In recent years, the abilities provided by modern technologies have created a demand for outsourcing allowing people to work from anywhere in the world. Being primarily used in security, cleaning, and logistics, this activity has become increasingly important in IT after the global financial crisis.
IT outsourcing is still gaining momentum, introducing changes in the way of doing business in the market, both locally and globally. Lots of small and large enterprises use the services of external contractors like Beetroot — specialists in a particular industry, helping to simultaneously increase the competitiveness of the firm in a dynamically developing world.
Types Of IT Outsourcing
In general, depending on the location of the client and the contractor, the following types of contracting can be considered:
- Offshoring — both sides are placed in different states and timezones, which usually reduces the costs of the services and makes business to work 24\7;
- Nearshoring — the customer and the contractor are located in the neighboring states, which helps to easily facilitate business processes;
- Onshoring — the customer and the contractor are located in different cities of the same country that eliminates cultural misunderstandings and tax policy differences of the above options.
In particular, IT contracting involves delegating the issues related to the development, implementation, and maintenance of IT systems of the entire company (hardware or software maintenance), consulting or fulfillment of the individual tasks (programming, hosting, testing, etc.)
Pros And Cons Of IT Outsourcing
When deciding to give some processes for outsourcing, companies are often guided by the following benefits of outsourcing:
- Lower costs: reduction of payments, lack of an additional social benefits package to the full-time employees, replacement of existing employees;
- Flexibility: flexible working schedule, mobility and lack of necessity to employ the permanent staff;
- Access to the best professional skills: you can expand the capabilities of your company by replacing existing employees and hiring highly-competent contractors;
- Predictable and standardized results: you can control the quality of contract work, and negotiate on the margin and revenue of contractors;
- Rebalancing of the regulatory and business risks: Concentration of professional skills, technologies, and internal interaction for solving tasks.
However, the practice of contracting in lots of countries can also cause a negative attitude. Opponents of the method are standing against job losses due to the relocation of working processes, which is especially noticeable in the industrial sector. But, such a relocation usually allows us to get better-managed services and a team with such core competencies, which, in turn, better meets the requirements of a free market economy.
How To Choose Service Providers For Outsourcing?
First of all, you need to pay attention to the company’s reputation and get feedback from other clients. It is worth talking to real clients and finding out what solutions or software development examples better show the level of expertise of the contractor. You can also check ratings and review platforms like Clutch or Goodfirms.
Secondly, discuss the clear terms of cooperation with the contracting firm, deadlines, and payment details. The timing usually depends on your needs. For example, if you need external support constantly, the agreement may be indefinite. If the services of the contractor are needed for a certain period, then such an agreement may be urgent.
Leaders Of The World Outsourcing
The use of human resources is the basis of successful outsourcing in the world. India and China share the top-positions among the leading countries, receiving orders from Europe, the US, and Japan.
Meanwhile, there is a tendency that the United States is gradually reducing the share of off-shore orders, planning to use the capabilities of its own providers. In turn, Japan is increasing the number of external orders, focusing on Asian countries. Meanwhile, Eastern and Central Europe provides a decent level of services to EU and US clients and makes a huge share of IT outsourcing globally.
The world is changing much faster than before and the labor market is affected by technological developments. One of the results is the rapid growth of the outsourcing infrastructure. There is no doubt that the invisible network of highly-experienced professionals constitutes a bigger share of the labor market than ever before. So, there is no reason to ignore the power of contracting, because business is like riding a bicycle — either you keep moving or you fall down.
If you are interested in even more business-related articles and information from us here at Bit Rebels, then we have a lot to choose from.