larger competitors.


5. Flexibility to allocate your talents

Each project you conduct may require different technology and specialists. Outsourcing your IT allows you to divide projects across a group of specific experts and optimize resource utilization. Staffing flexibility means scalable IT resources depending on seasonal need or project workflow that will eventually lead to business efficiency.


IT Outsourcing: The Disadvantages

Just like any other practices, outsourcing also has its own drawbacks. Knowing the disadvantages will tell you what to anticipate before implementing this practice for your business. Outsourcing your talents will cost you:


1. Lack of control and communication

Although you can still provide detailed direction in regard of what you want to accomplish as a client, you give up some control when you outsource some of your company’s business process. Outsourcing some people to work off-site means you can’t monitor their working process closely. Not only that, to have effective and frequent communication is also not as easy as when you have your own IT department.

Fortunately, you have the option of on-site outsourcing. Or you can assign an employee who is knowledgeable about IT to oversee the vendor’s work and make sure they do what they are contracted to do.


2. Longer response time

Although a good IT vendor will already have a plan if any emergencies occur, off-site IT team or staff will need more time to answer your call and resolve your issue. Especially if you do off-shore outsourcing, timezone difference will be yet another obstacle because your contracted workers might not be available to handle your issue.

When outsourcing IT team of staffs, make sure to read vendor’s SLA policy and guide thoroughly for when problems arise in the future.


3. Unexpected Cost

What outsourcing company sells is service, therefore it is very important to understand what is offered, at what price you will get those services, and what that includes. While it’s true that outsourcing from trusted vendor can result in huge savings, pairing with a wrong partner would give you the opposite result. Know your goal clearly, what you need to achieve that, and the difference of each service and term to avoid misunderstanding that will lead to additional cost.

Flexible fee is only useful if you are paying for what you need without spending unnecessarily expense.


4. Performance and quality expectation gap

You might have your own standards, but so does the outsourcing company. To avoid the expectation gap, it is important to perform thorough examination on the service provider company and their previous standard of work, as well as their previous projects and clients, did they deliver their work on time and within budget? Etc. Also be meticulous when arranging your expectations–budget, timeline, and quality standards–with the contractors.

After all, it is only a good thing if you are receiving the quality you expected.


5. Security and trust issues

When you outsource your IT needs to a third-party, you depend on them to compy with security and regulatory measures. Problems can occur if your service provider partner does not observe the correct processes and procedures. This concern could be even more bigger if you work with an offshore company where laws regarding privacy and security may be different.

Make sure to ask the vendor on how they will protect your company’s sensitive daya, including both employee and product-related information.

There are many pros and cons of outsourcing that you should carefully consider before deciding whether or not to adapt this strategy for your company. What benefits will you get, and what drawbacks will likely to occur with your current business condition. While some downsides can be avoided if you place the outsourced employees on-site, the most important thing is to choose the right outsourcing company.

As price is not always the best indicator of quality, it is best to select the IT vendor that can align with your organizational needs and culture.


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