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An Insight Into The Reasons, Risks And Rewards Of IT Outsourcing

Written by Amit Sharma

IT Outsourcing is not a new trend. The business of purchasing software related functions instead of performing them in-house has been quite up and steady ever since the dot-com boom. Be it building an e-commerce website, revamping old website, building one from scratch, developing a part of a massive project; businesses have always turned to IT firms for their technology related needs. It’s a way by which they reduce the time and money spent on various resources.

And outsourcing is not just restricted to Fortune 500 companies having loads of cash. Small and mid level organizations are enjoying its benefits too. The prime objective is to achieve the best possible technological outcome, at the lowest possible cost.

When should you outsource your IT projects?

It is advised that outsourcing is a good option when your company :

  • Can’t afford a highly skilled IT talent but has crucial requirement
  • IT budget has not been allocated
  • Does not have the expertise in latest technologies but would benefit from it
  • Needs assistance temporarily

It is not an approach that is followed only when businesses are in a fix. Most businesses would outsource IT related tasks to known experts in the domain as they expect excellence from outcomes. The important aspect is that one must outsource in a way that is aligned with an organization’s overall goals.

The most commonplace reasons and perks for IT outsourcing among organizations are:

Curb Operating costs

Outsourcing eliminates the costs associated with employee hiring such as retirement plans, management, training, employment taxes etc.

Better focus on business

With outsourcing, you are not required to be jack of all trades. You can focus on your core competencies without having to worry about expertise in terms of your IT needs. Moreover your internal resources can be allotted for other revenue generating (direct) purposes.

Access to exceptional capabilities

When you outsource your IT projects to a firm that specializes in your needs, positive ROI is assured. This happens because instead of being restricted to knowledge of one person, you gain from collective experience and wisdom.

Opportunity to maximize restructuring benefits

Noncore business functions are pushed aside when a company is restructures to improve costs, quality of service or speed. However, as they still need to be handled, outsourcing is the best way to do this. You must not put your restructuring efforts at risk by failing to keep up with noncore needs.

Availability of capital funds

Your capital funds are allotted to items that are directly related to product or your customers if you outsource your non-core business functions.

Reduced risk

You must keep up with technology required to run required to run your business. However, it is time, effort and capital consuming. Professional outsourced IT providers work with a wide base of clients and are required to keep up with industry best practices. As a result they know what will be an optimal solution and what will not. Businesses can benefit from this kind of knowledge and experience to reduce the risk of implementing a wrong decision that proves to be a costly mistake.

Access to the best in technology

It’s a common trend: Software and hardware becomes obsolete in a short span of time. A single staff member may find it difficult to keep up to date with everything. Outsourcing gives you the opportunity to have more than just one IT professional look into (and maintain) your software and hardware.

The risks associated with IT outsourcing

Of Course, as a business owner, the subject of risks will come to your mind, some of which may be:

Some IT functions are difficult to outsource

As  IT affects an entire organization on issues ranging  from the simplest day to day  tasks employees do , to the complex automated aspects.


Loss of control

Managers are concerned about issues such as confidentiality of data and disaster recovery, owing to control being given to someone else.

Employee morale

In case you are laying off employees to outsource their job, it can be a blow for them. Moreover, their peers may think that their job is a risk too.

However, if you know what questions to ask, before joining hands with an IT organization, these issues can be eliminated. Some of the important aspects worth discussing are:

  1. Access control and encryption methods used by them: because security is of utmost importance
  1. The background and expertise of employees (developers and non-developers) that will be involved directly with the project: because expertise matters
  1. Disaster recovery policies and procedures: Because nature can strike without warning
  1. Visibility of process: Are the clients given real-time insight into how their project is handled at each and every stage?
  1. How does the company manage failure, examples and steps taken to avoid those in future : because mistakes are biggest teacher’s.


Having studied the pros and cons of IT outsourcing, we are sure you are all geared up for associating with able IT outsourcing companies to help boost your process efficiency.

An organization has a number of options while considering outsourcing their web development projects.

  1. Offshore outsourcing

Assigning your IT projects to a company in a foreign country that offers various business benefits to the organization assigning them : lower labor costs, political stability, tax savings etc. India is the global favourite in terms of offshore IT outsourcing

  1. Nearshore outsourcing

Assigning your IT projects to a company in a country that is neighbors with your own. Easier travel and communication are the prime benefits.

  1. Domestic outsourcing

The third party is located in the same country as your own. The advantage is that the staff can be moved to work in-house at your own facility.

With the above-mentioned information, we hope you find the outsourcing option that best suits your needs and get going with your projects.

Author Bio: Arya Stark is a web developer working for an Offshore IT Outsourcing Company, Xicom which offers IT Outsourcing Services. So avail the best IT Outsourcing, you can get in touch with her.

About the author

Amit Sharma

Hello Friends, I am Amit Sharma and I am running this blog to share my learning based on my experiments in digital media. India is having many great bloggers who are working in the same domain and they have always been my inspiration.

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