What Is It Outsourcing and How Does It Help IT Companies?

An increasing number of companies of all sizes are turning to IT outsourcing. But what advantages does this bring with it and what explains this trend? We show you the most important points around the topic of IT outsourcing.

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What Is IT Outsourcing?

IT outsourcing, which is also referred to as EDP outsourcing, is the active outsourcing of IT tasks. These tasks are launched individually or bundled with external companies and freelancers, who then take over the tasks against payment. From simple IT Support for their own employees to the handling of complex programming tasks. More and more companies around the world are turning to IT outsourcing and benefiting from the many advantages, which we will discuss later.

What Is The Difference Between Outsourcing and Offshoring?

Often the terms outsourcing and offshoring are equated, although they imply completely different things. So let’s take a closer look at these two terms. In IT outsourcing, as already described above, individual IT tasks or the entire IT of the company are outsourced to external service providers. The tasks thus leave the company. With offshoring, companies take advantage of lower costs in other countries where small branches of their own company exist. The tasks are therefore shifted within the company so that mostly lower costs are incurred.

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How Does IT Outsourcing Work?

Probably the most important step in IT outsourcing is to clearly define the various tasks and find the appropriate professionals. Within your company, all digital work and digital tasks must be recorded and evaluated. Which tasks are particularly well suited to be handled externally?

Which tasks can only be performed in-house? Where are there legal restrictions? (Topic: data protection). Now, suitable companies or freelancers can be sought for individual tasks, which will take over these tasks in the future. This may seem complicated at first glance, but it is important to ensure that tasks are targeted and not duplicated, for example.

Why Do Companies Use IT Outsourcing?

IT departments are not only expensive, but also have to keep up to date with the latest technical knowledge. This therefore also means that, in the worst case, employers will have to hire new employees for every special field and every new technology. In the long run, this becomes very expensive and can mean a considerable overhang of IT employees.

With IT outsourcing, on the other hand, the relevant expertise is simply bought in from outside and is shed again when it is no longer needed. This makes planning for the HR area easier and simplifies the entire process. In addition, the necessary technology does not have to be purchased, which also significantly reduces the space required for IT. Companies can accordingly benefit from outsourcing in many areas.

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Advantages of IT Outsourcing

Let’s take a closer look at the advantages of IT outsourcing. Because advantages can be found on various levels so that different parts of the company can benefit sustainably from such a solution.

Savings in Many Areas

By outsourcing IT or by outsourcing parts of the tasks, companies save money. This is because both the IT infrastructure and the employees do not have to be provided for and paid for. Depending on the scope, there can therefore be enormous savings minus the costs of outsourcing. This also includes costs for software licenses, which companies have to pay even if they only work with these programs for a small part of the working time. All these costs add up significantly, which makes IT outsourcing is becoming increasingly attractive. Small and large companies alike save on personnel costs, which are also one of the long-term cost items.

Concentration in the Company on Core Elements of Work

If all departments of the company can concentrate on their core areas and the work required for this is done by external service providers, companies are usually much more productive. Above all, requirements for external service providers and freelancers are formulated much more precisely than is often the case with in-house company departments.

More Flexibility With Changing Tasks

If a company can afford its own IT department, it is optimized for certain tasks. This is necessary to ensure that the important core tasks are completed quickly and securely. But what if the requirements change? Training your own people not only costs money but also time. Hiring new people with the appropriate specialization is also hardly possible. Here, IT outsourcing can actually help to quickly establish new solutions without having to change anything in your own areas. The knowledge and also the technical possibilities are simply purchased externally. This makes it easier to meet changing challenges. In addition, this provides a further advantage.

The Situation in the Labor Market for Skilled Workers

Particularly in IT, skilled workers have increasingly become the focus of attention in recent years. Unfortunately, however, with the bad news that fewer and fewer specialists would be available for more and more jobs. In addition, many specialists can hardly be paid if they are to work exclusively for just one company. This causes real problems not only for small and medium-sized companies, but also for the big players in the industry.

IT outsourcing, on the other hand, can circumvent this problem. Significantly less recruiting effort and also faster response times and better flexibility in handling tasks ensure better processes.

Often Higher Quality Level of the Work

Very often, the quality of work increases significantly by means of IT outsourcing. This is mainly due to the fact that you pay motivated specialists for all work and all tasks, who can accordingly provide an agreed performance. If you tackle many tasks in-house, these are often only done on the side and not by the responsible experts. Errors are therefore much more frequent here than in outsourcing. Of course, errors can also occur here. However, the service provider is then also obligated to correct these errors.

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When Is IT Outsourcing Worthwhile?

When outsourcing is profitable depends on a wide variety of factors. On the one hand, there are the costs. As with the costs of app development, it is difficult to specify a sum above which IT outsourcing is profitable. The question is much more about the duration of the solution and the long-term costs. If parts of IT are needed permanently and are not likely to change for a long time, in-house solutions are usually more advantageous. However, if a company wants to remain agile and maintain the necessary flexibility while controlling costs, IT outsourcing is the solution of choice.

Are There Also Disadvantages to IT Outsourcing?

Of course, not everything in IT outsourcing is sunny-side up. Here, too, there are black sheep or problems that are simply avoidable. Poor communication and long-term commitment to a particular provider are the classics here. These can minimize the flexibility and drive up costs. Data protection can also become a problem. Here, the country in which your service provider is headquartered plays a role. Whenever customer data is involved, the legal framework must be clarified in more detail.

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How Can I Use IT Outsourcing in My Company?

Once the tasks are defined, IT outsourcing is usually very easy to realize. Through ElevateX, you can easily find suitable agencies, freelancers and companies that are specialized for the various tasks in no time. This not only saves time, but also ensures that the tasks can be taken over by real experts. Instead of half-baked or overpriced in-house solutions, the tasks can be done more effectively. The basis is always the clear definition of tasks and their scope. Only with well-structured specifications can tasks and work areas be optimally outsourced by means of IT outsourcing.

FAQs

What Is IT Outsourcing?

In IT outsourcing, individual tasks or the entire IT of the company are outsourced to external contractors or freelancers. This makes it possible to streamline structures within the company.

What Are Advantages of IT Outsourcing?

Outsourcing allows capacities in the company to be better allocated. The company can focus on its own core competencies. In addition, many IT tasks are being outsourced to specialists better and more efficiently. Companies also often save money with a better scope of services.

How Can I Use IT Outsourcing?

In order to outsource your own tasks, it is important to get in touch with the appropriate professionals. A platform like ElevateX is exactly the right way to do this. Here, freelancers, companies and clients come into contact and connect with each other.

In IT outsourcing, individual tasks or the entire IT of the company are outsourced to external contractors or freelancers. This makes it possible to streamline structures within the company.

Outsourcing allows capacities in the company to be better allocated. The company can focus on its own core competencies. In addition, many IT tasks are being outsourced to specialists better and more efficiently. Companies also often save money with a better scope of services.

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