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Outsourcing IT: How Does it Improve Efficiency?
Information technology is a massive part of modern business. Still, it is often overlooked by companies – this is unfortunate because most IT and business leaders agree that modern IT is essential for any organization that wants to succeed and compete in its industry and the landscape of contemporary business.
Unfortunately, suppose you aren’t a business specializing in IT or technology yourself. In that case, you’ll probably feel like managing IT is a bit of a distraction from your core business objectives – what is more, you probably won’t be as in the loop of the IT industry. The solution, in this case, is IT outsourcing.
Outsourcing is the process of placing responsibility for business processes – in this case, your IT – with a third-party outsourcing partner. Outsourced IT is a service that covers everything from technical support to project assistance, network monitoring, etc. A good example is the IT support North London partner, TechQuarters, provides for their customers. They have spent more than a decade providing outsourced IT services to SMBs all around London.
There are a lot of benefits for businesses that outsource their IT – the main one being that it dramatically increases business efficiency.
Outsourcing IT to Improve Efficiency: Economy of Scale
One of the main principles that make outsourced IT so efficient for organizations is done with economies of scale. This is the principle that states enterprises can gain cost advantages due to the scale of their operations. In a production scenario, there is an inverse correlation between the average cost per unit and the output – in other words, at a certain level of output, the price proportional cost drops considerably.
But this does not only apply to production. In the case of an IT support provider, their entire business revolves around IT services – they will have invested much more money into hardware and software resources, had plenty of time to hire and train personnel, and developed an infrastructure that efficiently delivers IT services to their customers.
The economy of scale applies to them as well. Because they have invested in their resources, they will see long-term cost savings – and in turn, they can pass those cost savings onto their customers.
Cost Efficiency of Outsourced IT
There are many different cost efficiencies that organizations can enjoy when they outsource their IT to an outsourcing partner.
- Cost Control – as mentioned above, the economy of scale means that an outsourcing partner that provides IT support can execute the IT processes an organization needs in a much more cost-effective way. An IT partner will have more resources (such as hardware and software solutions) and expertise than what their customers would build internally. What is more, if a smaller business tried to build an IT department that matched that of an IT outsourcing partner, it would be much harder to make a return on their investments. On the other hand, an outsourcing partner has many customers – and even if they offer their services at a meager cost, the collective income from their customers will enable them to make a return on investment much quicker and more efficiently.
- Labor Costs – If a business wants to create its own internal IT department, it will need to hire and train new staff. What is more, staff on payroll need to have their holiday and sick leave covered, and all human resource requirements are the responsibility of the business. On the other hand, if a business outsources its IT to a partner, it will be able to access labor for its IT needs. For instance, TechQuarters’ business IT support London service is supported by IT engineers that they have hired from all around the world and trained. The benefit of this is that customers can access support any hour of the day – and even if they only need IT to support 1 or 2 times a month, they are still paying less than if they had hired just one IT engineer internally.
Outsourcing IT to Improve Efficiency: Operational Efficiencies
Costs aren’t the only way that businesses can become more efficient when they outsource IT to a partner. For example, projects can be a challenge for businesses with a limited staff. There can be difficulties when attempting to allocate labor resources to projects.
However, if they are partnered with an IT outsourcing partner, they will have access to many more resources, thus enabling them to plan and execute projects much quicker. They can do this in one of two main ways – either recruit specialists from the IT partner to undertake the project, or outsource daily IT operations to the IT partner and rely on internal staff to complete the project.