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7 Fascinating Reasons Why Companies Outsource Work

Did you know? The worldwide IT outsourcing market is anticipated to increase at a compounded annual growth rate of 5% between 2020 and 2024. (Source: Global Industry Analytics report)

Sounds impressive, doesn’t it?

It’s not surprising, either. Over the last several years, the IT outsourcing services industry has exploded. It is worth more than 413.7 billion US dollars in 2021. And there’s still a lot more room for growth in the market.

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But what is it that makes companies decide to outsource? Why are business owners so keen to take up the services of IT outsourcing companies?

Of course, there are numerous benefits of hiring IT outsourcing companies. However, in this article, we list down the top 7 benefits that you will only get to enjoy if you outsource IT work. So let’s cut to the chase and find out why do companies choose to outsource work!

7 Fascinating Reasons Why Companies Outsource Work

Companies have been outsourcing work to other companies, countries, and continents since the very beginning of time. Although there are many reasons they do this, here are seven of the most common and exciting motivations behind it.

1. Reduce Costs And Save Money, Can Be 10% to 40%

Outsourcing IT work offers a wide range of benefits. For one, it makes your business more cost-efficient. If you’re wondering, “can my company afford to outsource its services?” then yes, you can! 

You can dramatically slash your operational costs by hiring the IT outsourcing services of a qualified and experienced third-party service provider. This is because, unlike your internal team, outsourced employees only get paid for the work that they deliver.

Also, by outsourcing work to well-established IT outsourcing companies in India, you can save up to 40% of your costs. These companies offer highly competitive rates – for project or time and materials (T&M) based engagements.

Not only that, according to a Deloitte poll of some worldwide firms, over 59% of them are currently outsourcing to India. Plus, 22% of those not presently outsourcing to India say they will do so in the future.

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2. Access To a Large Pool of Talent

Outsourcing IT work can give your company access to a bigger pool of IT talent.

You see, there are lots of talented individuals in the outsourcing industry—and they’re ready to offer their services at affordable rates. On top of that, these companies also allow you to choose the skill sets that you need for your project.

So how do you find the right IT outsourcing company?

Here are a few tips that can help you to choose the right company:

  • Check out their background and client testimonials
  • Get a glimpse of their IT staff’s profiles and past projects
  • Please find out how long they’ve been in the industry

By checking those things, you’ll find it easier to make a choice. Moreover, you’ll also get an idea of the kind of work they can do for you.

3. Accelerate Revenue Growth

When a company sets out to grow its revenue, many moving parts need to come together quickly. If you can do so more efficiently than your competition, outsourcing work can be an effective strategy for beating out other companies. 

IT outsourcing allows you to scale up your business rapidly with minimal investment, allowing you to spend money on areas like marketing that will boost your revenue even more.

However, you have to be careful with the type of work you outsource. You need to prioritize projects that won’t leave your business vulnerable because they depend on a specific level of expertise or resources.

4. Focus On Core Competencies

“Master your strengths, outsource your weaknesses.”–Ryan Khan – Founder of The Hired Group

If you’re not capable of doing something well, concentrate on performing well and outsourcing the rest. Thus, it is the most effective method to make your business a leader in its field. 

According to the latest IT outsourcing trends, 57% of companies outsource to focus on their core business. 

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With outsourcing, you can leverage a company’s time and resources to complete a project while freeing up your employees to work on more critical tasks within your organization. 

It’s also worth noting that outsourcing helps companies provide more customer-focused services because it allows them to expand their capabilities and introduce new products.

These days, companies are more focused on their core competencies because they know that outsourcing can quickly accelerate growth. They can indeed save more time and money when they outsource work to skilled companies. 

5. Access To The Latest Technology

Businesses that outsource work to other countries can take advantage of their access to the technology they may not have otherwise been able to afford. 

For example, China is often thought of as a hub for new and emerging technologies such as robotics and quantum computing. American businesses can bring in specialized workers from across the globe who already have access to these technologies rather than bringing them up with their in-house resources. 

Further, if your firm needs cutting-edge technology, it’s simple to hire someone who already has it. India is the ideal location for outsourcing because there are over 4 million IT experts working in the sector directly and another 10 million people working indirectly.

Furthermore, there are several more reasons to choose India for IT Outsourcing. Let’s look at them through an infographic.

6. Enhance Flexibility And Scalability of The Workforce

Many companies don’t want to get caught in a situation where they have excess employees and a lack of jobs to do. It could be that they are worried about missing out on opportunities, or they are just trying to protect their employees from being underutilized. 

A company can use another company’s team members when needed instead of employing them full time by outsourcing work. Besides, this is an excellent way for small businesses to grow, and big companies can protect themselves against market downturns. 

When you outsource work, you gain access to well-versed teams in technology and problem-solving. If your company is looking for a flexible workforce that can scale up or down based on the needs of the business, then it’s time to consider outsourcing. 

Outsourcing is also divided into three categories: onshore, offshore, and nearshore. Let’s take a closer look at each one. 

7. Less Risk of Micromanaging

When you outsource work, you’re passing off an essential function to a third party. In effect, that third party becomes an extension of your business. This means you’ll have less risk of micromanaging, which can be highly stressful for many employees.

It’s all about the talent. When you outsource your work, you’re not directly involved in completing it, so there’s less chance of monitoring and control over how things are done. Thus, it allows companies to concentrate on their expertise and grow their business effectively.

Besides, outsourcing work functions to a third party helps you avoid employing people who may not be a good fit for your business. It means you can hire professional teams with specific skill sets and expertise, which will boost your organization’s overall performance.

Now that you know the top seven reasons your firm should outsource IT work, it’s time to look at how to do it successfully.

Tips To Outsource IT Work Successfully

Tip 1: Analyse What You Are Trying To Outsource

Many companies only start to think about outsourcing when experiencing some issues.

They might be having problems with their current IT support team or struggling to meet deadlines.

Instead, they should assess their IT requirements in depth before looking for an external supplier. Thus, it will give you a quick and clear idea of your company’s needs.

Tip 2: Identify The Right Partner For Your Needs

Once a company has analyzed what it will require, it’s time to find a partner. Many third-party IT firms are available – all with different areas of expertise – so you need to find one that can help your business grow effectively.

You should start by thinking about where you want your company to be in the future and what kind of IT services you as a business need. From there, you can begin looking for suppliers who meet your requirements and have the capabilities to outsource that particular function.

It’s important to seek professionals with proven experience. In addition, you should look for a provider who has a successful track record in the industry and is well respected.

Tip 3: Negotiate And Agree On The Contract

If you decide to outsource your IT function, the next step is to put a contract in place. If this is done correctly, both sides will agree on their role and when certain milestones need to be achieved.

Due diligence, such as checking references and reviews from other companies who have used their services, can help with this process. A good contract will include all the details, deadlines, and requirements for your IT function.

Tip 4: Measure Results And ROI of Outsourcing Initiatives

After establishing a contract, the last step is to measure outcomes. This will aid you in future outsourcing efforts. Therefore, you must establish measurable goals. If the supplier fails to meet these targets, you can re-negotiate and agree on new destinations as part of a plan B. It may be necessary for your team to step in and take over specific projects.

However, if the supplier does meet these goals, you should look at how they can help your company grow and achieve its future targets faster.

Tip 5: Maintain And Improve Relationships

Your company will likely outsource different IT functions at some point. For this reason, it’s essential to maintain and improve relationships with your partner.

Moreover, this can be done by regularly checking in with them, providing feedback, and looking at possible plans. For example, it may be that the supplier is capable of taking over your company’s entire IT function, which would benefit both parties.

Although it’s critical to watch your vendor, finding an IT outsourcing company need not be difficult. However, if you use the ideas below, you should be able to locate a qualified associate who can assist your firm in growing its earnings.

Conclusion

The use of third-party IT suppliers is growing. It’s no surprise that more companies are starting to explore the benefits, such as cost savings and improved productivity, that outsourcing can offer.

Nevertheless, there are a few considerations before going down this path. Following the instructions mentioned above will assist your company in choosing the appropriate supplier for your needs and concluding an acceptable contract.

By outsourcing your IT function, you can take advantage of expert knowledge and resources while freeing up staff in the office to focus on core business activities. Plus, this will give you a significant edge over your competitors in an increasingly competitive market.

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Disclaimer: The information in this article is provided for general education and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness or fitness for any particular purpose. It is not intended to be and does not constitute financial, legal, tax or any other advice specific to you the user or anyone else. TurtleVerse does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.

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