Outsourcing IT Work: Unveiling the Hidden Truths

Assigning your information technology (IT) functions to an external service provider enhances cost efficiency. This practice allows your business to leverage skilled professionals and modern solutions without overspending.

However, adopting business process outsourcing (BPO) for IT processes also has disadvantages. Anticipating issues helps you implement a well-structured plan that ensures a return on investment (ROI).

This article explores some of the hidden truths of outsourcing IT work, both good and bad. Continue reading to discover insights into managing the impact of IT BPO on your bottom line.

The realities of outsourcing IT work

What is IT BPO’s main contribution to a business operation? This would be streamlined technical functions. Managed service providers (MSPs) employ certified IT experts and cutting-edge technologies to simplify the remote troubleshooting and maintenance of enterprise software and hardware.

Service providers also take over routine infrastructure development and testing tasks, allowing businesses to prioritize core competencies and innovations. Accelerating IT functions and keeping equipment in good condition help avoid product and service delivery delays.

Although the benefits of IT BPO are undeniable, looking beyond the surface is critical. Beneath these advantages lie drawbacks that can compromise operations if ignored.

Learn more about the realities of IT outsourcing below:  

1. Hiring an IT BPO company is affordable

Contracting an IT BPO company to boost application development, testing, and related processes significantly cuts operating expenses. In fact, Deloitte’s 2023 Global Shared Services Outsourcing Survey ranked cost reduction as the top BPO benefit.

Besides minimizing spending on real estate and infrastructure, MSPs primarily bring lower labor costs. They provide access to a dynamic talent pool payable through fixed hourly, monthly, or project-based fees.

Here is a table to show why outsourcing IT work is affordable:

The figures above reflect the significantly lower hourly income rate in different outsourcing regions compared to Arizona. They show up to 60% potential savings when hiring third-party technical support agents.

However, this data only covers an entry-level position. Businesses require more capital when hiring tech professionals with a higher experience level and more in-depth expertise.

For instance, a technical support engineer in the Philippines earns an average hourly wage of approximately $3 or ₱180. Compared to the value from the table, hiring a technical support engineer costs $1 more than employing a tier 1 technical support agent. This difference can significantly impact your budget allocations.

2. BPO lets you collaborate with a reliable workforce

MSPs have a vast pool of IT professionals worldwide, which enables them to quickly find skilled individuals who meet their clients’ niche requirements. Providers regularly train their employees and ensure they have up-to-date industry knowledge to accommodate fluctuating needs.

BPO companies establish standardized performance management systems and policies to monitor employee productivity and quality of work. This approach guarantees individual accountability, high output quality, and continuous improvement within the workforce.

Despite this, the remote nature of outsourcing can introduce challenges regarding service outcomes. Time zone differences alone make real-time communication difficult. Tracking employee performance is also trickier due to limited visibility and minimal firsthand insight.

Businesses can only depend on reports from their IT BPO partners. Metrics such as average response time (ART) might not tell the whole story. This is especially problematic when the data indicates “prompt and effective support,” but customer complaints persist. For example:

• The provider reported that the ART data showed consistently quick responses. However, your customers give your contact center team low ratings.
• Agents can respond within two minutes but with a generic answer that does not address specific issues. Customers have to follow up after receiving unclear instructions, prolonging resolution time.
• Although rare, the BPO partner might not report such situations to maintain a good image of its team’s performance. Regular meetings or in-person monitoring help uncover the problem’s root cause.

Remote work also presents a conflict of interest when BPO workers engage in moonlighting. For instance, an outsourced software developer might work for your business full-time but take a similar, temporary role in a rival company. A similar situation led to an Indian tech and consulting firm dismissing 300 employees for assuming second jobs with competitors. 

3. Data is safe when outsourcing IT processes

Is critical data safe when outsourcing IT work? The answer depends on how businesses align information security policies and systems with MSPs.

Although remote work introduces flexibility, online data transfer between in-house and third-party teams increases both parties’ cyberattack vulnerability. Weak security protocols lead to data breaches and increase spending for mitigation efforts.

Also, once the business entrusts the data to the MSP, it loses some control over IT and information security. Insider threats from BPO workers also threaten important assets. To avoid potential risks, here is what a BPO client can do:

• Conduct due diligence when seeking an IT BPO partner. Ensure it has certifications such as ISO 27001 that showcase its commitment to strengthening information security.
• Clarify data security expectations, policies, and procedures within the outsourcing contract. The agreement should include data access controls and incident response measures.
• Encrypt all sensitive data to be shared when outsourcing IT work to minimize the risk of cyberattacks.
• Schedule regular security audits of the BPO partner’s systems and processes to pinpoint and resolve potential vulnerabilities.
• Comprehensively train in-house and third-party staff on best practices for accessing and protecting confidential data.
• Study data residency laws in the client’s country and the BPO company’s location to store and process information based on relevant rules and regulations.
• Confirm whether the IT service provider has robust backup and disaster recovery plans to ensure regular data availability, especially during disruptions.
• Detail a contract clause outlining the process for data repatriation in case the BPO agreement ends.

4. Outsourcing results in high-quality output

Delegating IT functions to an MSP leads to high-quality output. The service provider implements structured recruitment strategies and specialized training to employ professionals with the expertise and experience to meet a client’s operational needs.

Moreover, BPO vendors have well-defined workflows and standardized processes per IT service to attain consistent and predictable work quality. They optimize key performance indicators (KPIs) to measure performance, identify potential challenges, and determine areas for improvement.

Leveraging emerging technologies such as artificial intelligence (AI) and robotic process automation (RPA) also helps MSPs automate repetitive tasks, improve accuracy, and minimize human error. This capacity enables businesses to focus on developing strategies to enhance their products and services.

However, outsourcing IT work can still result in lower-quality outcomes due to improper vendor selection and management. If you prioritize the lowest possible cost when adopting BPO, you might end up choosing an MSP with a subpar track record or inadequate resources.

Misunderstandings and conflicts can also arise between your in-house and third-party teams without specified project targets, performance metrics, and communication strategies. If you ignore this aspect, you can expect poor deliverables. 

How to make IT outsourcing work for you

Understanding the hidden truths beneath the benefits helps you decide whether IT BPO aligns with your business goals. Careful planning and decision-making assist you in selecting the right MSP and achieving ROI. 

Below are the strategies to make IT outsourcing work for you:

• Do your research and due diligence. Assess a potential BPO partner’s track record, client testimonials, and industry certifications to validate reliability.
• Clarify your IT requirements, desired outcomes, and KPIs to determine whether the BPO provider can achieve your business objectives and IT needs.
• Set up centralized communication channels and standards with your chosen MSP. Remember to schedule regular meetings and report submissions.
• Monitor the BPO team’s performance and output to determine whether the provider meets your demands and promptly address any concerns.
• Manage your expectations. Note that IT outsourcing is not a perfect solution to your inefficiency. Be realistic and proactive when dealing with potential challenges.

The bottom line

Working with an IT BPO company reduces costs, improves efficiency, and boosts service quality. Optimizing robust tech and specialized talent helps an MSP deliver these advantages at competitive pricing.

However, risks remain when outsourcing IT work. Confidential data is unsafe if your security measures do not match the BPO company’s equivalent procedures. Prioritizing cost-cutting and overlooking a provider’s incompetencies can compromise the quality of work.

Find a BPO company that best suits your IT needs to limit the risks and challenges. A trustworthy service provider recognizes the hidden truths behind IT outsourcing and takes steps to maximize the benefits and minimize the drawbacks.

Are you interested in working with a BPO organization that fits this definition? Let’s connect today and let our IT support team help you gain a competitive advantage.