How Much Does it Cost to Outsource IT?

As IT becomes the core driver for business success, many organizations have come to terms with the fact that managing their complex IT systems and infrastructure on a day-to-day basis takes them away from focusing on their core business objectives. This has led to a sudden and widespread adoption of IT outsourcing, with reports expecting the market to be worth $397 billion by 2025. Although IT outsourcing opens doors to several benefits including access to skilled expertise, better risk management, round-the-clock support, and compliance management, among others, when it comes to actually opting for a partner, organizations are bound to have a lot of questions before they embark on their journey.

One of the major factors in making such a decision is the cost. Read on to get your hands on the most up-to-date information on the costs of IT outsourcing and how you can lower them by partnering with an expert.

What is the Average Cost of Outsourcing IT?

Despite the fact that IT outsourcing can substantially bring costs down, the question still remains: how much do organizations have to pay when they outsource IT to an external company? Unfortunately, the answer to this question isn’t straightforward, because the average cost of outsourcing IT depends on several factors:

  • The location of the outsourced partner
  • Level and variety of services you opt for
  • Security and compliance requirements
  • Level of communication and collaboration
  • Delivery model – such as onsite, cloud, hybrid
  • Billing model – such as time and material, fixed, pay-as-you-go, tiered, volume-based and more
  • SLAs and support metrics

How to Budget Outsourced IT Costs

In today’s competitive and dynamics business era, IT outsourcing is a great way to drive better business value and strengthen competitive advantage. Although IT outsourcing helps in reducing the overall costs of IT management, budgeting for outsourced IT costs requires you to have a good understanding of the various cost elements associated with IT outsourcing. These include:

  • Cost of expert resources
  • Cost of advanced tools and processes
  • Infrastructure costs
  • Project management costs
  • Onsite/remote support costs
  • Helpdesk costs
  • Training and transitioning costs
  • Ongoing-maintenance costs

How You Can Lower Costs Through IT Outsourcing

There is no doubt about the fact that IT outsourcing is the only way for businesses to focus all their attention on their business goals and not worry about daily management of complex IT systems. But if you really drive substantial cost savings through IT outsourcing, you need to follow certain best practices:

1. Cheaper isn’t always better

The outsourcing market is mushrooming with companies that claim to manage your IT systems in an extremely cost-effective manner. But cheaper doesn’t always mean better. Although these outsourcing companies might offer you a bunch of services at a low rate, not much can be said about the quality of these services. Instead of opting for a provider offering sub-par services with the lowest bill, go for one with a proven track record of successful outsourcing projects. Choose a partner who has experience in managing systems and infrastructure that you have, and who can provide support in a time-zone that you operate in.

2. Pay-as-you-go is more favorable than fixed price

Although there are many outsourcing providers who offer a fixed price model, if you really want to lower the costs of IT outsourcing in the long run, choose a pay-as-you-go pricing model. Such a model not only eliminates an upfront, rather-large investment, it also helps you split your costs over a period of time – thus allowing you to efficiently manage costs across different areas of business. Since you only pay for the services you use, its is a great way to budget more efficiently, make cash flows more predictable, and avoid surprise payments.

3. Outsource IT completely to a single provider

Your IT ecosystem is likely to comprise several different servers, databases, platforms, systems, and devices, each of which requires constant monitoring, management, and updates. Instead of outsourcing different aspects of your IT to different providers, it makes sense to outsource all IT functions to one single provider. This will allow you to have the transparency you need into the different aspects of your IT business while also reducing the time, effort, cost, and complexity in constantly collaborating with various providers for issues and updates. Having a single provider manage your IT end-to-end means you can greatly minimize back-and-forth communication and provide you with a single pane of glass into your IT operations.

Utilizing Expert IT Outsourcing Services

Post-pandemic, cost reduction is on every C-suite executive’s mind. Given how complex today’s IT systems have become, they have realized that outsourcing IT is a great way to bring their costs down. With IT outsourcing, organizations get access to advanced tools and processes, which paves the way for improving flexibility and agility and improved speed-to-market. Since the daily management of IT and associated systems is taken care of, organizations can focus on their core objectives and not worry about costs of poor IT security, non-compliance, or poor customer satisfaction.


Contributed blog courtesy of Synoptek. Read more contributed content from Synoptek here.

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