Outsourcing is shaking off its negative reputation and in 2018 and 2019 it was a global trend. The IT sector seeing huge gains in popularity. We are going to cover some of the key findings from the report and take a closer look at what functions IT companies commonly outsource.
Why Do Companies Choose to Outsource?
There are plenty of reasons for outsourcing IT functions. One of the principal reasons is that it is highly flexible. Companies can scale up and scale down based on the needs of the projects without having to contract somebody for longer than necessary and without the same commitment. IT outsourcing lets companies tap into an excellent talent pool that they may not be able to find locally; this also expands the skill sets of their in-house teams. Another very good reason is the ability to reduce costs by contracting highly skilled IT professionals quickly and often at lower rates.
The study was carried out in 2017 and published by Computer Economics. It included 131 IT organizations across the U.S and Canada. For a complete picture, various sized companies were involved. The term outsourcing followed the Computer Economics definition of “contracting an onshore, nearshore, or offshore service provider to perform an IT function that is commonly performed in-house”. It also includes the outsourcing of certain parts of a project, while the rest of the project is completed in-house.
IT Outsourcing Budgets
The global market size of outsourced services reached $85.6 billion in 2018 showing that more companies are spending in this area and confirming the gaining popularity. The total budget for IT outsourcing rose from 10.6% in 2016 to 11.9% in 2017 and kept growing in 2019 up to 12.7% in 2019, hitting a five-year high. The budgets can be seen in more detail when you compare the size of the organizations:
- Big organizations- Companies with a budget of over $20 million spent 6.3% on IT outsourcing in 2016, which grew to 8.7% in 2017.
- Mid-sized organizations- Those companies with a budget of between $6 and $19 million spent 6.9% of their budget in 2017, up from 4.7% in 2016.
- Small organizations- There was an increase from 6.7% to 7.8% for companies with budgets of less than $5 million.
The 10 Most Outsourced IT Functions
These are by no means the only functions that can be outsourced.
- Application development- the outsourcer will develop new apps or improve existing ones
- Application maintenance- the outsourcer will take on the responsibility of maintaining IT systems
- Datacenter operations- the operation of the data center can be handled solely by the outsourcer or combined with the in-house team
- Data administration- the outsourcer will monitor and fine-tune databases either physically or logistically
- Desktop support- the outsourcer handles the installation and maintenance of a company’s PCs
- Disaster recovery- in case of any disaster, the outsourcer will manage off-site data storage, recovery data centers, and even redundant systems
- Help desk outsourcing- whether it’s phone or electronic, the outsourcer responds to end-user incidents
- IT security- the outsourcer may begin with security assessments and penetration testing and then manage security services
- Network operations- the outsourcer can be responsible for all or part of the data networks operations and monitoring
- Web hosting and operations- the outsourcer will host, operate, and/or maintain corporate websites, e-commerce sites, etc.
As IT outsourcing continues to provide excellent services, it’s only natural that more companies are willing to try its suitability. Those companies that have found a reliable outsourcing firm are in the process of developing strong, long-term relationships and feel more confident to hand over IT functions. There is also no doubt that as more companies turn to cloud-based solutions, it makes it easier for them to hand over more control to third parties. If you are looking to enhance productivity, take advantage of expert IT techs, and save yourself some money, it would be in your best interest to look into your IT outsourcing options.