How large companies benefit from IT outsourcing


Outsourcing of IT has long been a favourite of large corporations, which have seen significant gains in efficiency and profitability by replicating the model outside of IT services, particularly in departments with complex processes such as RH, finance, logistics, and others.

As a result, their infrastructures were more flexible, they gained agility, and they spent less money on legacy and on-premises applications, giving them more money to invest in their core business.

So, why do businesses outsource? According to a Deloitte study, the most common reasons for outsourcing are:

  • Lowering and controlling operational costs (59%)
  • Increasing the company's focus on core operations (57%)
  • Increasing service efficiency and quality (31%)
  • Internal resources are being made available for new activities (47 %)
  • Having access to intellectual capital (28%)
  • Changing the course of transformation (17%)

Outsourcing reveals itself to be an intelligent competitive strategy, allowing funds to be freed up for innovation and digital transformation, as well as reducing the market's shortage of specialised resources, because the service provider ensures the necessary teams for each project.

Cases of success that confirm the history of outsourcing

Companies such as Procter & Gamble, General Motors, Cisco Systems, Slack, WhatsApp, Studytube, Skype, Alibaba, Google and Burger King have all demonstrated that outsourcing is a good option, revealing how they were able to improve their operations with the help of the right partners, becoming more effective, growing faster, and lowering costs.

Alibaba is an example of a company that outsources, but unlike Amazon and eBay, Alibaba is based in China, which makes outsourcing challenges somewhat different. Alibaba recognised that, while local manufacturing and resource costs could be kept low, the skills required for growth were not available at scale in their region. As a result, Alibaba began looking for partners and outsourcers early in their development across a variety of projects and found many of the skills they required in the United States. By outsourcing web development to the United States, the site flourished and grew at an incredible rate. Knowing what skills were lacking in their region, Alibaba was able to quickly find resources elsewhere capable of completing the tasks that needed to be completed. So, the takeaway from this case study is that before you outsource to your enterprise, make sure you understand your organization's requirements.

Let us look at another example. Apple's name should be at the top of everyone's list when discussing revolutionary technology companies. Apple is another company that outsources multiple services in the United States, Asia, and the Far East. Apple is able to focus on its core strength, designing great products, by outsourcing their supply chain and manufacturing facilities. Apple recognised that outsourcing is about cultivating relationships and ensuring the mutual benefit of both parties. It is a relationship that benefits both the client and the provider. Apple gains the ability to concentrate on their core competencies. The partners benefit as well because they are aware that Apple is constantly innovating and changing.

SMEs: Motivated to Grow

If the big ones are doing what they're doing, the small and medium-sized enterprises (SME) must have well-defined growth goals or risk falling behind and losing out on opportunities to grow. Aside from financial optimization, SMEs that use IT outsourcing as a service model to sustain their growth can benefit from the expertise of highly trained teams to provide the best solutions for specific demands, flexibility in adapting their solutions to the volume of transactions, being more agile in market demands, and spending less money. As a result, SMEs become more competitive in the market, as well as more efficient and credible to various stakeholders.

Nearshore, Offshore, or Onshore Outsourcing?

Whatever service delivery model they choose, the most important thing is that digitalization of the business is at the centre of the strategy and that the company receives the right combination of the most important benefits to achieve the business goals.

Nearshore - partnering with a company located in a country that shares borders with yours. This will make travel and communication easier.

Onshore - When a service provider is located in the same country and provides services remotely or within the company (client). The accessibility is excellent in this model; the teams speak the same language, live in the same time zone, and so on.

Offshore - in this model, the service provider is located in a different country. Cost-cutting measures may be implemented under this model, but language or different time zones must be carefully analyzed.

In addition to selecting the best model for the company's needs, the CEO must consider several key factors when developing an outsourcing strategy - NEAR, ON, or OFF:

  • Clear goals and objectives must be established for both the company and the outsourcing firm.
  • A strategic vision and planning are required.
  • When it comes to vendors, a good and careful selection is required.
  • A good relationship management between the firms.
  • Subcontracts and vendor agreements that are well-organized.
  • Constant and effective communication with stakeholders.
  • The senior leadership must provide continuous support and involvement.
  • Pay close attention to any potential problems among the personnel.
  • Remember that all financial justifications must be for the near future.

It is time to look for solutions and a good partner.

Think of that a good partner selection and consistent communication, as well as consistent executive support, are critical in a successful IT outsourcing. Remember that a good Service Level Agreement (SLA) is also essential during this process.

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