How To Outsource IT Services? [Complete Guide]

If you run a business, you know that IT services can be a significant expense. IT services are an important aspect of modern business, from managing your computers and servers to ensuring the security of your networks.

The problem? IT services can be costly, and small businesses might not have the budget to hire a full-time IT team. Fortunately, there is a solution – outsourcing your IT services. That is, instead of hiring full-time employees to handle your IT needs, you can hire an external company to take care of it for you.

In fact, information technology is the most outsourced industry and business department, with 37% of IT operations being outsourced and an average IT department budget of 13.6% allocated to outsourcing.

But why, how, and when should you outsource your IT services? Let’s explore the benefits and considerations of outsourcing your IT needs.`

What is IT Outsourcing?

IT outsourcing refers to hiring external service providers to perform IT-related services or tasks traditionally handled by the company itself. This strategy allows companies to focus on their core operations, cut costs, access specialized expertise, and increase workload flexibility.

According to a report by Grand View Research, the global IT outsourcing market size was estimated at USD 245.91 billion in 2021 and is expected to reach USD 261.9 billion in 2024. The report also notes that the outsourcing industry’s total value is estimated to hit $405.6 billion by 2027.

IT outsourcing can take several forms: offshoring, nearshoring, onshoring, and multisourcing.

• Offshoring involves outsourcing services to a company or individual in a different country, often in a region with lower labour costs, better economic conditions, or a larger talent pool.
• Nearshoring involves outsourcing services to a company or individual located in a nearby country, which can result in smoother communication due to the smaller time difference and cultural similarity.
• Onshoring involves outsourcing services within national borders, often to a location with lower operational and labour costs.
• Multisourcing involves outsourcing business processes to multiple vendors to diversify the risk in vendor operations.

Why do companies outsource IT Services?

Outsourcing IT services has become a common practice among businesses of all sizes. By outsourcing IT services, companies can focus on their core competencies and leave the technical details to the experts. Here are some common reasons why companies choose to outsource IT services:-

Cost Savings

One of the primary reasons companies outsource IT services is to reduce their labour and operating costs. According to a report by Deloitte, 70% of US companies that outsource to other countries cite cost reduction as their primary motivation. Outsourcing IT services to countries with a lower cost of living can significantly reduce labour costs.

For example, if you have difficulty finding a qualified IT professional for your organization, you could look into outsourcing that sector. It could save you money on labour while providing better expertise and services.

Moreover, outsourcing IT services can also provide businesses with economies of scale. IT service providers typically have access to the latest technology and equipment, which can be expensive for companies to purchase and maintain. By outsourcing IT services, companies can take advantage of the economies of scale that IT service providers offer.

Access to Global Talent

Another reason why companies outsource IT services is to access global talent. By outsourcing, companies can tap into a vast pool of skilled professionals from all over the world. It also allows companies to have more flexible staffing. Companies can scale their workforce depending on their needs without worrying about hiring and firing employees. This flexibility enables companies to be more responsive to changing market conditions.

Outsourcing IT services gives companies access to specialized expertise that may not be available in-house. For example, a company may need a specific skill set to develop a new software application. By outsourcing to a company that specializes in that skill set, the company can get the job done more efficiently and effectively.

Technological Advancements and Innovation

One of the key benefits of outsourcing IT services is the ability to foster innovation. External experts can bring fresh perspectives, providing new ideas and problem-solving approaches. This can lead to the development of new products, services, or processes that give businesses a competitive edge.

Outsourcing IT services is an intelligent move that enables businesses to access the latest technological advancements. By partnering with external experts, companies can access innovative solutions that they would have needed help purchasing or implementing.

For example, a company may need to implement a new software system or upgrade its hardware infrastructure. Outsourcing these services allows the company to access the latest technologies without investing significantly in equipment or personnel.

Focus on Core Business

Outsourcing IT services allows firms to concentrate on their core operations. Outsourcing frees up significant internal resources, allowing organizations to focus on their strengths. It enables companies to focus on product innovation, client interaction, and strategic planning.

By outsourcing IT functions, companies can allocate their resources more effectively. They can focus on their core business functions and leave the IT tasks to the outsourcing company.

Outsourcing can also give businesses a competitive edge. This is because outsourcing companies have access to the latest technology and expertise. Companies can benefit from outsourcing IT services by gaining access to this expertise. This can help businesses stay ahead of the competition and be relevant in a constantly changing business market.

How to Outsource IT Services?

Outsourcing IT services can help you with business growth and expansion, but finding an outsourcing provider can be daunting if you don’t know where to start. Here are the steps on how to get outsourcing IT support right:-

Identifying IT Services to Outsource

The first step in planning your IT outsourcing strategy is to set clear objectives for your goal. This includes identifying the specific IT services you want to outsource and the goals you want to accomplish by outsourcing those services. For example, you may want to reduce costs, improve efficiency, or gain access to specialized expertise. To identify the IT services to outsource, companies should follow a systematic approach based on their specific needs and objectives. Here are the points to see while identifying IT services to outsource.

You should assess your business requirements and IT needs. This involves evaluating current IT capabilities, identifying gaps, and determining which areas could benefit from external expertise and resources.

A thorough analysis of the existing IT infrastructure can help you identify areas that require specialized skills or technologies unavailable in-house

You could seek advice from IT experts or consult with IT outsourcing providers who can provide valuable insights into which services are best suited for outsourcing.

Once you have identified your objectives, you can develop a plan for achieving them. This may include identifying potential outsourcing partners, setting timelines and budgets, and establishing performance metrics to track progress.

Define the Scope of Work

Before outsourcing any IT service, it is crucial to define the scope of work, including the specific tasks, deliverables, timelines, and quality standards, to ensure a successful outcome.

To define the scope of work, you should first determine the project requirements, including the goals and objectives, timeline, and budget constraints. Once the requirements are defined, the deliverables and outputs should be outlined, specifying the project deliverables, acceptance criteria, and completion deadlines. Here are some questions to consider when determining a scope of work for IT services outsourcing:

What will the work consist of, and what IT services will be outsourced?

What is the purpose of the IT services outsourcing project?

What are the benefits of outsourcing IT services, such as reducing IT costs, obtaining world-class IT resources, increasing resource flexibility, and freeing in-house resources for other priority services/tasks?

What is the estimated timeline and budget for the project?

Hence, a well-defined scope of work is critical for ensuring the success of outsourcing initiatives, as it helps to ensure that both the organization and the service provider clearly understand the project requirements, deliverables, and expectations.

Identifying Core vs. Non-Core Activities

Another critical step in planning your IT outsourcing strategy is determining which IT activities are core to your business and which are non-core. Core activities are essential to your business operations and should be kept in-house, while non-core activities can be outsourced.

Examples of core IT activities might include developing and maintaining proprietary software, managing sensitive data, or providing customer technical support. Non-core activities might include routine maintenance and support tasks, such as installing software updates or troubleshooting minor issues.

If you study some examples of successful IT outsourcing projects, like Netflix’s partnership with Amazon Web Services or General Electric’s collaboration with TCS, you will see that they have identified their core and non-core activities well. By outsourcing non-core activities, these companies were able to focus on their core competencies and achieve greater efficiency and innovation.

Choosing the right IT outsourcing service provider

Platform	Description	Price	Visit
Toptal	Toptal is a global remote-work marketplace connecting businesses with only the top 3% of freelance IT professionals.	Varies
Upwork	Upwork is an American freelancing platform that connects businesses with skilled freelance professionals globally, offering a wide range of services, including elite IT services.	Varies
Fiverr	Fiverr is a popular online marketplace for outsourcing services that connects companies with freelancers worldwide and provides various IT services, such as IT consulting, software development, and cyber security.	Starting at $5
Clutch	Clutch is a market research platform that helps businesses find reliable outsourcing partners for various services, including software development, marketing, and IT services.	Varies
PeoplePerHour	It is a UK-based freelance marketplace that connects businesses with freelancers, allowing them to hire skilled professionals for one-off or ongoing projects.	Varies

When outsourcing IT services, selecting the right provider is crucial to ensure a successful partnership. You should choose an IT outsourcing provider with the expertise, experience, and resources to deliver the outsourced services. To select the right IT outsourcing service provider, you should consider several key factors, such as,

• Industry Understanding and Alignment: It is crucial to select an outsourcing provider that understands your business model and company goals. The provider should align their services with your specific business needs and objectives to ensure a successful partnership
• Qualification and Expertise: Look for an outsourcing partner with a well-structured team, experienced professionals, and relevant expertise to meet your specific project requirements.
• Infrastructure and Technologies: Consider the quality and reliability of the outsourcing provider’s IT infrastructure, including hardware, software, network capabilities, and cybersecurity measures.
• Risk Mitigation and Data Security: Prioritize risk mitigation techniques and assess the provider’s data security and privacy commitment. Conduct due diligence on cybersecurity measures, encryption techniques, access controls, and incident response strategies to protect data and maintain regulatory compliance.

Know that when outsourcing IT services, you have three options to choose from –

• Full-fledged IT agencies: These are large vendors and established IT organizations, are equipped with a broad range of services and resources to fulfill complex project requirements. Some examples include Accenture, Capgemini, and IBM.
• Mid-size IT outsourcing companies: These providers work with small and medium-sized businesses and offer specialized services, such as web development, software testing, or digital marketing. They are likely to have more competitive pricing than large vendors.
• Freelancers: These are independent professionals with specific skill sets who work on a project basis. They offer more flexibility and cost-effectiveness but may not have the same resources and support as larger IT agencies.

Here are some global IT agencies that are renowned for IT services consultation –

For freelancers, you can opt for freelance platforms like Upwork, Fiverr, or Toptal. But it’s important to thoroughly vet the freelancers and their work before hiring them for your project.

Toptal

It is a global freelance marketplace that connects businesses with only the top 3% of IT professionals. These freelancers are vetted and handpicked based on specific business needs, ensuring that you can find the right talent for your projects. Here, you can be assured of finding the best and most talented web developers to suit your needs.

Upwork

It is an online platform where you can find a curated pool of freelancers and agencies with various IT outsourcing specialties, from software development to IT project management. Outsourcing IT professionals through Upwork can provide businesses with scalability, as they can hire freelancers or agencies on a project-by-project basis or scale up or down as needed.

Fiverr

It is a popular freelance marketplace where you can hire IT professionals for a starting price of $5. It can help businesses outsource IT services by providing access to a large pool of freelancers offering services in various niches at affordable rates, an easy-to-use interface, and a curated IT talent pool through Fiverr Enterprise.

Clutch

It is a leading online platform that helps companies find reliable IT service providers through research, ratings, and reviews. Through its platform, you can browse through a wide range of IT service providers, access client reviews, compare offerings, and make informed decisions based on others’ experiences.

Peopleperhour

It is a UK-based company that provides an online platform for businesses to access freelance IT professionals. It allows you to post projects, manage posted projects, communicate with freelancers, review proposals, and pay invoices through PeoplePerHour’s platform, making it easier to find, hire, and work with reliable IT professionals

Once selected, ensure to have a contract in place to protect both parties’ interests and clearly outline project expectations, timelines, deliverables, and payment terms. Here’s how you can effectively work on a contract with an outsourced IT professional:

• Clearly define the scope of work: The contract should clearly outline the tasks and responsibilities of both parties, including specific deliverables and timelines.
• Agree on payment terms: Decide on a fair compensation amount and how it will be paid (hourly, fixed rate, etc.). Also, include any additional costs such as software or equipment expenses in the contract.
• Set realistic timelines: Ensure that the project timeline is feasible and agree upon deadlines for each deliverable. This will help manage expectations and avoid any potential delays or conflicts.
• Include a confidentiality clause: If your project involves sensitive information, it’s important to include a confidentiality clause in the contract to protect your business’s interests.
• Have a dispute resolution plan: In case of any conflicts or disputes, have a plan in place for how they will be resolved. This could include mediation or arbitration to avoid costly legal battles.
• Include termination clauses: It’s important to have a clear understanding of the conditions under which the contract can be terminated by either party, as well as any associated fees or penalties.

Types Of IT Services You Can Outsource

There are numerous IT services that can benefit your organization and help it run smoothly and efficiently. Many of these services enable employees to interface with technology that assists them in doing their duties at work or communicating with one another. Some of the most common types of IT services that you can outsource for your company are:

Cloud Services

Cloud services are a type of computing that relies on the Internet to provide access to hardware and software resources, such as servers, storage, and applications. Cloud services offer many ways for business team members to interact with the necessary technology.

Cloud services are becoming increasingly popular for purposes other than data storage. They are cost-effective and scalable (meaning you just pay for the services you use) and provide excellent performance and efficiency. Additionally, cloud services allow employees to join meetings and work on projects from any location, which is especially useful if you have remote workers or operate in multiple locations. Some platforms from which you can outsource cloud services are Upwork, Amazon Web Services(AWS), Microsoft Azure, Google Cloud Platform(GCP), Alibaba Cloud, Oracle Cloud, etc.

Network Infrastructure Management

The business’s network infrastructure typically includes internet connectivity and internal networking between computers and other devices. Network services start with configuring the infrastructure at your location, including setting up servers, installing firewalls to prevent malicious traffic, etc.

It involves tasks such as monitoring system performance, setting up and managing accounts, configuring network devices, installing firewalls, troubleshooting connectivity issues, and ensuring the smooth operation of the entire IT infrastructure

Some platforms from where you can outsource this service include Insidea, Fiverr, Upwork, Peopleperhour, etc.

Voice Over Internet Protocols

Voice over Internet Protocol (VoIP) is a technology that allows voice calls to be made over the Internet instead of traditional analog phone lines. This helps with internal long-distance communication for businesses with offices in different locations. Most VoIP services require paid subscriptions, which companies can use with traditional phone services or as an alternative.

VoIP services can offer cost savings for long-distance and international calls and added features and flexibility for remote workers. It can offer features such as call waiting, call forwarding, caller ID, and voicemail, and can also allow for video conferencing and other multimedia communications

You can outsource VoIP services from various providers such as Outsource2india, IndiaMART, VoIP Infotech, Zoom Phone, Enterprise Outsourcing, etc.

Software Development

IT services can often include software development processes to create custom applications that fulfill specific business needs. It involves several key stages, including requirements gathering, design, implementation, testing, and maintenance. Software development is a collaborative process that requires effective communication and seamless teamwork among developers, designers, project managers, and stakeholders

For example, a startup business may rely on its IT service team to create a software application for organizing and maintaining venture capitalist records.

Software development services can be outsourced from various providers such as Fiverr, Upwork, Freelancer.com, Toptal, etc.

Network Security

One of the most demanded IT support services is network security. Network security services help protect a business’s network from unauthorized access. They encompass various aspects, including hardware and software solutions, access control, threat protection, encryption, and more.

Network security includes multiple layers of defense, such as firewalls, intrusion detection systems (IDS), virtual private networks (VPNs), antivirus software, access control mechanisms, and encryption protocols.

You can outsource these services from various platforms and providers, such as Fiverr, Upwork, Cybriant, IT Goat, etc.

IT Consulting

IT consulting helps you identify which IT services are the most beneficial for your business. These services align technology initiatives with the client’s business goals and processes. IT consulting can cover many areas, including strategic planning, architecture design, operational assessment, implementation planning, and more.

IT consulting service providers assess your business’s and company’s needs to determine which IT pathway would be best for you based on your goals/requirements. Popular IT consulting outsourcing platforms include Upwork, Fiverr, and Freelancer.com.

CyberSecurity Services

Cybersecurity threats are becoming a significant concern for businesses of all sizes. Outsourcing cybersecurity services involves hiring a third-party provider to manage and protect an organization’s digital assets and infrastructure from cyber threats. This can include services such as network monitoring, threat detection, incident response, and security compliance.

These specialists analyze your IT infrastructure, identify vulnerabilities, and implement robust defense mechanisms to safeguard against data breaches, malware attacks, and cyber threats.

To outsource cybersecurity services, you can consider various platforms and providers, such as Scarlett Cybersecurity and Insight Global.

Challenges Of Outsourcing IT Services

• Lack Of Control:- When outsourcing IT support, you entrust a third party with client contacts and network administration. This may raise questions about your ability to control service quality and client happiness. While outsourcing can be cost-effective, it requires careful management to maintain your brand’s standards and values. Effective communication and oversight are vital for maintaining control.
• Security Control:- Sharing sensitive client information with an outsourced partner may result in security problems. It is critical to choose a partner with strong data security safeguards. Conduct extensive due diligence to verify that your partner follows industry-specific security standards and legislation. Implement encryption and data access controls to minimize security vulnerabilities.
• Lack of consistency: Outsourcing can lead to a lack of consistency in the delivery of activities, as different outsourcing contracts may be delivered in a variety of different ways, and there may be staff, management, or substitution changes within the outsourcing itself
• Negative Impact on Staff: Outsourcing may also impact your workers, depending on the extent. No one wants to believe that their job is at risk, especially for critical services such as cybersecurity and information technology infrastructure. Morale is an important factor when a company relies heavily on third-party resources. Disheartened employees may work less or become dissatisfied with their surroundings, resulting in quality loss and, in certain situations, turnover.

Frequently Asked Questions (FAQs)

Aashish Pahwa

A startup consultant, digital marketer, traveller, and philomath. Aashish has worked with over 20 startups and successfully helped them ideate, raise money, and succeed. When not working, he can be found hiking, camping, and stargazing.