Pros & Cons Application/IT Outsourcing

Pros & Cons Application/IT Outsourcing

IT Outsourcing is a big decision that can lead to big benefits. The reasons are clear: cut costs, gain professional and trained personnel to handle your web presence or internal applications, and get more time for focus on your primary business.

But when you decide to outsource the IT department of your business, you must be familiar with all advantages and disadvantages from that process. Or, at least most of them. We’ll try to give you a better picture of this process by outlining three pros and cons of outsourcing IT. Then, we invite your feedback at the end.

IT OUTSOURCING PROS

  1. More cost effective – If IT is not your field of work, outsourcing just makes sense. IT Outsourcing companies are usually paid by the time spent on your project or one set fee, contracts which are cost effective and save both time and money.
  2. Trained and experienced personnel – Even if you are ready to pay for in-house IT, technology is changing all the time. You need to invest in trainings and certifications for your employees if you want to be sure that they are ready to work with modern solutions. Companies that offer IT outsourcing almost always have top educated and certified personnel ready for the challenges of the modern age.
  3. Specialization – When outsourcing IT, you can hire a direct specialist according to your need s, which is much easier than hiring multiple professionals for different tasks.

IT OUTSOURCING CONS

CON #1 Response time. Outsourcing companies execute tasks by priority and require communication for re-prioritization. Response time can be a problem, especially in cases of emergency or crisis. Still, there are companies that offer 24/7 service or that solve problems within 4 hours, or less.

SOLUTION: Select a partner works on a world clock. With an eye to deadlines, for example, Atol Solutions delivers on time, every time. How? First, Atol Solutions employees work on flex time, which means that they can be available during evenings and early mornings to accommodate the time schedules of our clients. Second, our programmers check in with clients multiple times per day, sometimes working simultaneously together via chat. Finally, we check emails constantly and respond to each case of urgent need as it occurs.

CON #2 Time to understand infrastructure and way of working. Every business is specific. So you can`t expect that an IT outsourcing company will know how to work with you from the get-go. They will need some time to evaluate your IT infrastructure and business process. Be aware of this and plan ahead.

SOLUTION: Make sure your partner has experience working with a variety of company sizes and configurations. For example, Atol Solutions provides you with an account manager whose international IT experience makes process integration smooth. Atol Solutions project managers have 50+ years of combined experience working with small, medium, and large international corporate organizations. We pair you up with these managers to streamline processes and to integrate project infrastructure from Day 1.

CON #3 Security. Security is an always a concern. Your data is very important to you and choosing a partner that you will share it with is not an easy task. An ideal IT outsourcing partner must have implemented all necessary security protocols, policies and standards, (including international standards) that certify professionalism and accuracy.

SOLUTION: Request documentation from potential partners about their security protocols. Atol Solutions considers security a priority. Our security protocols, policies and standards are ISO certified. Please ask us for more information or copies of our process documentation if security is of particular concern to your business or project.

ARE YOU CONSIDERING OUTSOURCING?

Deciding to outsource IT is not easy task. It takes time and analysis. When you’ve fully evaluated and made your terms clear, you can succeed in saving both time and money.

 

And Near Shore IT: 5 Things you need to have in place

THE NEARSHORE ZONE

So what’s a nearshore zone? Nearshore zones are countries in the neighborhood of your business and usually shares a border with your own country or regional zone. If they are not neighbors in the strict sense of the word, a nearshore zone includes two countries within the same time zone (+/- one hour). Further, countries in the same nearshore zone are usually well connected with airlines that operate daily and travelling from one to another is a simple procedure that lasts no more than a few hours.

NEARSHORE IT VS. IT OUTSOURCING

The IT industry, connected via internet, is one of the most eligible industries for outsourcing. In fact, a few years ago, offshore IT outsourcing was significantly trending. To be honest, outsourcing IT to distant companies helps cut costs. IT outsourcing affects the bottom line. Costs in India, for example, are a few times lower than those in Western Europe or USA. IT companies started offshoring… a lot. But, there is no such thing as free lunch. In addition to benefits and savings, there were problems too. These include:

  • Time delays – Different time zones are one of the greatest problems of outsourcing IT. Five to eight hours “distance” between client and supplier is almost one working day. That means that feedback or small changes can take hours to “travel”, and that is not at all acceptable, especially in a crisis.
  • Language or cultural differences – Another problem is culture and sometime language. Although Indians (we take India as an example because they are the most popular offshore destination in the world) are great in the English language – the lingua franca nowadays – client countries may speak different language such as French or German. Communication can be a problem.
  • Barrier to personal visits – And we will mention one more disadvantage of offshoring, compared with nearshoring – lack of person-to-person communication. And again the only reason is distance and expensive travel costs.

The solution of all these problems is: Nearshore IT. Problems can be solved in a real time, you can see and check progress on projects in the same day, and evaluate what is happening. And when you nearshore IT, you can not only speed up delivery time, you can save money. Advantages of nearshoring IT include:

  • Cultural closeness
  • Face-to face, on-site visits are realistic
  • Lowered costs
  • Multiple language diversity
  • Quicker delivery time
  • Real time problem solving
  • Real time project management

SO WHAT DOES YOUR COMPANY NEED TO DO BEFORE YOU START NEARSHORING?

When the following prerequisites are met, your company is ready to go in search of a nearshore IT outsource partner.

  1. Define tasks well. Good planning is half of any job. Before you start to nearshore IT, complete a full analysis and research within your own company first. Define all aspects of the job or service you want to send to a nearshore company. Make a list of the tasks you are doing, what you don`t want to do and what needs to be done, and then create final list of the tasks that you are ready to send to a partner firm.
  2. Identify the “ideal” nearshore partner. You will need a profile of the ideal nearshoring IT partner, BEFORE you start looking. Define what kind of company this should be, with how many employees and what structure. Is ISO compliance important to you? What are some optional places where the firm can be located (list from preferred to acceptable). Outline other parameters that are important for establishing cooperation with another company.
  3. Find that partner. Start looking at the IT outsourcing market. When you know what you are looking for, it is much easier. Check into the nearshore zone in which you operate. Some compromises will be made to accommodate the options available, but stick to your previously defined plan.
  4. Allocate funds. Before you start, be sure that your company can afford to send IT elsewhere. Nearshore IT can save you money over time, but may be more expensive than offshoring initially. Be aware of that. Also, be aware that nearshore companies depend on funds to operate; they hire and manage all needed personal to fill your needs. Being paid on time can be essential to operations.
  5. Create a team for communication. Communication for an IT project is crucial. If you choose a nearshore outsourcing partner, you can talk in a real time. The team responsible for communication must have one specialist for communication and negotiation, in addition to project management experts that will control the flow and quality of the outsourced job.

IT Outsourcing: Top 10 Countries

What do India, China, Bulgaria and Lithuania have in common? It’s not location or people, it is a growing IT outsourcing market. Each of these are part of the Top 10 IT Outsourcing countries in the world. What other nations are included? A comprehensive list and more details about IT outsourcing countries here.

IT OUTSOURCING IS EVERYWHERE

As a trend, outsourcing is present everywhere. Professionals and companies from all around the world are connecting all the time in order to lower cost and speed delivery times. Companies from Western Europe, North America or other highly developed parts of the world are hiring professionals and companies from Southeast Asia, Central and South America and Eastern Europe to be their providers of all kind of IT services… from simple data entry to the most complex architectural and database designs.

TOP 10 IT OUTSOURCING COUNTRIES

It is really hard to create a global list of outsourcing countries because there are a lot of factors to be considered. Plus, you must gather a lot of information (which is not always available). Finally, the world is changing so fast that it’s really hard to follow everything, everywhere. So how did we come up with this list?

When we started to create a list of Top 10 IT Outsourcing destinations, we had few factors in mind:

  • The business and economic environment
  • Costs and resources
  • IT skills and talent

All three of these factors helped us generate one overall index for ranking IT sourcing companies. And here they are.

1. India – India is the leading country for offshoring outsourcing services. Also known as the country that “invented” offshore outsourcing, today India captures more than a half of IT outsourcing business, with $47 billion export value. Top consumers are companies from Americas and Europe.

2. Indonesia is moving from dependent nation to exporter of IT and IT related services. Indonesians work in almost every field of IT, but they are most popular in the call center market. Currently, the Indonesian government is liberalizing its economic policies to make the country even more eligible for outsourcing market.

3. Estonia – The first of the non Asian countries in this list, Estonia had experienced great economic improvement since it was a member of Soviet Union 20 year ago. Almost every field of living and working has been impacted, especially the IT sector. The IT outsourcing market in Estonia is valued at approximately $130 million, with 100 companies employing more than 2,800 IT professionals.

4. Singapore – Singapore is the ideal location for outsourcing IT business, if you take the word of Citibank, Credit Suisse First Boston, Hewlett-Packard, IMB and Microsoft. Each of these companies has selected Singapore as its offshore home. Singapore’s welcoming business environment and quality infrastructure are among a few factors that makes it one of the fastest growing outsourcing markets in the world.

5. China – The most populated country and manufacturer of almost every electronic device for western companies from Europe and USA, China is also one of the fastest growing IT outsourcing markets. More precisely, China’s IT outsourcing market is growing 30% annually. China has five major outsourcing centers:

  • Beijing
  • Chengdu
  • Shanghai (product, research and testing)
  • Guangzhou (engineering )
  • Shenzhen (software and application development and management)

6. Macedonia – The Republic of Macedonia is a small country but it has great potential when we are talking about IT Outsourcing. Of the more than 500 companies involved in IT business, only a few of them are mega-companies. The majority are 10-20 firms, advantageous because the process of decision making and project realization is faster and more effective. Other benefits include well educated and trained professionals, lower cost of living, supportive business climate, low taxes and proximity to all highly developed countries in Europe. In the past few years, Macedonia has become very active in the field of IT Outsourcing, and the predictions are that this market will continue to grow in the feature. Companies are Gigavoice and Disney/Lucas Animations.

7. Philippines – And back to Asia again. IT companies in the Philippines are ranked first in business process outsourcing. However, many companies are choosing the Phillipines for outsourcing general IT services, as well. Strong English skills, hardworking talent, and familiarity with Western cultures are among main key factors for companies (even Fortune 500 ones) who are among their clients.

8. Thailand – The slow but constant growing IT sector in Thailand has led to an increasing market of IT outsourcing services. IT outsourcing may not grow fast in Thailand because of the lack of regulative and government support, but this country has the potential to be one of the major international IT players in the near future.

9. Lithuania – Near 75% of all Baltic IT companies are located here and that fact tells a lot about theinfrastructure and good conditions of doing business in Lithuania. Proximity to clients is another plus and with over 45,000 professionals employed in IT outsourcing companies, business has attracted some global companies such as Fujitsu, Omnitel, and Sweesbank to become IT outsourcing clients here.

10. Malaysia – The last one on the list of IT outsourcing countries is Malaysia, but this country has the potential to be among the Top 3 in the very near future. Known for cost-effective and value oriented services, Malaysia can be a real competitor in the fields of: PO (Business Process Outsourcing), SI (Systems Integration), and IT consulting segments.

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