For Start-ups: The Pros and Cons of Outsourcing IT Services

As we step into the dawn of a new decade, we are witnessing a huge revolution in the growth and application of technology. On the contrary to the school of thought that technology robs people of jobs, the innovations brought about by technology has created greater demand for skilled professionals with a vast variety of experience. Right from individuals to companies, businesses, and big corporations, people are heavily dependent on technology to perform their day to day responsibilities.

Owing to its promising capabilities, many companies have information technology departments and verticals within them to integrate hardware and software platforms to help store, protect, use and transfer huge chunks of data and information. However, operational efficiency takes a toll on such companies marginally. To maintain the efficiency and balance out the budget constraints, most small companies and businesses transition from an in-house to outsourced staffing model, thus eliminating the need to maintain IT personnel on the bankroll.

Although outsourcing IT services seem to be a viable option for your company, especially if you are a start-up, you need to be aware of certain factors as well. By utilizing IT consultants, your business has access to knowledge and solutions like infrastructure management, threat monitoring, and crisis resolution. You could either consider the option of outsourcing an entire IT department or leverage consultants to compliment your IT department and boost the work capabilities.

Either way, IT outsourcing has its advantages and disadvantages. Before opting for IT consulting, it is advised to consider both the positive and negative factors that are listed below.

The Pros:

1. Better focus on operations

The first and foremost advantage of hiring IT consultancies is the fact that small-time companies and businesses can concentrate and focus all their manpower on their operations. Without enough resources to handle internal IT needs as well as providing client servicing, start-up companies can suffer a great deal of damage unable to take-up or ignore both the requirements. Outsourcing certain tasks and focussing on tasks you are good at becomes extremely easy with the help of IT consultants.

2. Access to wider skillsets

Hiring skilled employees or an entire team of IT experts with varying specializations can be exasperating for start-ups. Often, such companies may have to depend on the dexterity of one or two individuals internally. In such cases, those employees tend to become overworked, thus hampering the growth of the business. Even if such companies do have a full-time IT team, they still might have limited skills and resources to execute the assigned operations. All such scenarios could be eliminated by outsourcing the IT services as it eliminates the factors of dependency and skillset limitation. An outsourced IT team can anytime provide external support and cover any technological need of companies and businesses.

3. Cut down extra costs

Outsourcing IT services can help a start-up in two ways when it comes to financial planning and saving. Firstly, many IT consultancy firms offer flexibility in terms of payment schedules and yet provide access to the latest technology and infrastructure without having to buy the same, they gain an upper hand when it comes to convenience. Secondly, outsourcing helps in making the budget planning easy for start-ups by increasing the predictability of the monthly expenditures. Since IT consultancies are in charge of monitoring the software and equipment, there is no scope for unpredictable costs to creep up. A bonus fact worth mentioning here is the option to choose services that the companies need.

4. Reduced risk factor

When it comes to providing quality service with zero downtime or zero disruptions, many enterprises fail to do so due to innumerable factors that they might not be in control of. Of all the cases, security breaches are the most damaging. By outsourcing IT services to a third-party company, you are essentially reducing the risk of service outages by a significant amount as you have access to several backup servers which act as backups during outages. Certain IT Consultants also provide companies with disaster recovery options that ensure uninterrupted business connectivity which means that you do not lose your revenue or your data during such inconsistencies.

The Cons:

1. Hidden Costs

Out of all other cons, the hidden cost that might sometimes burden the company gets the top spot in our mention. When we say that outsourcing to third-party vendors cuts down the extra costs, we mean it only for those who promptly perform their duties. However, the converse comes true when you outsource your work to the wrong partners who tend to levy unnecessary costs in the billing. In such cases, it is very crucial to define the goals and parameters to such third party companies before outsourcing the work. Also, ensuring the accuracy of the cost estimate before taking their service can help you avoid paying up unnecessarily.

2. Coordination Hindrances

Many at times, the outsourcing company and the third party service vendor have to get together for the exchange of data and other information for successful work completion. However, such a stunt fails many times due to the lack of coordination between the two teams. A quick fix to this menace would be to adopt a hybrid IT model – where a team of both the outsourcing company and the service vendor works together to come to a solution to the existing problem. But even such hybrid IT models fail often due to the absence of IT leadership, without which, redundancies tend to occur often thus obscuring the absolute responsibilities.

3. Access to confidential information

When outsourcing a service to a third-party company, you are giving them access, and in some cases control, over confidential information of your company. Especially if the third-party vendor is situated overseas, the possibility of exposure to data and information theft significantly shoots up. In such cases, the information from your company as well as your client's company might be in jeopardy, which in turn poses a big risk for the company's survival. One way to overcome this hurdle is with the execution of the Non-Disclosure Agreement (NDA).

4. Uncertain wait times

When your company has an internal IT team, the time taken to get work done is extremely minimal. In other words, the response time for all IT related problems is immediate. However, when you outsource your IT-related work to a third-party company, the response times vary by a great margin. Especially if the third party service vendor is an overseas company, the time zone variation comes into the picture as well. It's a good idea to check with the service provider about their response times to your queries and if possible have them well-defined before you sign them on.

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