We recently did two articles, Outsourcing Solutions and Outsourcing on outsourcing and how it can benefit your business.
While the benefits of outsourcing are undeniable, it is clear that outsourcing is not for everyone. The level to which you outsource will largely depend on the laws and regulation governing a country and the nature of your business. If you are dealing with sensitive information, you need to tread very carefully.
So when does one outsource and what does one outsource? What are the drivers that businessmen need to look out for?
The new age criminal
Cyber crime is a major issue in the world today. Nations are setting down cyber crime action plans and standard operating procedures when it comes to responding to a cyber threat. In addition, companies are also spending top dollar on cyber protection and insurance policies.
An interesting article on channele2e.com shows the importance of outsourcing cyber security.
The article points out that in the cases of IT security and disaster recovery, the motivation to outsource is typically not about saving money and more about the skills of the internal staff.
Security risks are changing and growing at an alarming rate, and being up to date with the latest know-how can be a full time job on its own. Outsourcing these tasks makes sense for a company that is having a hard time keeping up with these trends, as can be the case with many smaller firms where technicians are expected to perform multiple functions.
The things smart devices are made of
The article adds that application development is the most-frequently outsourced functions in the study. According to the report, 37% of organizations that outsource this function are planning to increase the amount of work they outsource.
Application development continues to take larger parts of the IT budget, and many IT organizations are looking to optimize internal staffing through the use of outside development firms, that can specialize in creating or improving these applications.
The report shows that not only smaller firms with limited skills are outsourcing, but large organizations have increased the percentage of their IT budgets spent on outsourcing from 6.3% to 8.7%. Small organizations are now spending 7.8% of their IT budget on outsourcing at the median this year, compared to 6.7% last year. Midsize companies have increased their spending at the median from 4.7% to 6.5%.
Driving outsourcing growth
So how much of an influencer is security threats when it comes to driving growth in outsourcing? An article on information-management.com paints an in depth picture.
While organizations are not broadly increasing the number of functions they choose to outsource, they are increasing the amount of work they offload to outside service providers.
The article points out that the percentage of total IT budgets being spent on outsourcing rose from 10.6% in 2016 to 11.9% in 2017, the report said. That represents a major increase as organizations have hovered between 10.2% and 10.6% for the previous four years.
Finding and maintaining the right skills to meet these threats can be a challenge, Wagner said. Turning to experts to supplement internal IT security skills is a smart choice for most organizations, he said. Other areas growing quickly include disaster recovery and network operations. Like cyber security, these are important areas and require specialized skills that are not necessarily core to the business, Wagner said.
Power in numbers
The article adds that outsourcing is becoming more attractive to all organizations, the study said, but large organizations are growing IT outsourcing budgets the fastest. At the median, large organizations have increased the percentage of their IT budgets spent on outsourcing from 6.3% to 8.7%.
Small organizations are now spending 7.8% of their IT budget on outsourcing at the median this year, compared with 6.7% last year. Midsize companies have increased their spending at the median from 4.7% to 5%.
Hopefully this article, along with the previous articles we published, paints a wholesome picture of outsourcing and how it can benefit or not benefit a company.