What are the benefits and risks of outsourcing IT services?

Answer 1

The main risks you should consider are:

- Will I actually save money AND get a better result?

- What are my options if I don't outsource (do nothing)

- Is the work a core competency (if it is, you shouldn't outsource it)

- Is the IP sensitive, and could releasing it to a 3rd party damage my business.

- Do I have the skills and know enough about the work to manage the project effectively.

These are the basic questions you should ask in understanding the broad risks of outsourcing.

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Risks in Outsourcing:

1. Cost-reduction expectations

2. Data security/protection.

Answer 2

It largely depends on your business model and company requirements.

For example, if the majority of your business is E-Commerce oriented, then outsourcing is often not a good idea because you need in-house support. Having managed IT projects that we have outsourced, I personally have found:

Advantages

* Less expensive than hiring permanent in-house services * Greater range of resources available from all over the world

Disadvantages

* Communication problems can be a huge obstacle. If the company you are using does not share the same native language as yourself, specifications can be lost in translation. * Greater down-time unless the company you are hiring has 24/7 support staff. * Requires a manager who understands all the issues to do with the services - thus costing more money. Sometimes it is just as cheap to hire an individual or two to perform the tasks required in-house.

The bottom-line is money - and it is worth looking at your company's current resources to see which is cheaper. Research the market and see how much it would cost to have staff who are on-call to handle any work.

Software developers, for example, are expensive to have in-house. Yet the benefits of having them in-house are that they can adapt the development as and when required. But if you specify everything required at design time, and can fix the requirements to avoid scope/feature-creep, you are better outsourcing it - especially if it is not a revolutionary idea you are developing (e.g. website)