Why IT Outsourcing is Beneficial for Medium and Small Businesses

IT Outsourcing

Today, the main consumer of IT outsourcing services is large businesses.

But the economic effect of their use is minimal or absent, most often it is done to raise prestige. From the financial side, the transfer of IT infrastructure support activities to third-party companies is most profitable for the SMB sector. What keeps the “middlemen”?

Advantages

IT outsourcing allows you to free up management resources to solve core tasks for the company. For any company that does not specialize in information technology, the configuration and support of computing and office equipment, the development, configuration and implementation of information systems are non-profile activities, they do not provide it with competitive advantages in the market, but take energy and time for managers. It is logical to transfer these functions to specialized companies and to use your own managers in areas that are really important for the enterprise. Thus, everyone will do what they do best.

The withdrawal of the IT department of the holding into a separate legal entity allows you to restore the principle of unity of command, violated by the fact that the IT departments of individual companies are subordinate to their CEOs, not to the IT director of the holding. The presence of “two gentlemen” in the traditional approach to the organization of IT services dramatically reduces the efficiency of their management due to the conflict of interest of the CEOs of the companies involved and the CIO of the holding. According to speakers, often in order to implement decisions taken at the holding level related to hardware or software, the CIO of the group of companies has to “punch” up to four levels of management to overcome management resistance “on the ground”. In this context, the transfer of the personnel of all holding companies to a separate legal entity managed by the IT director of the holding allows to solve the problem and significantly improve the efficiency of the IT department, which has been turned into an outsourcing partner.

Outsourcing IT problem-solving saves the company from the need to calculate the cost of developing and implementing software solutions and keep a fairly difficult accounting of intangible assets. By subcontracting with an outsource software development company and configuration of Internet portals, companies are simultaneously getting rid of the difficulties associated with accounting in this area. As a result, only the amount corresponding to the payment for the services of the outsourcing partner will appear in the company’s documents. All accounting and tax accounting issues related to the software are resolved by the partner independently.

Outsourcing printing services allows companies to save on the purchase of high-quality printing equipment and consumables for it, as well as on the maintenance of this equipment. In this version, the outsourcing company provides the customer with a ready-made solution that ensures the printing of all necessary documents and other materials (possibly printing), setting a fee for the service provided. For a user company, this is very convenient, as it saves it from large initial investments in office equipment, from the periodic costs of its repair and adjustment. The company’s risks of incurring losses are also reduced due to the inability to print the right document at the right time.

The transfer of the information system to an external company as a whole allows the company to get rid of the cost of software and hardware, related updates, repairs, and maintenance. Recently, we have been talking not only about outsourcing work on setting up and configuring, maintaining, and maintaining an information infrastructure but also about transferring to third parties the full range of measures to create and maintain a corporate information system. In the latter case, the company does not even acquire hardware ownership – everything is provided by an outsourcing partner. Such comprehensive outsourcing shifts to the partner all the concerns about maintaining the infrastructure in working order, periodic updating of computers and software, office equipment, and consumables.

Read Also: Which Businesses Benefit from Outsourced IT?