Is Outsourcing IT Good or Bad? What Are the Potential Risks and Benefits that You Need to Weigh?

Is Outsourcing IT Good or Bad? What Are the Potential Risks and Benefits that You Need to Weigh?

Here you are now, facing multiple challenges: to digitally transform your IT business, to adopt new operating model techniques in core, to automate your in-house processes, to jump on the “cloud adoption” trend... So, you can't help asking yourself: “What about outsourcing IT?"

“Wouldn't it accelerate my digital transformation? All while helping me cope with the inherent costs?”

Then, you're suddenly “bombarded” by an avalanche of (legitimate) questions:

  • Is outsourcing IT good or bad?
  • What are the benefits and the risks to consider?
  • And do the advantages outweigh the... disadvantages?
  • What would an in-depth “in-house vs outsourcing IT” analysis reveal? 
  • What are those contexts where outsourcing development becomes more tempting than having exclusively in-house developers working on your projects?

Let's shine some light here and dig out both the potential risks and the powerful benefits of this business model:
 

1. But First: 3 Undeniable Benefits of Working with an In-House Team

Now, before we start “dissecting” the business practice of outsourcing IT, let's recap the clear benefits of the “conventional” in-house approach to software development:

  • an in-house development team would be already familiar with the culture and the particularities of your company
  • … therefore, they would be better “equipped” for the challenges that they might be faced with throughout the development cycle; more agile and adaptable to unexpected changes
  • there's this “propagation” of knowledge inside an in-house team that you won't find inside a group of freelancing developers that just happen to be working on the same project
  • in-house developers have an in-depth understanding of your overall business idea — not just of a specific project's requirements and context

In other words, they'll be more committed. More determined to contribute their share of experience and expertise to turn your business idea into reality.
 

2. 7 Main Benefits of Outsourcing IT

What are the clear advantages of outsourcing some of your IT functions or even whole projects? For, there must be some hard-to-resist-to gains, considering that it's a business strategy favored by both startups and globally-known brands...
 

2.1. It's Cost-Effective

And this benefit is more than... predictable:

  • you don't hire in-house developers at a fixed cost, instead you contract remotely working tech professionals
  • you cut down costs, such as sick pay and insurance
  • you cut down your employee training expenses, as well
  • you get to tap into the benefit of hiring skilled tech talents at half of your local rate
     

2.2. It “Puts You in Touch” With Top Specialists in Their Fields

And this must be the second most tempting advantage of outsourcing IT after that of reduced costs:

More often than not, freelancers and companies providing custom IT outsourcing services put a greater emphasis on... self-development. 

In short, outsourcing IT increases your chances to find some highly experienced software developers for your projects. Or for specific tasks in your projects.
 

2.3. You Can Fully Benefit of Short-Term/Project-Based Commitments

Here's this particularity translated into a clear advantage:

Hiring project-based, short-term tech experts help you reduce a plethora of costs.

And this benefit becomes particularly valuable if it's a startup that you're managing: 

You can hire tech professionals for a well-defined period of time only, to ensure a specific project's success. No need to invest the resources you... don't have to hire skilled tech talents on a long-term basis.

Nor to compromise your project's quality just because you can't afford a complete in-house team. Not just yet...
 

2.4. Real-Time Scalability to Suit Your Fluctuating Project Needs

Another huge benefit of outsourcing IT functions is the highly flexible pool of tech talents that you can dive into. 

Basically, you get to scale your outsourced team up or down, to perfectly fit your projects' needs. And to get it perfectly equipped for any unpredictable challenges throughout the development cycle.
 

2.6. You Can Spare Valuable Internal Resources for Your Core Processes

Say you run a mobile app startup: efficiency is the ultimate goal when it comes to managing your resources, right?

So, you:

  • can't afford to have multiple teams or in-house experts, in various fields (marketing, content, etc.)
  • can't afford to deliver a core product that's any less than highly innovative and top quality (that, if you ever want to grow your IT business from a startup into an... enterprise)

In this respect, the other strong advantage of outsourcing IT is... the focus that you gain.

Meaning that your internal team can stay focused on the core processes. On doing what they're experts at, instead of having to invest their skills and innovative potential to fill in certain talent gaps in your agency.

For instance, mobile app developers don't need to... provide written content, while your front-end developers don't need to step into the shoes of QA engineers, as well.
 

2.7. You Gain Access to a Wider Talent Pool 

By outsourcing IT functions, you are no longer limited to:

  • the level of expertise already available in your in-house team
  • the pool of professional developers available in your... area

Instead, you get to... expand your search area. And this becomes pure gold particularly when you run out of time with a project, one that calls for the expertise of a professional in a field of peak demand. Articifical intelligence or iOT, for instance...
 

3. Why Is Outsourcing IT... Bad? What Are the Potential Risks?

For, if all companies, startups or large organizations, would have outsourced their entire load of business processes and IT projects... we hadn't had any on-premise development teams now, right?

So, there must be some disadvantages, as well, that you should weigh against the above-mentioned benefits. Let me outline just 4 of them:
 

3.1. Lower Commitment to Your Project and Its Success

You need to keep in mind that those freelancing tech specialists might be working simultaneously on multiple IT projects. 

So, you can't expect the same level of focus and commitment to your goals as you could expect from an in-house team. 

In short, you can't expect them to willingly go that... extra mile.
 

3.2. Gap Between the Expected and the Provided Level of Quality

And you need to take this drawback of outsourcing IT really seriously. For it is, indeed, a real risk:

  • in many cases, contracted developers might turn out unable/unwilling to meet your specific expectations
  • … to live up to your company's standards of quality
  • they won't be as “readily available” and within reach to closely monitor your software product's code or to fix it when... trouble strikes


Note: one thing that you could do to prevent these scenarios from turning into reality is to check that agency/freelancer's background and, most of all, past clients' testimonials.

Are there any bad reviews on aspects such as staying on budget, meeting deadlines or quality standards?
 

3.3. Security and Confidentiality Issues

And there are 2 “profiles” of outsourced developers that are more likely to pose such risks:

  1. tech professionals who “juggle with” multiple projects/multiple clients at the same time
  2. freelancers working with low-quality equipment (software)

In these 2 cases here, the risk for them to unintentionally exploit security vulnerabilities in your IT projects or to cause certain “information leakage” is double.
 

3.4. Lower Quality Control

By outsourcing IT, you'll automatically lose some of your granular control over those outsourced tasks/full projects...

And it's only but... predictable:

  • maybe you don't even get the chance to meet those developers personally
  • they might be working on your project from... the other side of the globe

Therefore, you can't expect to be able to monitor off-site teams' work-in-progress — to check whether they do stick to your quality standards throughout the development process — as closely as you would monitor an in-house one. 

The END!

These are the pros and cons of outsourcing IT. 

Now that you've gone through the whole list, how does your own “in house vs outsourcing IT” analysis look like? What's the score?

Photo by Brooke Cagle on Unsplash