IT Outsourcing Trends and Use Cases

How organizations are shifting IT processes to service providers and the subsequent
impacts of outsourced labor.
 April 5, 2022

Information Technology Outsourcing (ITO) is the delegation of IT-related responsibilities in exchange

for contracted labor, offered at lower rates. ITO organizations have utilized their established
expertise as IT support providers to build outsourcing services, now offering skilled staff tailored to
enhancing productivity, efficiency, and security for clients. With ITO support, companies can limit the
cost and time of hiring highly-skilled IT staff, as ITO employees possess specialized knowledge in
many IT topics such as cloud computing and cybersecurity.

Core Trends in IT Outsourcing

The COVID-19 pandemic has had a significant impact on the way organizations function, shifting
towards the digital realm, where cyber security and efficiency are paramount, and productivity is
gauged via different metrics than traditionally measured. Studies indicate that nearly 87% of
organizations have begun allocating key processes and procedures to the cloud due to impacts of
remote work and focus on enabling a faster and more flexible enterprise environment.

The need for enhanced cybersecurity services has been greatly magnified in the wake of the
pandemic, as cyber crime rates and data breaches are growing substantially, with YTD numbers by
Q3 in 2021 setting new records for criminal activity— easily surpassing 2020 numbers and illustrating
the severity of using ineffective controls to mitigate attacks and protect corporate, employee and
client data.
The Shift to the Cloud

Outsourcing companies are increasingly counting on cloud-based platforms to collaborate effectively

with teams around the globe and share and edit information in real-time. Outsourcers typically utilize
three types of cloud computing services to achieve their strategic goals in outsourcing corporate
activities.

Software as a Service (SaaS): Business process outsourcing companies utilize CRM

solutions including Salesforce to manage all of their prospects' information on a
single platform.
Infrastructure as a Service (IaaS): BPO companies are increasingly storing and
processing sensitive data on remote servers. Personal information, financial data, and
other data concerning customers are typically included.
Platform as a Service (PaaS): BPOs use PaaS platforms to build their own services.
Rather than making a large upfront commitment, these firms can subscribe to a PaaS
and add new services as needed.

Source
Increased Focus on Cybersecurity

Cyber attacks in the form of data breaches accelerated in both frequency and scope in 2021, with
average costs increasing from $3.86M to $4.24M last year alone, the highest the IT sector has seen
in nearly 17 years. And high-level data security will be one of the most essential themes in the
coming years. According to a Gartner analysis, the worldwide organizational expenditure on the
information security industry is expected to reach $170.4B annually this year.

Cybersecurity threats and data theft are of critical concern to the executive team of a company that is
looking to pursue the outsourcing route for its operations. Outsourcing firms are now working to
prioritize enhanced data security measures in their operations. To maintain the security of their
clients' data, these providers have invested in VPN, SSL and multi-factor authentication.

Service providers are shifting toward using cloud containers (IT processes housed in the cloud which
allow enterprises to bundle processes and data in a simplified and performance-oriented manner) to
house processes which offer more scalable systems. Containers-as-a-Service are now used to
outsource processes to the cloud and allow an enterprise to bundle its data in a less sophisticated
manner and one which promotes high performance.

Application Development & Infrastructure Management

Developing a new software application internally for business use can take up valuable resources,
both from costing and timing perspectives, and can be challenging without an experienced
developer. Valuable time devoted to developing applications in-house is a resource that could be
more effectively allocated to core, revenue-generating business initiatives.

Outsourcing these activities through a partnership with a trustworthy and experienced team is a core
opportunity in any business transformation initiative. Outsourcing can ultimately lead to more
efficient development of applications for your business and can make better use of your team’s time
and capital, in both the short and long term.

After assessing IT requirements, your team may determine that it does not need an in-house team to
manage IT processes. An in-house team can reduce the emphasis on core business operations and
ITO service providers can provide scaling capabilities through their labor forces, allowing your team
to concentrate on scaling your revenue-generating workforce as needed.

Outsourcing service providers can also provide valuable insight into relevant IT skills market trends
that enhance the performance of your organization. Outsourced IT teams will have a well-rounded
understanding of the types of systems, applications and processes that will best fit your
organizational needs and can provide standby support for fixes and patches to your applications.
Decision-Making and Implementation Process

Executives are tasked with determining which parts of their IT function to keep in-house and which to
outsource. This decision often comes down to identifying if the in-house IT operation is a unique and
core strategic part of the firm.

If the function does not provide a marginal competitive benefit, outsourcing should be considered as
it can often allow this function to be performed at a similar quality but at a lower cost. If the
organization does not need to have enormous flexibility and control over the function, then there is
certainly value in outsourcing. 

Once a manager decides to outsource IT, a team of high and mid-level managers across all impacted
business units should be created. It is important that this team is given autonomy over decision-
making and that each member has accountability to see through the results. The next step is to
outline the scope and implementation as outsourcing IT that function effectively and efficiently
requires careful planning and organization.

Working closely with the outsourcing vendor is also paramount for ease of implementation and risk
identification. Depending on the function, vendors have scrum masters, project managers, and
program managers that should be utilized to work alongside your organization's staff.

If Technology Platforms are outsourced - like AWS, Google Cloud, or Microsoft Azure - vendors will
have application support specialists, developers, and automation testers. Although your
organization’s team should be composed of managers that best understand the firm’s operations
and structure, specialists at the outsourcing vendor should complement the in-house group.

Outsource IT functionalities can be critical in growth and

sustainability

The path an organization takes in opting to outsource IT functionalities can be a critical juncture in
the growth and sustainability of the organization. The benefits offered by shifting from on-premises
solutions to cloud-based alternatives can provide an organization greater flexibility to focus on their
core business and more easily pivot to the latest and greatest technologies. In shifting operations to
SaaS/PaaS/IaaS models, an organization can benefit from more robust cybersecurity infrastructure
offered by cloud-based solutions.

It is important that businesses look for ways to improve the efficiency of their processes and the
quality of their offerings. Organizations, especially those in growth stages, should consider
outsourcing select components of their IT infrastructure to maximize their window of growth. IT
outsourcing can create tremendous value for an organization, allowing for the business to focus
more on their core business strategies and operations.

What we can do for you

We have developed our expertise in contact center transformation by assisting numerous

organizations’ contact centers with digital transformation efforts, as they sought to navigate
significant changes and unprecedented times.
Capability

 Business Transformation