When to Consider IT Outsourcing

With the global IT outsourcing market set to reach $430bn in revenue by the close of 2023, many companies are considering this the year of the contractor. With business leaders across the world looking to drive efficiency and productivity gains through digital transformation, the question remains: when should we consider IT outsourcing as a solution to our talent challenges? 

This guide looks closely at answering that question, addressing the benefits of outsourcing and the stages at which a business should consider it before we close out with a closer look at the different forms that IT outsourcing takes. 

What are the Benefits of Outsourcing? 

The use of IT outsourcing providers in 2023 has seen a 22% growth on the figures from 2019, highlighting that many organisations are utilising contractors as a means of plugging the skills gaps they’re facing as a result of the COVID-19 pandemic, the Great Resignation, and general talent shortages due to a dearth of qualified candidates. 

It’s clear that organisations see many of the advantages of outsourcing their IT function, but what are these? 

• Access A Greater Range of Skills

According to Deloitte’s 2022 Global Outsourcing Survey, 50% of business leaders have recognised acquiring top talent as the primary roadblock standing in the way of achieving their organisation’s vision. 

IT outsourcing provides a way for organisations to access the skills they need on short notice. This allows them to connect with tried-and-tested experts with a thorough understanding of the area and project they’ve been recruited for—with many IT professionals beginning to think about moving into the contracting space around the middle to later stages of their careers. 

Many organisations shift towards IT outsourcing due to the need for talent. This is driven by difficulty finding dynamic, committed, and resilient software engineers. Contractors allow them to focus on their core business requirements, leaving specific tasks to the experts.

• Cost Savings

One of the major benefits of outsourcing is, of course, the cost savings that can be recouped. 

63% of businesses highlight the reduced cost in acquiring talented candidates as one of the crucial advantages of outsourcing their IT function. Almost half of the businesses surveyed by Deloitte realise savings of up to 40%, and the remaining businesses typically see 10% to 25% savings when it comes to outsourcing software development projects.

Utilising contractors for your IT functions can eliminate the need to pay for expensive licenses, additional training, and the perks and benefits that come with hiring a permanent employee. 

• A Scalable Solution

IT outsourcing enables business leaders to quickly address the shifting need for talent by allowing them to scale their workforce up and down as needed. 

With certain projects requiring agility to maximise productivity and cut costs, outsourced IT services can help organisations quickly adapt to changes in market conditions or consumer demand. 

Working in close partnership with an IT outsourcing provider can help them to understand your business and address your anticipated talent needs well in advance, enabling them to have candidates in place as soon as they’re needed rather than reactively hiring once a project is underway and a skill gap is identified.

• Expertise At All Levels

IT outsourcing can be used to support functions at any level, from hiring a single high-level project management expert for the duration of a business change initiative to staffing an entire team of software developers or cybersecurity specialists. 

This can be of significant help to an organisation that’s looking to grow quickly but can’t make the business case for bringing expertise on full-time, whether due to cost or the time-limited nature of a specific project. 

• Increased Productivity

One of the clear advantages of outsourcing is that it can greatly help to enhance business productivity—and, as a result, profitability. By hiring experts for specific project functions in an interim fashion, business leaders can allocate personnel more effectively, ensuring that people aren’t pulled away from their daily tasks to fill in due to skills gaps. 

The rate of UK productivity has grown by just 0.4% over recent years, according to the Financial Times. Output per hour worked increased by around 0.1% in the third quarter of 2022 when compared to the previous quarter based on the latest ONS statistics. As a result, it’s crucial that permanent, internal staff are freed up to focus on their revenue-generating duties.

The benefits of outsourcing IT functions are apparent in helping businesses to utilise their resources and permanent personnel more effectively. Leveraging the unique service that contractors can provide will help organisations weather the uncertain economic climate, granting them access to the skills they need to continue to remain competitive in their markets. 

There are a broad range of advantages to IT outsourcing compared to hiring an in-house IT team from scratch. If you’re interested in learning more, see our recent guide to The Benefits of An In-House IT Team vs IT Contractors for in-depth, expert insights into the business-critical decision to outsource your IT services.

When to Consider Outsourced IT Services

The decision to utilise outsourced IT services shouldn’t be entered into lightly—it’s important to consider which functions you’d prefer to keep in-house and which you’d be happy for contractors to complete. 

Whilst we’ve established that IT outsourcing can provide a range of benefits, choosing the right form of outsourcing for your unique business case is the first step to take—but how can you decide whether now is the right time to scale your workforce up through a contract recruitment provider? 

IT Outsourcing: What Stage of Growth Should It Be Considered At?

IT contractors and outsourcing can be valuable tools for businesses at any growth stage, from the startup environment to plugging skills gaps for specific durations within multinational corporations. 

At the early stages of growth, contractors reduce the amount of money that founders need to spend to gain access to specialist talent and minimise the risk of attrition. Outsourced IT services enable business leaders to avoid the expense of a salary and benefits structure that permanent, specialist IT employees would expect. 

As their business grows, these companies can still utilise the services of an outsourced contract recruitment provider to continue scaling their services and incorporate new features, whether that’s a support function via tickets or through software development outsourcing. 

For larger corporations, IT outsourcing can help them streamline their operations, enabling their permanent staff to focus on their primary, core responsibilities to the business, ultimately driving performance improvements. 

Deciding Which Workflows to Outsource

When it comes to IT outsourcing, it’s vital to enter into a partnership with a contract recruitment provider with a clear idea of which workflows you require assistance with. 

Whilst a provider will be more than happy to work with you to analyse your business processes, it can help to come to them with a clear idea of your needs, which they can then assist you in developing further. 

Typically, outsourcing IT services is done in what is considered “low impact” areas—that is, repeatable work that consumes a significant amount of personnel hours and other resources. 

By creating a detailed write-up of the precise IT functions or project requirements you wish to delegate to a contractor, you can create a clear scope of work and timeline, enabling you to understand what deliverables you will receive when they are submitted and the standard of quality you expect. 

Once you’ve chosen an outsourcing partner, established which areas of your workflow you plan on outsourcing, and the contractor is in place, you should perform regular evaluations of their performance and efficiency. This will give you the opportunity to raise any concerns and minimise the risk of projects running over their anticipated deadlines, ensuring that contract terms are adhered to.

The Different Forms of IT Outsourcing

So, now we’ve understood that IT outsourcing can benefit businesses at any stage of growth, from startups fresh from the business incubator to major corporations that work on products found in households around the globe, we can take a closer look at the different areas in which you can leverage the services of an IT contract recruitment provider. 

Software Development Outsourcing

Based on the latest statistics from 2021, around 60% of technology-focused organisations outsource all or part of their application development. Software development outsourcing can enable businesses to handle a wide range of duties, from creating new front and back-end code for desktop applications to creating and maintaining business-critical websites. 

By utilising an IT outsourcing service in software development, an organisation gains access to candidates with time-served expertise, quickly bringing different ideas and experiences into the fold whilst minimising the costs associated with an in-house team of programmers and developers. 

A fast way to bring domain knowledge into your business, software development outsourcing allows businesses of all sizes to leverage the latest technologies whilst reducing the budgets associated with major application rollouts. 

Cybersecurity Outsourcing

Often ranked as one of the top three outsourced IT services, utilising the expertise of third-party cybersecurity contractors enables businesses to protect their—and their customer’s—sensitive data, granting them a way to rapidly ensure that their systems are protected from malicious attacks and accidental information leaks. 

In comparison to a permanent cybersecurity team, IT outsourcing models enable businesses to lower the costs associated with bringing staff on board for a long-term position, with many providers utilising a fixed-cost model. 

At the same time, the attacks being carried out against businesses are becoming increasingly refined, which means that organisations need to gain access to specialised talent that is eager to improve their security posture and leverage the latest tools to thwart hackers, phishers, and those carrying out distributed denial-of-service strikes. 

According to IBM, the expense of an information security breach has increased by around 15% over the past three years, but it’s not just a financial cost that business leaders need to be worried about. Indeed, the damage that can be done to reputations and customers alone is reason enough to utilise the services of cybersecurity specialists. 

IT Infrastructure Outsourcing

Another one of the top three outsourced IT services, IT infrastructure contractors enable organisations to delegate the management of their hardware, software, cloud, and networking needs to a team of experts that either work remotely or on-site, supporting their infrastructure scaling needs as required. 

This is where the additional flexibility which IT outsourcing presents comes into its own. Businesses rarely require the same infrastructural resources from project to project, meaning they can scale their back-end services up and down as necessary. In turn, this reduces the cost associated with maintaining infrastructure which may not necessarily be generating revenue. 

At the same time, as more businesses begin to turn to the cloud for their infrastructure needs—with around 67% of enterprise infrastructure now running in the cloud—gaining access to trustworthy experts with skills in configuring and managing cloud technologies is crucial to ensure resilience and security.

Helpdesk Outsourcing

Outsourcing helpdesk services to a third-party contractor can be valuable for a business to offer their customers enterprise-grade support on a limited budget. 

Freeing permanent staff to focus on mission-critical responsibilities and high-level strategy, contractors can help ensure that your customers receive excellent service and that all issues are logged and passed on to the best party to offer a solution. This helps you improve operational efficiency, ensuring that your staff with expertise in software development can focus on their core duties without needing to also manage the aspects of the helpdesk which foreground customer journey and experience. 

With 96% of customers wanting to do repeat business with a brand based on the level of excellence in the service they receive, it’s a crucial consideration that many organisations neglect—but which can make a big difference in developing key accounts and driving revenue growth.

Wrapping Up: When to Consider IT Outsourcing

IT outsourcing provides business leaders with a broad range of benefits that can be leveraged at various stages of growth. As the global market for outsourced IT services continues to expand, it becomes increasingly evident that outsourcing and contract recruitment providers play a role in the strategic solution to ongoing talent shortages and cost constraints. 

The advantages of outsourcing are clear: access to a diverse range of skills, significant savings, the scalability to adapt to fluctuating demand, expertise at all levels of seniority, and enhanced productivity. 

Whether you’re a startup looking to minimise costs and the risk of recruiting permanent staff or a large corporation seeking a flexible approach to streamlining operations, IT outsourcing offers a valuable means for addressing pressing business needs. By carefully considering which workflows to outsource, creating clear expectations, and periodically evaluating performance, organisations can effectively harness the power of contractors within a technological landscape undergoing rapid change. 

From cybersecurity to software development outsourcing, infrastructure, and helpdesk support functions, the array of contract options provides businesses with the agility and resources needed to remain competitive, ultimately allowing them to position themselves for success in a competitive IT market.

Experts in IT Outsourcing

At Fruition, our recruitment consultants are dedicated to providing high-quality outsourced IT services talent, helping you to quickly address skills gaps and staff your high-priority projects. We’re committed to supporting businesses of all sizes as they aim to scale their workforce sustainably. No matter how complex your requirements may be, we provide the candidates you need to grow. 

Contact us today to discuss your needs.