Should Your Business Insource or Outsource Your IT Needs?

As advancements in technology drive up the demand for skilled IT talent, many businesses struggle deciding whether to outsource or insource their IT needs. When weighing the decision, business leaders should take into account the size of their business, core competencies, vision, and other measures. Even if a business already has an IT department, because of new technologies like the cloud and mobile, it’s important not to stick to the historic norms of your business. In other words, don’t continue either outsourcing or insourcing merely based on the past. This kind of complacency can turn what was a good decision at one time into a bad situation and it can creep up on you over time. IT leaders, directors and above, should consider this option every few years.

Let’s weigh both insourcing and outsourcing options for your business in order to position it competitively in the market.

By choosing an insourced IT department, your business benefits from more control over IT. Here are some of the advantages of insourcing your IT department:

• Knowledge – insourced IT teams develop critical tribal knowledge, this enables them to respond to needs with great agility and efficiency
• Flexibility – insourced IT does not require change orders during project scope creep and reprioritize without contract negotiations
• Motivation – insourced IT employees have “skin in the game” and know their success is tied to the company’s performance
• Retention – when managed effectively, insourced IT teams will see their company investing in them and their future through training and development

On the other hand, the prospect of outsourcing is argued to be more competitive due to it’s capacity for cost reduction with reduced risks. Below are some of the other benefits of IT-outsourcing:

• Operational costs are controlled – There is no need to invest in recruiting, training, management, and other aspects of IT
• Exceptional capabilities – you have access to outstanding talent albeit at a premium cost, but such talent can be used for short term needs without long term investment (hiring)
• Enhanced corporate value – while your IT needs are managed by a 3rd party, you can focus on your company’s vision and strategy

Just as every business is unique, the choice between insourcing and outsourcing needs to be tailored to your needs. You have to decide which option best suits your business objectives. If just weighing pros and cons isn’t enough, consider the following question: “Is your IT management giving your business a competitive advantage?” 

If you answered yes, then you just need to stay focused, and keep your current strategic course of action. But, what happens if your find contradictory results? Where do you stand in this dramatically evolving business world?

If you answered no, your current strategic plan needs to change to the competitive needs of the market.

• If you have been managing your IT in-house, you may need to consider outsourcing your operations first and then other contextual areas of IT.
• If you are already outsourcing your operations, but not getting the anticipated benefits, maybe you are in need of some objective 3rd party consultancy. You may need to bring some or all of your outsourced IT back in-house, depending on the current scenario; or there could be the prospect of generating synergies across your organization by adopting the combination of both insourcing and outsourcing of your IT functions.

These decisions are not easy to make but important to remain competitive in the market.

PARC offers un-biased consulting services, to help you better assess your IT needs. Contact our solution team, and let us architect the best solution for your IT management.