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Was formally recognized in the late 80s, outsourced IT services have become one of the most effective strategies that many companies adopt nowadays. By contracting out business processes to third-party providers, corporations can utilise external efforts to handle IT tasks such as software development, technical support, and infrastructure solutions.
With the trend of digital transformation and the rising apps and extensions, the report of Statista in 2022 indicates that the Asian IT Outsourcing segment has constantly been growing in the past few years and is prognosticated to reach $US 86.86 billion at the end of this year. Let's investigate further the top crucial benefits of IT outsourcing and why it's a phenomenon.
6 Reasons to Use IT Outsourcing
In recent years, many small business owners have preferred to outsource rather than have an in-house IT team due to the tech talent shortage and their limitations in budget. Not only helping companies address their deficiencies, but IT outsourcing can also considerably grow your business and give you the opportunities to meet talented workforce around the world.
1. Enable concentration on core business
Outsourcing can significantly improve the operation's performance as it extricates time and resources to concentrate on your core business aspects and lets your team members contribute to their primary responsibilities and the long-term plan.
Tasks you lack the knowledge for - or out of your abilities - should be outsourced to professionals who can manage them better and in a shorter time frame. It's a waste of money and working hours to spend every second of your time on something that doesn't play to your company's crucial strengths.
For instance, if your company is a Bank, you can outsource applications development and maintenance while devoting all your efforts to other financial services. As is the case of Asian Commercial Bank (ACB) - one of the largest banks in Vietnam, it concentrated mainly on the online e-banking services delivered to business users and obtained the KMS Solutions dedicated software development team to build a stable mobile banking app.
Read more: How ACB embraced mobile banking to engage the new gen of customers
2. Lessen IT costs and assorted expenses
More often than not, outsourcing means saving money. This is common because of the lower labor costs, cheaper infrastructure, operational costs, or an advantageous tax system in the outsourcing location.
Hiring and training the staff is one of the most costly and prolonged business operation processes, regardless of the scale. Although these processes may take several months, there is no assurance the trained person will be a worthwhile investment and a valuable talent to the team. By outsourcing, you'll only need to pay for the services scaling your demands without concerning any other costs. Thus, it helps businesses reduce costs related to in-house hires and equipment.
3. Benefit from the top talent
Sometimes, the internal workforce cannot fulfill your business's technical requirements and can only be addressed by experts outside. Outsourcing agencies can help companies without employee capability or technical knowledge reach the top global talent effortlessly to ensure customer satisfaction and competitive results. These IT specialists make businesses stay up-to-date on the latest technology, trends, compliance factors, security risks, and other details.
With the technical skills and lowest labor cost compared to other IT outsourcing competitors, Vietnam is gaining recognition as a promising Asian destination for outsourcing low-cost, high-quality software.
4. Retain flexibility and scalability
In fact, many companies may not demand the same level of staffing year-round. The dedicated software development team can grow or shrink with you, adding services and support to your immediate needs.
Corporations can staff up ahead of a predicted growth stage without the financial commitment of recruiting in-house employees, which may take years to pay off. After making it through the hectic season, businesses can easily diminish unnecessary staff and switch back to an entirely internal team.
5. Manage risk and uncertainty
During growth, corporations will often find themselves benefitting from having more technical talent on hand but can't afford the risks that they may bring. Canceled projects, missed deadlines, and extended recovery time is some of the issues that limit the growth potential and slow any momentum that your company has built. Some businesses may take a gamble and hire new employees, only to find that gambling doesn't always pay off; rather than entering panic mode and quickly finding a suitable replacement - which could take months to properly train - finding outsourced services. This is a great way to proceed with the tasks without interruptions, safeguard your business from workforce uncertainties and minimize risks.
6. Fulfill compliance requirements
One of the reasons that make corporations decide to outsource is the strong security knowledge and experience of the employees. Some of the substantial components of IT comprise network security, data recovery and backup, compliance, and more.
Having a poorly trained staff who cannot correctly follow regulations could lead to enormous loss of the business. Hence, hiring an outsourcing firm that is PCI level 4 and HIPAA compliant is worth considering since you can prevent the possibility of facing the risk of potential lawsuits and other hardships that come with non-compliance.
The Most Outsourced IT Functions
By the time outsourcing has become a global trend, various services are carried along. Here's a list of IT activities that you can entrust to an external partner:
- Software/ Application development and maintenance: develop software applications based on your need and constantly update, modify and re-assess for improved performance.
- Software testing: many outsourced agencies have adopted automation testing to accelerate assuring quality and give more accurate results.
- Data analytics: build a robust yet scalable platform to help you analyze data and access those insights quickly.
- Technical support: you can outsource for a dedicated software development team that contributes to your products or simply make up for the resources you lack.
- Consulting and professional services: build IT strategic plan, health-check the projects and align IT initiatives to make the technology adoption easy.
The Challenge of Outsourcing
Outsourcing can be hard to implement if there's any formally detailed contract at the beginning. The inherent conflict of interest in any outsourcing arrangement can make the outsourcing process turn out to be a failure. The business seeks better service, regularly at lower costs, than it would get doing the work itself. The agency, however, wants to make a profit. That tension should be managed carefully to ensure a successful outcome for both parties.
In addition, different time zones and working habits also result in an ineffective outsourcing process. As these reasons can severely hamper your workflow and the outsourcing partner, your project's time-to-market may unexpectedly become lengthened. Therefore, choosing the right outsourced partner at the beginning of the project is particularly essential as it provides you with effective services at affordable costs.
See more: Your Checklist for Selecting IT Outsourcing Vendor
Take Advantage of IT Outsourcing by Partnering with KMS Solutions
In this highly competitive business environment, it's more essential than ever to outsource to improve your company's performance. Although there are some disadvantages of outsourcing, by partnering with the right outsourced service providers, you can eliminate those challenges and turn them into opportunities.
At KMS Solutions, we offer a professional outsourcing process with a workforce network from different regions to provide you with the most qualified candidates for your business function requirements.
Connect us for high-quality and affordable IT outsourcing services!
