Everything you always wanted to know about IT outsourcing but you were too afraid to ask
Nowadays, outsourcing or nearshoring plays a crucial role in the technology world. Yet, there are aspects of it that may remain unclear.
What IT outsourcing is?
By definition outsourcing is the cooperation between two companies, usually from different countries, where one company is the provider of services or processes on the other company’s behalf. Over the past 35 years it has immensely developed and has been noticed as an excellent solution to vastly reduce costs and time (that otherwise would have been spent on e.g. recruiting new personnel), yet still sustaining quality. In the era of widespread Internet connection, outsourcing (or nearshoring) comes into sight as an easier way to do business. It frees management time, letting companies concentrate on their core competencies.
Different words, the same meaning
Outsourcing – it is assigning services or processes to another, usually external, company rather than conducting them internally. It frees you from many actions connected with managing your project. From planning, through supervision to market analysis. It guarantees flexibility and can save you unnecessary expenses, because companies pay only for the services they require. Also, it eliminates the need to hire and train new employees.
Offshore outsourcing – it is a type of a classic outsourcing model. It is an agreement between two companies, where one agrees to provide services for the other one. It is usually in a distant country. Its biggest advantage is lower price, in comparison to in-house services.
Nearshoring – it is understood as an outsourcing to a neighbouring or nearby country or a region with similar, or a very close time-zone. It is based on exactly the same principles as offshore outsourcing, with the possibility of more frequent visits due to geographical proximity.
- Novelty enters – we can easily observe the impact that growth of social media, mobility, analytics and cloud (SMAC) has on IT. These new technologies initiated a change in business strategies. The focus will now move to delivering better customer service experience. Outsourcers will go with the odds and use the SMAC model to stand out against the competition.
- Internet of things (IOT) – it is the trend with the broadest prospects to flourish. In 2006 there were 2 billion IOT objects, whereas in 2020 it is predicted to grow to 200 billion. IOT is the network of things connected to the Internet that interact with each other, completing tasks when you work or rest. It might be everything, from things that seem really obvious, like smart-watches or tablets, to unbelievably tiny and innovative stuff like smart dust.
- Managed service model (MSM) – another change will be visible in measuring the effectiveness of sourcing relationships. The traditional client-vendor relation is changing into a partnership. It is no longer only cost-efficiency that matters, but also the impact that outsourcing has on the overall business. Managed Services Model allows the Client company to focus on their core business, whereas the outsourcer, being more independent, can manage the investment, benefiting the Client.
- Software as a Service (SaaS) – it is a type of a managed service, working on a usage subscription model, paid regularly. All customers can effortlessly enter their data over the network, wherever they are. What is more, users pay coly for the software and features they need and don’t have to worry about additional costs. Since SaaS is used in the multitenant environment, scalability is much faster and highly beneficial for your clients.