Everything you need to know about IT outsourcing

In a 1995 edition of Harvard Business Review, a trio of academics turned their attention to an issue that was increasingly causing headaches for executives. Across a two-year period they had studied 40 companies that had grappled with the issue of outsourcing their information technology (IT) functions and came to the conclusion that many managers felt incapable of understanding IT, let alone managing it.

“Managers (believe they) can place big bets about their markets, future technologies and suppliers’ capabilities and motives with a great deal of certainty,” the academics wrote. “They can’t. The world is too turbulent, unpredictable and complex.”

Staying on top of an organisation’s IT infrastructure can be incredibly stressful. Technical support is a specialised role that warrants the attention of a dedicated team and, in the modern world, that support is needed 24 hours a day, seven days a week. At a time of increasing financial pressure and with budgets shrinking, the cost involved with providing that support locally can create headaches for managers and all too often results in it being left to unqualified team members to inadequately manage in addition to their normal workloads.

Needless to say, taking short-cuts rarely works in the long-term. From end users installing unlicensed software to under-resourced staff chasing problems from machine to machine, the risks associated with adhoc or under-resourced IT processes are too great to ignore. They also create problems where there shouldn’t be any. Take the frustration that comes when setting up new users, with what should be a simple and seamless process dragging on and on when it is left to chance.

Compounding these issues is the fact Australia and New Zealand are facing an IT skills shortage. According to a report by Deloitte Access Economics and The Australian Computer Society, the demand for IT workers was expected to grow by almost 100,000 roles between 2018 and 2023, meaning those companies wanting to invest in local IT support are finding it increasingly difficult to find the right candidates for the right roles. 

What is IT outsourcing? 

IT outsourcing is a business practice where companies delegate specific IT functions or processes to external service providers. It involves contracting a third-party organisation to handle tasks such as software development, infrastructure management, technical support, data management or other IT-related activities.

IT outsourcing as a business strategy

There is another way though. Outsourcing IT support sees a company send certain hardware or software support-related tasks to a team outside of their own organisation, with locations such as the Philippines leading the way as an offshoring destination. This approach not only allows businesses ranging from start-ups to large companies to access the around-the-clock technical support needed in our increasingly digitised world but to do so at a price that would simply not be possible locally.

Outsourcing has many benefits, but we all know that money talks in the business world. If a strategic decision does not stack up financially, it simply won’t happen and that is why it is pertinent that an increasing number of companies are making the decision to outsource. The global market for outsourcing was worth US$245.9 billion in 2023, while the market size of IT outsourcing amounted to US$519 billion, a 22% increase over 2019's numbers.. Outsourcing is saving countless organisations money by having day-to-day tasks completed in lower-cost economies such as the Philippines where employment costs are up to 70% less.

IT outsourcing job roles

The range of tasks that an offshore technical support team can assist with knows no bounds. From troubleshooting, diagnosing and investigating issues to programming, debugging and working with code, outsourcing companies have the ability to tap into huge talent pools of IT staff who are not only highly skilled but extremely motivated.

The days of outsourcing being the domain of call centres and basic administration are long gone, with companies having opened their eyes to the excellent talent that can be found offshore and how modern technology and communication tools is ensuring a seamless working environment.

Outsourced IT staffing solutions include:

• Desktop support specialists are the people companies turn to for maintaining their computer hardware and software systems. Experts at diagnosing common problems with computer software integration, they are often the first point of contact for all computer and system-related issues and help resolve technical issues around software infrastructure and customer support. With such tasks often repetitive, rules-based and requiring a high level of attention to detail, desktop support specialists are particularly well-suited to being outsourced as doing so allows a company’s onshore team to focus on higher-value tasks.
• IT helpdesk specialists play the vital role of providing technical support to customers or clients experiencing hardware, application and software issues. When it comes to troubleshooting, they lead the way by resolving queries, analysing issues and implementing solutions. They are also often required to provide training on new systems, install peripherals and perform general computer maintenance and updates.
• Quality (QA) assurance testers are the ‘proofreaders’ of an organisation’s consumer merchandise and goods. Responsible for analysing and reviewing new software or existing programs for any defects, they essentially ensure products or services are ready for the end user by running various tests that confirm an application meets mandatory policies and guidelines before it is approved to be marketed to consumers.
• Systems administrators are essential to the success of an organisation as they make sure computer systems are up-to-date, configured correctly and reliable for users. They supervise the installation and management of networks such as desktop computers, wireless networks and server systems, with specialisations including the administration of servers, networks, database and security systems. A quality systems administrator will almost seem invisible, such is their role in ensuring a well-oiled IT machine.
• Technical support specialists are masters at turning technical jargon into simple language for the benefit of the customers they serve. Responsible for providing technical support and assistance with problems, they are troubleshooting experts and handle a broad range of complications such as connection issues and unresponsive applications. Along with being knowledgeable about the systems and software their organisation uses, they are patient communicators as they routinely walk customers through launching new programs and resolving concerns.

IT outsourcing benefits

Cost saving

Access to lower labour costs, cheaper infrastructure and advantageous tax systems are extremely attractive, particularly given the ever-expanding talent pool available in outsourcing destinations such as the Philippines. It is estimated that companies that outsource to the country can cut labour costs by 70% but crucially such savings are not made at the expense of their outsourced labour force.

The Philippines also has a much lower cost of living – even compared to many of its Southeast Asian neighbours – thus ensuring offshore staff are making a decent, livable wage.

Scalability

The capacity to scale an outsourced workforce to meet the demands of a business is a huge benefit for executives, particularly in uncertain times such as these. This is not just in the realm of growth opportunities but also in situations that require downsizing. Outsourcing services that provide flexibility and the ability to scale enable businesses to respond quickly to changing priorities, be it growing teams within a matter of days or weeks or returning to more appropriate staff numbers during quieter periods of the year.

Flexibility

Few aspects of modern business life require a 24/7 focus quite like information technology and outsourcing IT services allows organisations to access that support at a fraction of the cost they may otherwise face. As the saying goes, time is money and the very nature of around-the-clock support can be a significant expense. Fortunately, IT outsourcing companies are built on the premise of going the extra mile for less financial outlay, which provides executives with peace of mind on two fronts. The professional approach of offshore teams also sees them rate highly for delivering improved customer service experiences and maintaining high standards of security.

Recruitment and training

From interviewing potential staff and onboarding successful candidates to rolling out ongoing training programs, organisations spend countless hours on the management of their people. By embracing outsourced IT services, those responsibilities are tasked to trained professionals whose very businesses thrive on their ability to identify the best talent for their onshore clients and ensure their skills are maintained to the highest level.

Business development

While the likes of technical and desktop support specialists play a crucial role in the administration of a successful IT system, the reality is much of their work is based around repetitive, step-by-step tasks. Outsourcing such roles means onshore staff are able to dedicate more time to higher-value work that has the potential to lead to sustainable business growth. Along with increased business efficiencies, the removal of tedious and time-consuming technical support tasks from local staff workloads has been proven to result in sizeable increases in employee satisfaction.

Improved quality

Outsourcing destinations such as the Philippines are emerging hotbeds of IT talent, with a growing number of experienced and quality candidates seeking opportunities to work with Australian and New Zealand based organisations. The capability of outsourcing companies to recruit individual candidates or assemble entire support teams is raising the bar for accuracy and quality for IT services within their clients’ organisations, which in turn is helping increase morale among their onshore counterparts.

The decision

Outsourcing tech support is clearly a winning idea but the decision of who to work with can be a difficult one. Just as no two clients have the same needs, no two outsourcing providers are the same and it is essential to consider a range of issues such as whether they operate 24/7, have experienced previous data breaches and what metrics they ultimately aim to achieve and maintain.

It’s all about asking the right questions and to assist companies with that process, a free eBook has been created that outlines the 36 Questions to Ask Your Tech Services Outsourcing Provider.

The learnings do not end there either. To find out more about the power of outsourcing -including an insight into how one business grew new client acquisition by 72% after implementing a specialist tech offshore team – download the free eBook How to scale and grow your tech company through offshoring 2.0..