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What is IT Outsourcing?
IT outsourcing generally involves reducing the number of IT systems and issues you deal with internally by contracting an outside partner to handle them instead.
As an example, you might hire an IT Managed Services Provider (MSP) to fully manage your IT Infrastructure. Including but not limited to patching or updating your desktops or maintaining your servers, among other tasks. In exchange for the MSP’s services, you pay a predictable monthly Operational Expense (OPEX). A flat fee including all the IT services your business needs.
The main goal of outsourcing IT is to get the most business value out of your IT spending.
Why Businesses Outsource Their IT
Businesses will outsource IT for a number of reasons, including:
Controlling IT Spending
First, outsourcing IT enables businesses to move away from capital expenditure (CAPEX).
For example, instead of spending a significant amount upfront on server infrastructure, you pay an OPEX for the Cloud Computing you need. Yes, the OPEX is recurring, but you will have paid a recurring expense for maintaining and securing your own servers anyways (on top of paying off your CAPEX). You’re also free from worrying about server expansion or upgrades.
Second, outsourcing also helps make IT spending predictable. This makes budgeting easier by removing month-to-month variances. It may result in cost savings, as well.
Freeing Up Internal IT Resources
Many businesses will also outsource some IT work to free-up internal IT resources for strategic projects or other urgent priorities. In these situations, the outsourcing partner could take care of patching desktops or monitoring networks, while the internal team handles new installations.
Simplifying Risk Management and Compliance
In heavily regulated industries, such as finance, smaller businesses lack the internal resources for keeping up with their cyber security and compliance needs. So, they’ll outsource to partners that already have the necessary expertise and infrastructure.
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Building Internal IT Leadership
In a lot of cases, we find that businesses — especially those with 50-100 seats — have IT salary costs that they don’t fully understand. They often lack IT leadership (e.g., an IT Director) to say whether these costs make sense.
Likewise, these businesses don’t have a champion to drive necessary IT growth in the company. In these situations, they could seek outside help (especially with experience) to get buy-in from key executives, such as CFOs.
Getting Ahead of the Competition
MSPs leverage economies-of-scale by supporting many different clients. So, this gives MSPs the flexibility to continue investing in getting more IT talent and new technologies. In turn, it’s easier for you to implement digital transformation projects and avoid technical debt.
The net-impact of a successful outsourcing effort is that the business can focus on its core work. After all, it isn’t an IT company, so it makes no sense why it should spend most of their time and attention worrying about IT issues.
IT Outsourcing Strategies: What to Look For
There are many MSPs — and IT outsourcing options — available on the market, so you have many choices to explore. You should look for the following:
First, you should ensure that your MSP/outsourcing partner understands your business realities, especially your industry, corporate environment, and regulatory/compliance needs.
This is important because you want a partner that actively supports your business strategies via IT. So, as an example, they should understand how your business processes work and strive to improve them so that you cut costs and increase productivity.
Be it their help desk, field support, or technology, your IT outsourcing partner’s services should contribute to achieving your business goals.
Compliance & Security
Second, you must ensure that your outsourcing partner complies with your industry’s data protection and IT security rules. This is important for two reasons:
- First, a non-compliant partner will, by extension, make you liable to costly penalties.
- Second, a partner with security gaps will put your business at risk, especially if they suffer a data breach or cyber attack.
Your outsourcing partner’s IT efforts should be led by people with cyber security qualifications (e.g., CISSP). In addition, the company should rigorously apply cyber security best practices, including using multi-factor authentication (MFA) across every device and login portal.
The partner should also comply with the OEM’s best practices. So, for example, in June 2019 Microsoft announced that it was requiring its channel partners for Office 365 to implement MFA (Computer Business Review). Your partner should keep pace with such requirements.
Support Your Business Goals
Finally, your outsourcing contract should include measurable deliverables — e.g., guaranteed uptime levels, ticket response times and resolution-rates — through a service-level agreement. You’re not outsourcing IT for its own sake, but to achieve tangible business outcomes, such as cost savings and productivity gains. Besides performance, you should ensure that your IT outsourcing partner can work within your budget.
Next Steps: Managing IT Outsourcing
Between ensuring that your potential partner knows how to work in your industry — and your own corporate environment — to selecting the right services, there’s a lot at play. It would be a good idea to measure the potential benefits and risks of IT outsourcing.
At Fusion Computing, we help businesses achieve critical business goals — such as productivity gains, cost savings, etc. — through their IT. Contact us for a FREE consultation to see how.