Before you switch off – thinking outsourcing is just for big companies – consider how much we already outsource. Take accountants, for example. Surely, bookkeepers or finance directors could attempt to get to grips with the intricacies of tax and dealing with the associated administration. But, more often than not, the decision is taken to outsource this task to a specialist – an accountant, who works on a subcontract basis for a fee. The same is true for lawyers, surveyors… and IT specialists.
Many companies can provide specialist expertise that may not exist in your own IT department. You may choose to outsource most of your IT, leaving a skeleton department to act as an interface. Or, you could subcontract projects to companies that specialise in a certain type of work. Your board might have taken a decision to introduce a new payroll system, for example. The decision to outsource this to a specialist provider has clear benefits, in that you are buying into a proven track record and outsourcing most of the risk associated with the project.
Risk mitigation is an important factor when considering whether to outsource. Give the job to a specialist and pay them to take the risk? Or, do it in-house, manage the risk yourself, tie up your resources, use non-specialists to do the job... and save money?
Just like most business decisions, the choice to outsource usually comes down to finances. Martin Blacher, of worldwide consulting firm QPCa, explains, ‘Companies usually consider outsourcing at the point of either expansion or contraction. If you do your sums properly, it will soon become clear if outsourcing is an option.’
But outsourcing is not a cure-all to be used without discretion. ‘You should only consider it if it’s not a differentiator in your business,’ Blacher continues. ‘For example, if you have an online business where your speed of order processing gives you a big advantage over your competitors, be careful of outsourcing this part of your IT.’
Outsourcing should work alongside an existing IT department, and far from seeing it as a threat, savvy IT managers will view it as another resource. Companies will often out-task the mundane labour-intensive work, such as PC help-desk support and web hosting. This leaves their IT team free to get on with more strategic work without getting bogged down with tasks such as fixing printers or showing users how to create graphs in Microsoft Excel.
Is it feasible?
If you’re weighing up the feasibility of outsourcing, you should also consider the benefits of scalability. Outsourcing arrangements can usually accommodate changes in line with your business needs, without incurring expensive fixed costs, such as wages. So, win a big contract and you don’t necessarily need to increase your headcount permanently, as long as you can manage the surplus via the outsourcing agreement. Call centres are a good example as they often have thresholds above which their calls are outsourced. This lets the call centre manage capacity and demand effectively, without having to hire and fire at the drop of a hat.
If outsourcing ticks all your boxes in terms of finances, scalability and core competencies, the next step is to recruit a suitable company and agree how you can work together. Blacher is quick to point out the need to put in place formal and regular appraisal procedures.
‘The usual service level agreements contain all the necessary key performance indicators to do with capacity, number of emails, amount of storage space and bandwidth, etc. But they often lack an assessment of quality of service, such as response times, server uptimes and disaster recovery times,’ he says.
The core numbers will go back to the feasibility study you originally carried out when considering outsourcing, but the quality element will be something you’ll probably have to work out how to measure yourself.
Outsourcing can range from IT support to fully outsourced projects. For example 24-hour IT support is available from BT with IT Support Manager and as Stewart Buller, head of marketing for BT’s IT services says, ‘People are often surprised by how inexpensive and easy to set up this type of outsourcing can be.’ Moving up the scale to outsourced projects, BT Lynx provides a flexible approach to system management, ranging from single system management to a service that completely manages IT infrastructure.
Outsourcing can be a valuable asset. Consider if the time is right for you, whether the numbers stack up, and the implications for your business. Do remember that it is your company’s own internal IT resource that has the critical task of managing and monitoring your outsourcing partners, to maximise the potential of the relationship and ensure that your investment ultimately brings returns.
The Creation Agency – Rapid expansion required IT assistance
In just six years, sales and marketing organisation The Creation Agency became a £7million company. But rapid expansion left them with potentially huge bills to recruit IT staff to support their 170-plus workers – many of whom were based at home and all of whom needed 24/7 support.
MD Jason Burrows says, ‘Higher value projects were being delayed, and for a business of our size, the expense of recruiting extra people was not an option.’
After discovering BT’s IT Support Manager service, the agency switched all its user support and day-to-day voice and data maintenance to BT, meaning all its PCs
were covered 24/7.
‘Hearing about BT’s IT Support Manager was music to my ears,’ says Burrows. ‘And as we recruit new staff, we just add more licences.’
The Creation Agency needed a lot of out-of-hours support which can cause costs to spiral. So, Burrows was happy to have 24-hour support at a fixed cost. As the financial benefits included employing less staff (eg, reduced sickness and holiday pay), BT’s IT Support Manager became an obvious choice.
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