Should you Outsource Your IT Department?

There are some advantages and disadvantages that should be considered before outsourcing your IT department. Picture: Supplied

Most businesses understand how important it is to have strong IT infrastructure backed by a strong IT team.

However, maintaining an in-house IT department can be expensive and time-consuming, so many businesses have questions about outsourcing their IT department.

IT outsourcing is becoming increasingly common in both small and large businesses. In practice it can include anything from basic helpdesk support to complex network management.

If you have decided you want to outsource your IT department, there are some advantages and disadvantages that should be considered before going down, or going further down, this path.

Some of the benefits to outsourcing your IT department include:

Cost savings: Outsourcing can help you save money on IT costs in a number of ways.

The obvious cost saving comes from not having to pay the salaries and on costs of IT staff, although this will be offset to some extent by fees paid to an external company providing IT services.

You may also be able to avoid some costs associated with investing in expensive IT equipment and software if the external company own this and allows you and their other clients access to it.

Access to expertise: Outsourcing gives you access to a wider pool of IT expertise than you would have if you were to hire an in-house team.

This is especially important if your business needs specialised skills that are difficult to find. It is also important to note that IT is a rapidly moving field so when you bring an IT person into your business and their exposure to what is happening in other businesses decreases, you may begin to slowly deskill them over time.

Improved flexibility: Outsourcing gives you more flexibility to scale your IT resources up or down as needed.

This is important for businesses that experience fluctuations driven by project work, product life cycles or changes in business growth rates.

Focus on core competencies: By outsourcing your IT department, you can free up your remaining staff to focus on your core business activities, which is not likely to include IT if you are considering outsourcing your IT department.

However, there are also some challenges associated with outsourcing your IT department.

These include:

Loss of control: When you outsource your IT department, you’re essentially giving up at least some control over your IT infrastructure.

This can be a concern for businesses that are sensitive to security or compliance issues.

Additionally, this may involve storing your data off site in a data centre owned by another company.

Communication challenges: Outsourcing can also lead to communication challenges.

It’s important to choose an IT outsourcing provider that has a good track record of communication and delivering for clients.

It is also wise to ensure that you will be dealing with Australian based staff, and ideally locally based staff who can visit you when necessary.

Service quality: The quality of service you receive from an IT outsourcing provider can vary.

It’s important to do your research and select a provider that has a good reputation for quality and also consistency.

If you’re considering outsourcing your IT department, there are a few things you could consider working through to help you make a start:

– Assess your current IT needs.

– Identify your most pressing IT challenges.

– Decide what your long-term IT goals are.

– Start systematically and methodically researching IT providers.

There are many factors to consider when choosing a provider, but some of the more important of these may include:

– How long have they been around, and do they have experience working with businesses in your industry?

– Do they have the expertise to meet your specific needs?

– What is the provider’s reputation like?

– How much does the provider cost relative to how much the same expertise would cost to keep inhouse? Beware of hidden fees!

Once you’ve chosen an IT outsourcing provider, make sure you have a written contract that clearly defines the services being provided, the fees, and the duration of the relationship.

Generally, the advice we give to clients on outsourcing its IT function depends on where the business is in its lifecycle.

As a rule, the following tends to be the best approach:

Early-stage business: these tend to be small businesses with no complex IT issues, so we often recommend keeping IT in house with some ad hoc free advice from your local hardware and software retailer.

Maturing business: as a business grows its dependence on IT grows, as does the complexity of the hardware and software being used.

At this stage businesses find themselves facing decisions around hiring a dedicated IT person, or maybe even a small team.

More often than not we recommend that businesses outsource instead of hiring in at this stage.

Mature business: once a business grows large enough it will have significant dependence on IT and that IT can be very complex.

At this point we recommend a hybrid approach with a small internal IT team who are experts on the business’ IT landscape but who are supported by an external company that can provide additional guidance, expertise, and person power when necessary.

This is obviously a very complex topic but outsourcing your IT department can be a great way to improve your business’ IT infrastructure and save money.

However, it’s important to proceed cautiously and choose a provider that you are confident can deliver under terms that will save you money.

If in doubt, start small, proceed slowly, and remember to monitor performance!

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