Why do companies outsource IT services?

The days when almost every medium to larger-sized company has its own IT support department have all but passed.

Now, the cost and complexity of IT systems mean even multinational enterprises may choose to outsource aspects of their IT services.

This has created a dynamic and evolving marketplace for IT services, increasing demand for IT contractors.

Why do companies outsource IT services, what are the advantages and disadvantages of doing so, and what opportunities does IT outsourcing provide for contractors?

What is outsourcing in the IT industry?

IT outsourcing is the practice of contracting specialised external providers and contractors to manage specific IT services.

These consist generally of functions that might once typically have been handled in-house.

External providers, often referred to as managed service providers (MSPs), offer a range of services to companies, such as network management, technical support, cybersecurity, cloud computing, and software development.

Some companies may find it practical and cost-effective to outsource a single function, like help desk support. Others outsource a more extensive range of IT services.

Any contractor looking to offer IT support must understand why companies outsource IT services, and how they can tailor their offer to meet client requirements.

Why do companies outsource IT?

Outsourcing of different operational requirements is common across business.

Outsourcing IT services allows businesses of all sizes to scale their IT resources according to their needs.

It often makes sense not only from a day-to-day operational perspective, but also from a strategic point of view.

Some of the main reasons why companies outsource IT services include:

Reduced costs

A leading driver for IT outsourcing is cost savings. An internal IT department is rarely cost-efficient, particularly for small to medium-sized enterprises. Companies are better able to budget for IT services they need by outsourcing.

Specialised expertise

Outsourcing gives companies access to experts in specific fields like cybersecurity or cloud computing. External providers often have teams of experienced professionals, who understand the latest technologies and best practices.

Core business focus

By outsourcing IT, businesses free up more time and resources to focus on their core operations and future business goals. IT management can be time consuming, particularly if a business doesn’t have a technological focus.

Flexibility

Outsourced IT gives businesses greater flexibility to scale up (or down) their operations as required. During periods of rapid growth or transformation, companies may require additional IT support or resources. By outsourcing, they’re able to access both the expertise and technology they need without committing to additional infrastructure or workforce.

Managing risk

Outsourcing IT services to a trusted provider helps companies mitigate the risk associated with cyberattacks, system downtime, and data breaches. Managed service providers will usually deploy the latest security protocols and adhere to compliance requirements.

What are the benefits of outsourcing IT support?

There are a number of benefits to outsourcing IT support for businesses of all sizes:

24/7 support

Outsourced IT services will frequently offer wraparound support for employees and customers. This can be particularly important for businesses operating in different time zones, or if they employ remote workers.

Latest technology

Investing in new technology is expensive, but with outsourced services, companies can keep up with beneficial advancements. IT service providers will typically invest in the latest hardware, software, and infrastructure.

Increased efficiency

Without the need for in-house IT support, businesses can streamline their operations and improve productivity. Technical issues can be resolved quickly and efficiently, reducing the burden on internal staff who are then better placed to concentrate on their primary responsibilities.

Better financial planning

Instead of dealing with fluctuating expenses related to maintaining an internal IT department, companies can opt for a fixed monthly fee that covers all their IT needs. This reduces the risk of unexpected IT expenses and encourages better financial planning.

What are the cons of outsourcing IT support?

While there are many benefits to outsourcing IT support, particularly for small to medium-sized businesses, it isn’t always appropriate

The possible drawbacks include:

Loss of control

Companies lose direct control over their IT operation. They may be unable to monitor or influence their IT system in real-time. Not only that, they should be clear about the level of support included in their contract before committing.

Security and data privacy

While any company offering outsourced IT services should follow the strictest security protocols, transferring data to a third party always carries an increased risk of unauthorised access. Companies need to ensure that their outsourcing service comply with all relevant regulations.

Dependence on a third-party provider

Any IT services provider will need to build its reputation on the reliability of its services. However, if the provider does experience technical issues, financial difficulties, or even goes out of business, clients can find themselves without the IT support they rely on. Many companies will usually have back-up plans in place to bring basic IT services back in-house temporarily.

How to find the right umbrella company as an IT contractor

If you’re a contractor providing outsourced IT services to companies, then being employed by an umbrella company can provide peace of mind when it comes to a reliable payroll solution.

You’re paid in the same way as a salaried PAYE employee, meaning there’s no need to complete a self-assessment tax return.

Working for an umbrella company also means greater flexibility to choose working arrangements.

However, not all umbrella companies are the same and choosing the right one for you is essential.

At Umbrella Tracker, we help IT contractors compare a comprehensive list of umbrella companies in the UK.

Calling on years of experience operating in the contracting marketplace, and informed by supporting countless freelancers – including IT contractors – find the most suitable solution for their circumstances, we remove the stress from what can feel like an overwhelming decision.

To understand more about how umbrella companies work, and to find the best one for you, don’t hesitate to contact our knowledgeable team of advisors today.

Call us by dialling 0203 026 3303, or complete a contact form and request a free comparison.