Outsourcing Services: What is it and reasons to do it?

Small businesses routinely outsource their accounting, distribution, payroll processing and many other important functions because they have no other choice. Many large companies outsource to reduce costs. As a result, entire industries have evolved to meet the outsourcing needs of businesses.

Outsourcing is the use of external service providers to take care of a company's technology issues, whether in solution management, application services or infrastructure.

Outsourcing, software-as-a-service and cloud outsourcing are options that help companies develop their strategies by selecting the right service providers, with whom long-term contracts and agreements are often signed. Outsourcing can enable companies to reduce costs, accelerate time to market and leverage the expertise, assets and/or intellectual property of these providers.

MSP, a key player

In fact, in this outsourcing of IT services, the external managed service provider (MSP) is key. This can be a company that can cover everything (from network security and operating system deployment to software installation and file backup) or only take care of part of your IT needs.

This is not a company that helps you with your technology issues, but a managed service provider is a technology partner, constantly monitoring your network for a monthly fee. MSPs are there to keep your network running smoothly, not just fix problems, so they have more incentive to find a quick and reliable solution if something goes wrong.

While companies of all sizes can benefit from outsourcing their IT services, small and medium-sized enterprises (SMEs) benefit the most, as the time and money needed to set up an in-house IT department is likely to be better spent on growing the business.

Types of IT outsourcing services

Within IT service outsourcing, we can distinguish several types. The classification can also be made taking into account various parameters.

Thus, if we take geography into account, we can talk about:

• Subcontratación nacional u onshore. Consiste en contratar a un socio de servicios externo, situado en el mismo país, para que realice trabajos relacionados con las TI, a distancia o in situ.
• Offshore outsourcing. The process of sending IT-related work to a company in a country that shares a border with our own. This type will facilitate communication and travel between the two companies.
• Offshore outsourcing. This is the process of sending IT-related work to a company in a foreign country, such as the Philippines, India and China, which offers lower costs and tax savings. However, political stability must be ensured.
• Domestic or onshore outsourcing. This involves contracting an external service partner, located in the same country, to carry out IT-related work remotely or on-site.

If we look at the products we are going to subcontract, then we can differentiate between:

• Cloud computing. Contracting an external provider to deliver IT-related services over the Internet, such as platform-as-a-service, infrastructure-as-a-service and software-as-a-service.
• Managed services. This involves contracting with an external provider to offer network management functions such as virtual private networks (VPNs), messaging and call centres, firewalls, IP telephony, and network monitoring and reporting.

With outsourcing, you can choose the managed services that best suit your business to help meet specific business needs. A suitable managed service provider provides a wide range of technology services within one or more technology domains. These providers have a large team of IT experts to deliver a superior end-user experience, offering operational support and enhancements for a wide range of IT applications and services.

Benefits of outsourcing

However, not many companies, especially small ones, are fully aware of the benefits of outsourcing. It is true that outsourcing can help save money, but that is not the only (or even the most important) purpose for doing so. IT outsourcing can provide small businesses with a number of long-term benefits.

Having in-house software development teams is expensive, especially for small businesses that want to minimise costs. Outsourcing IT support makes it easier for a business to access the best services and talent without wasting the costs associated with hosting in-house software development work and, in particular, training and hiring staff. Outsourcing allows you to focus more on your human resources where you need them most.

In addition, outsourcing partners help companies eliminate the need to invest in the tools and equipment necessary for successful software development. Therefore, outsourcing turns fixed IT costs into affordable costs and can help with effective budgeting.