How to Reduce Costs With Our IT Outsourcing Strategy

The IT industry is a fast-paced arena with changes emerging every day.

As a fast-moving business, maintaining the latest technology and business processes can be challenging. That’s why having a clear-cut IT outsourcing strategy is critical to your success.

Most businesses choose to outsource their IT and rely on the services of managed IT service providers that offer on-demand resources and expertise.

Essential Ingredients for IT Outsourcing Strategies

Outsourcing IT, however, is not as simple as just finding a provider and telling them to get to work. To get it right, IT outsourcing requires a strategy of its own. 

The strategy must be focused on generating returns sustainably to maximize benefits while minimizing potential risks.

An effective IT outsourcing strategy should:

1. Determine which services to keep in-house and which to hand over to an MSP to reduce costs, save time, leverage expertise, or all of the above.
   
2. Include the type of IT service provider to maximize return on investment, along with a clear set of service level objectives (SLOs) to keep them accountable.
   
3. Be as clear as possible, as this will help both you and the IT service provider understand your long-term goals and how your IT fits in with that.

The Ultimate Goal of an IT Outsourcing Strategy

IT outsourcing strategies range from traditional to cutting-edge. Smaller businesses might work with a provider that offers a complete suite of services. Larger companies might create ambitious plans that involve partnerships with numerous suppliers with specialized capabilities.

However complex the strategy, the ultimate goal is for IT to be managed in the most effective  way possible at the lowest possible cost. 

This will likely involve consulting with teams across the business to determine what IT capabilities are required, as well as meeting with senior leaders to discuss how IT outsourcing can best support the wider business strategy.

A good IT outsourcing strategy will ensure you don’t receive services that are more expensive than what you need, or a provider that is incapable of delivering what your business needs. 

If you decide to outsource, you should have plans to track results, measure progress and identify trends. That wary, as the plan unfolds, you will know if the strategy is achieving the intended ROI.

5 Steps to Developing an IT Outsourcing Strategy for Your Business’s Needs

Here are five basic steps that will help you develop and execute your IT outsourcing strategy.

1. Know When it’s Time to Outsource

Many growing businesses believe they can self-manage their IT, not realizing that the time they spend on managing technology could be much better spent elsewhere. In addition, some businesses turn to IT outsourcing services prematurely or let costs spiral out of control before choosing to outsource their IT.

Pay close attention to how much time and energy your business is spending on IT and consider whether outsourcing could eliminate your burden and help with risk management. According to Forbes, data breaches are the most significant risk businesses face today.. 

Suppose you find that IT is causing issues with customer service, efficiency, or business growth. In that case, it’s time to give heavy consideration to outsourcing your IT.

2. Know What to Outsource

Understanding exactly what needs to be outsourced can help you optimize your strategy.

For instance, outsourcing software development and IT automation can save your team from getting bogged down. However, managing email servers or a specialized third-party service in-house may be more cost-efficient.  

Before you outsource, take time to assess your business’s capabilities and needs to ensure you get the right level of technical support.

3. Know Your Objectives

Not knowing what you wish to achieve by outsourcing your IT will make it difficult for you to articulate your needs to providers and for providers to know how best to help. That is a recipe for poor ROI and poor relationship management in the long term. 

Try to create a rationale for why you need to outsource IT and put together a list of tangible, quantifiable targets that will help you to measure the impact of your decisions and investments. 

Look out for cost savings, time savings, and areas where IT has helped the business to increase sales and service quality.

4. Know Your IT Outsourcing Engagement Model

Speaking broadly, there are three main types of outsourcing arrangements. 

• Staff augmentation: External employees conduct specific tasks under your orders. 
• Project-based model: Outsourcing companies take full control of a specific project. 
• Dedicated team model: External specialists who work for you (usually long-term)

The outsourcing relationship you choose depends on your requirements. You might even shift between models or use a combination of the three as your needs evolve. You can only determine this step once you know what you’re outsourcing and hoping to achieve.

5. Know Your Budget

When the plans are drawn up, it’s time to discuss budgets and how much can and should be spent on outsourcing information technology. 

Bear in mind that the goal is to reduce costs through reducing in-house management, eliminating time-consuming IT issues, or cutting down on software costs.

Poor outsourcing contracts can lead to budgets getting out of control, so you need to be stringent and realistic. Beware of hidden costs in the fine print too.

Managing IT Outsourcing Can Seem Daunting, But it Doesn’t Need to Be

Whether you operate a small business that’s relying on outsourced IT for the first time or a large enterprise with complex technology needs, preparing an IT outsourcing strategy can be challenging without an experienced voice in your corner.

We understand that at ITSco. We’re never satisfied meeting SLA minimums. Instead, we focus on exceeding client and service expectations every time.

If you need advice on developing an IT outsourcing strategy, we’re ready to assist you. Contact us today and get started on the path to successful outsourcing.