Letters

Why you should think twice before IT outsourcing

tech

The onset of Covid-19 brought numerous changes to business operations. Enterprises switched to the best operation alternative possible to survive. Outsourcing dramatically increased during the pandemic.

Many people lost their jobs. Although businesses are now recovering, many are yet to get back fully on their feet.

An increasing number of businesses have opted to outsource services with the key aim of making more profit. As one might imagine, outsourcing some work is always cheaper than hiring permanent full-time staff. Not only will you save time and money on recruitment, but your profit margins will also improve.

Unlike the employed workforce, outsourced labour works on a short contract, which does not necessarily provide benefits like paid leave among others. Outsourcing enables the company to focus on broader business issues while leaving operational details to an external expert.

For many companies, the single most compelling reason for outsourcing is to relieve management of the issues that siphon off huge amounts of management resources and attention.

Outsourcing is often a byproduct of another powerful management tool; business process reengineering. It allows an organisation to realise immediately the anticipated benefits of reengineering by having an outside organisation that is already re-engineered to a world-class standard stake over the process.

Studies indicate that the most outsourced service is in the field of information technology. The vast growth of technology has made business easier through accessing large market research databases to find new customers.

It is easy to understand, therefore, why companies consider transferring IT assets, leases and staff to third-party vendors that promise savings without losing ground to the competition.

However, despite the advantages of outsourcing the IT expertise, this could risk your enterprise. It is important to understand that IT outsourcing cannot be compared with outsourcing of security, logistics, legal services, advertising, or the procurement of raw materials and components.

No outside vendor can match the responsiveness and service levels offered by an in-house function, largely because the outsider is not subject to the same control as employees. Concerns exist with outside vendors about the confidentiality of data, strategic applications, and provisions for disaster recovery.

Further, the outsourcing vendor provides the level of IT services specified in the contract using the technological platform it deems appropriate. Unless specifically spelled out in the contract, a company may lose the flexibility of moving to new computing platforms.

IT professionals argue that outsourcing allows the user to become a hostage of the vendor; the company may lose technical staff and be locked into the vendors' proprietary software and hardware. In a long-term contract, the customer has more leverage in negotiations, but the vendor has more leverage after outsourcing is underway.