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When – and When Not – to Outsource IT Operations

Is outsourcing your IT operations the best way to meet your IT needs? We look at the benefits and drawbacks of outsourcing IT.

Virtually every business today needs IT services. But that doesn't mean every business has to build an IT department. For those that lack the will or money to manage IT operations on their own, there's an alternative solution: outsourcing IT operations to external service providers.

For some organizations, outsourced IT is the simplest and most cost-effective way to meet IT service requirements. For others, though, outsourcing will lead to lackluster results and may not be the best use of financial resources.

Keep reading for tips on how to decide whether outsourced IT operations are the right fit for your business.

What Is IT Operations Outsourcing?

IT operations outsourcing is the use of managed service providers to provide some or all of the IT operations functionality a business requires.

For example, your company could rely on an external business that specializes in IT operations services to handle infrastructure setup, application deployment and management, or incident management — work that would otherwise need to be performed by an in-house ITOps department. Even cybersecurity work can be outsourced (although security technically falls outside the domain of IT operations by most definitions, so security outsourcing is a bit different from IT outsourcing).

Benefits of Outsourced IT

Choosing to outsource IT operations instead of building your own IT department offers a number of potential benefits:

  • Simplicity: The biggest advantage of outsourced IT operations for many companies is that it's the easiest way to obtain IT services. They can contract with service providers to deliver what they need, rather than having to hire and manage in-house staff.
  • Speed: Outsourced IT is often the fastest way to implement an IT operations function within a business. Contract-based service providers can begin meeting your IT needs immediately, whereas it could take many months to build or expand an in-house IT organization.
  • Cost: In some cases, outsourced IT providers may be able to deliver IT services at a lower total cost than an in-house team. That's especially true in cases where businesses require limited IT services, and would therefore struggle to use an in-house IT team to its full potential.

Access to technologies: Managed IT service providers may have expertise in technologies or methodologies that an in-house IT organization is unable to deploy. In that way, outsourced IT operations can be an on-ramp for businesses that want to take advantage of new types of IT tools or strategies that they would otherwise not be able to.

The Risks and Downsides of Outsourced IT Operations

On the other hand, outsourcing IT operations carries some risk and may expose businesses to disadvantages, including:

  • Lack of control: When you turn IT functions over to a managed service provider, you give that provider control over how IT services are designed, implemented, and managed. That leaves you with less ability to tailor technologies to your business's unique needs.
  • Reliability and quality: The reliability and quality of outsourced IT operations can vary, and it's not always immediately obvious when external service providers are falling short. As a result, you may end up paying one provider, only to discover down the line that you need to switch to a different provider due to poor service. You'll have ended up wasting time and money on the provider that did not work out.
  • Security and compliance: Choosing to outsource IT operations can create some security and compliance challenges if it places sensitive data and applications in the hands of an external company. That doesn't mean outsourcing is inherently insecure or will lead to compliance issues; responsible managed service providers will be just as diligent with your company's data as an in-house IT team. Still, outsourcing does complicate compliance and security, and it can increase the risk of accidental data leakage.

Who Benefits Most From Outsourced ITOps?

When you weigh the advantages against the disadvantages of outsourced IT operations, it becomes possible to discern which companies are in the best position to take advantage of IT outsourcing.

Companies for which outsourced IT is a good fit tend to be:

  • Smaller: Not only do smaller businesses tend to struggle to build and manage in-house IT operations, but they may also not have enough IT needs to justify maintaining their own IT organization.
  • In need of new technology: If you're a company that wants to take advantage of new technologies — like Kubernetes — without having to deploy them yourself, outsourced IT is a good solution.

In contrast, for businesses with extensive IT needs, and/or those with strict security and compliance requirements, in-house IT is likely to make more sense. That's also the case for organizations that need bespoke IT services that would be difficult for an external service provider to implement.

Happy Medium: Partially Outsourced IT

It's worth keeping in mind that IT operations outsourcing doesn't have to be an either/or proposition. There's no reason why you can't outsource some ITOps work, while relying on an in-house IT team to handle other IT needs.

This hybrid approach works well if, for example, you want to implement a certain technology that your in-house IT team can't manage well on its own, but your IT engineers are otherwise capable of meeting your IT requirements. Or you could use outsourced IT on a temporary basis to get a new service up and running, then bring management of the service in-house once your IT team has become familiar with it.

About the author

Christopher Tozzi headshotChristopher Tozzi is a technology analyst with subject matter expertise in cloud computing, application development, open source software, virtualization, containers and more. He also lectures at a major university in the Albany, New York, area. His book, “For Fun and Profit: A History of the Free and Open Source Software Revolution,” was published by MIT Press.
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