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IT Offshoring: the Risks and the Alternatives

by: Admin

Thursday, July 22, 2010 |

The offshoring of IT operations has become a trend among companies worldwide in both the public and private sector. Offshoring is a process that, if done right, can yield maximum returns on investment for both the client and service provider. As with any corporate endeavor, however, there are pitfalls that companies need to be aware of and avoid in the process of establishing a successful outsourcing operation.

IT outsourcing has long been a way to cut costs - especially so given the financial limitations in struggling economies undergoing a downturn. Businesses of all scales worldwide are searching for a means to cut costs. Offshoring has become a means to not just reduce costs, but maintain a high level of service - if not higher - than was established beforehand.

“In-house IT management is complicated, time-consuming and requires the finance, resource, and capacity that businesses, especially following the recession, simply don’t have - something which is not set to change any time soon,” commented Onyx Group CEO, Neil Stephenson.

A company that removes a process that unnecessarily consumes such an amount of time and resources can stand to steer the course of the company towards core goals. However, before such a direction can be taken, all risks and the alternatives need to be analyzed.

Assessing the risks and considering the alternatives are, according to outsourcing expert, Iain Monaghan, inevitably linked together: “Some organizations looking to outsource give their existing in-house departments the opportunity to put forward a competing bid, while others conclude that the benefits available from outsourcing could be obtained more economically by changes in internal processes; for example, increased standardization.”

IT outsourcing still a growing trend in major offshoring countries


IT outsourcing is still a rapidly growing trend in major offshoring countries such as the UK despite the many traps that companies tend to fall into during the process. Analysts predict that outsourcing has yet to experience its “golden age”. With figures indicating that approximately £80 billion of public sector services in the UK are currently outsourced - a figure that could well exceed £140 billion by 2015 - the prediction holds much weight.

According to Monaghan, the success of an IT outsourcing partnership can be measured by business value and customer satisfaction. He further adds that customers expect improvements in both the quality of services and its costs.

The popularity of IT management outsourcing has far-reaching implications and presents small-to-medium businesses an opportunity to purchase high-end services at minimum costs. 

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