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Unlike some functions of business – finding an office space, deciding on a product to sell, or picking a company logo – your information technology (IT) needs will change over time. That’s because business growth necessitates changes in your hardware, software, and even your overall digital footprint: more sales means more vulnerabilities and more opportunities. Often, growth happens at a faster-than-anticipated pace, which is why business owners look to outsourcing for help.
So what does outsourcing mean, exactly? In general, the term is used whenever a company hires a person or team outside the physical office to perform functions that support business goals. These individuals and groups are called by different names, depending on their scope and function – contractors, freelancers, and managed service providers, to name a few. Each outsourcing provider acts like an employee, with similar results-based targets and expectations, but typically without the demands of square footage, HR resources, and payroll requirements required to employ traditional employees and managers.
Why Do Companies Outsource?
As business at large has grown and changed, so have the attitudes surrounding it. In a post-pandemic world, much of the workforce has grown accustomed to working from home, and even the most reluctant legacy companies have been forced to admit the “WFH” approach has merit. In doing so, the idea of the office as “home base” has faded considerably, with important paperwork, software, and connections now routinely accessed through cloud-based services.
Companies outsource for a variety of reasons – affordability usually topping the list. The cost of hiring, managing, and assessing employees is a considerable one, not to mention the cost to “house” them in an office throughout the work day. Through contracting with outside workers, a company can achieve important goals while keeping their overhead costs predictable, scalable, and low – particularly in comparison to individual hires.
What Is An Example Of Outsourcing?
Imagine Company X needed help setting up a computer network for their office, a laptop lending program for traveling executives, and a reliable video conferencing setup for discussing terms with overseas vendors. Normally, Company X would need to hire, at minimum, an IT department manager and one employee, compare specifications, labor costs, and availability of computers and hardware, purchase the hardware and coordinate setup with their new IT department, and keep track of the location and status of all devices once they were in use.
If, alternately, Company X decided to enter into an outsourcing arrangement with a managed IT service provider, all of these important tasks would be taken care of for them, for a flat fee. While they would, of course, have to pay for whichever hardware they ended up selecting, they’d know that they got the best price because their Managed Service Provider (MSP) team did the research and comparisons for them. The MSP team would also help them set up appropriate camera equipment (or software) to facilitate video conferencing, and would be “on-call” to help when it needed to be put to use. Some common questions among business owners include, “what is managed IT services,” and “what is IT service continuity management,”we cover these questions in our complete guide to managed IT solutions.
Why Should Your Company Outsource?
Trusting something as important as your IT needs to an outsourcing provider can be anxiety inducing , but once you’re able to take advantage of the benefits, you’ll wonder why you considered anything else. As a business owner, you need to make a great deal of decisions each day that steer the direction of your business; ideally, they’re both prudent and cost-saving ones. When it comes to IT, however, if your business doesn’t operate in the technological space, it’s reasonable to feel “out of your element” – making you a poor choice for selecting and onboarding new IT members.
Businesses actually outsource every day – hiring a managed service provider is just less obvious than selecting specific contractors for specified business operations. For example:
- If your company isn’t a commercial construction business, you’d have no problem using a realtor and renting an existing warehouse
- If your company doesn’t source and provide utilities as a function of business, you rely on sewer, water, and electrical services from third parties – occasionally even the city itself
- If your company does not manufacture its own products directly, you’d use a vendor or white label provider to obtain your own stock
- If your company doesn’t do its own payroll, chances are that the work is already outsourced to an employment payroll company
While it’s true your company could put a realtor, builder, lineman, plumber, manufacturer, and accountant on the payroll, it’s likely not logistically or financially reasonable to do so. Using an outsourced service provider or independent contractor, however, ensures professional-level results with a price tag that works with a budget. Additionally, the cost saving extends to office space and utility usage in your physical headquarters: remote service providers don’t use parking spaces, desks, electricity, or paid vacation days. These are some of the many benefits of managed IT services.
The Argument For Growth
The goal of almost any business is to grow. More sales, more space, more target markets and clients: these are the goals that keep brands climbing the proverbial ladder. The problem is, the costs required to support that growth can sometimes outpace the liquid capital growth brings in. When this happens, going on a hiring glut can be costly, and even cause financial trouble if growth stalls after a spike.
Instead, using outsourcing firms like managed IT service providers ensures a predictable cost that can be scaled up or down as needed, and a perpetual pool of talent – one absent of the stigma and stress of moving employees from part time to full time, or vice versa, just to meet periodic business needs. Agility and versatility are the “magic words” for successful businesses in a modern market, and that means a clear need to embrace non-traditional methods of satisfying core business needs. An outsourcing relationship isn’t just a matter of temporary convenience – it’s a smart, stable business strategy that’s become a must-have for some of the most well-known brands across the world, regardless of industry, product, or service.