As an IT service provider, I often hear an opinion at the beginning of a conversation with a potential client: “We do not use outsourcing because it does not fit into our business model. Besides, we don’t trust this kind of service and prefer to keep and develop core competencies in our team.”
So I then ask one question: And what system (here you can choose any system from any area) do you use in your Company? In most cases, the name of the external vendor that maintains and develops the indicated area falls. My observations are confirmed by the Report “Outsourcing maturity of Polish Enterprises”, according to which as many as 93% of entrepreneurs admit this. [1]
Approaches to Outsourcing IT Services
Why do we so easily outsource some areas and cling to others under our wings? Unfortunately the opinion persists that outsourcing means hiring a single employee. And yet, in reality, this business model has long since evolved much further.
The very definition states, “Outsourcing is the separation from the organizational structure of an enterprise of certain functions carried out by it independently and transferring them to be performed by other entities. Outsourcing allows management processes to focus on the core objectives and core competencies of the organization.” [2]
The purpose of outsourcing, therefore, is to redeploy resources in the organization to profit-generating areas. This is not only practical but also brings actual cost savings at the same time. 79% of the companies surveyed considered outsourcing services a fundamental reason for separating processes outside the organization. In turn, 64% of companies said that an important motive for which they are willing to use outsourcing is the desire to focus on core business activities. [1]
Among the barriers to the development of outsourcing, respondents cited primarily:
- the cost of its implementation (90%)
- legal regulations (58%)
- lack of suitable suppliers (53%)
The research illustrates that despite the fact that most companies have implemented it in-house, outsourcing is still used to a relatively limited extent. For most of the organizations surveyed, it is of operational importance. However, the research also points to an evolution toward an increase in its strategic importance.
This will depend, however, on the pace of development of the outsourcing market, including the supply of such services, as well as the growth of companies’ experience in using more advanced outsourcing strategies, wrote Dr. Mariusz-Jan Radlo and Dr. Dorota A. Ciesielska, partners at the analytical and consulting firm SEENDICO Doradcy and academics at the Warsaw School of Economics, in summarizing the survey results.
Who should use Outsourcing of IT services, and to what extent?
No organization today bases its entire business solely on its own resources. Even if IT systems are the business foundation of an organization’s operations, providing valuable “know-how” and professionalism at every level is impossible.
The rule of thumb is simple: any activity that is not strategic from the organization’s point of view, but allows to free up resources needed to achieve the primary business goal, is worth putting into an outsourcing model.
Following this trend in the market, the following quote from our backyard is worth quoting:
A professional and reliable IT department is essential to meet customer expectations and increase the company's value. Only with the support of such a department is it possible to develop and improve the quality of services offered. The decision to outsource IT, allowed the company to focus on key aspects of the heating business and entrust difficult and costly IT issues, not directly related to the area of our core business, to a trusted and experienced partner [...]. [3]
Mariusz Dzikuć CFO of MPEC Wrocław
At the same time, it should be remembered that the saving is not always a reduction in the cost of servicing a particular area but the very protection of the organization from employee turnover in key positions.
In business, it's worth making decisions like in life. When deciding to build a house, we can choose the contractor for each stage of the work ourselves. The building will be erected for us by one company, another will lay the roof tiles, the interiors will be finished by a third, someone else will take care of the construction of the access road, and someone else will do the electrical installation," the Impel Group expert describes and continues: - The house will be built on the cheap.
However, will everyone meet the deadlines? What if the building, in the end, does not meet our expectations? Who will bear the responsibility for this? It is easier, more convenient, and safer to choose a contractor who will select subcontractors independently or in consultation with us and take care of the whole project.
This guarantees that the processes will complement and work together and that the contractors will work responsibly and comprehensively. [4]Piotr Regulski Vice President for Commercial Affairs of Impel Cleaning and Impel Security Polska
So why is it worth handing over management of certain areas to an external provider?
Certainly, 1,000 reasons could be given for outsourcing, but I will use the authority here [5]. The use of outsourcing makes it possible to achieve such goals as:
- cost reduction and control;
- concentration of the company on its core business;
- gaining access to production capacity of the best quality;
- freeing up its own resources to pursue other objectives;
- acquiring resources that the organization does not have;
- gaining the benefits of restructuring more quickly;
- dealing with a function that is difficult to perform or impossible to control;
- obtaining capital;
- spreading risk;
- cash inflow.
Outsourcing service companies are organizations that specialize in this type of activity. In addition to performing a specific service, they also take on employee turnover, upskilling, or multi-shift work issues.
If you want to be perceived as an expert in your field, it is worth supporting yourself with specialists in areas where expertise is not required.
Learn more about our Outsourcing Services.
