Striking the Right Balance: When IT Outsourcing Is Not Beneficial

Outsourcing IT operations can save money and give your organization access to ITOps engineers with specialized skills. However, these five IT functions should be kept in-house.

Christopher Tozzi, Technology analyst

February 14, 2024

5 Min Read
two road signs--one "outsourcing" and the other "in-house"

Outsourcing your business's IT operations is like ordering takeout: It has many benefits to offer, and there's good reason to take advantage of outsourced solutions in some cases. But it's also important to strike a healthy balance.

You probably don't want to order takeout for every single meal you consume. Doing so would be very expensive, and it would probably not be great for your health. In a similar vein, outsourcing every aspect of IT operations may lead to bloated costs, security issues, and other challenges.

That's why certain IT functions often work best when they're kept in-house. Let's explore them by discussing the reasons why businesses may opt for an outsourced approach to IT operations, then identifying specific components of IT operations that are best kept in-house.

The What and Why of IT Outsourcing

Outsourced IT operations is the use of a managed service provider to meet a business's IT needs. Outsourcing IT is an alternative to hiring your own staff of full-time IT operations engineers.

The outsourced IT model offers several compelling benefits. It may result in lower overall costs and greater budgeting flexibility because you don't have to commit to full-time IT employees. You also don't have to find and hire IT engineers yourself. And outsourcing provides access to engineers with specialized skills whose help you may require on a temporary basis (if, for example, you are deploying a new type of system), but whom you have no reason to hire full-time.

Related:Why Many ITOps Teams Must Also Take On Cybersecurity Tasks

When Is IT Outsourcing Not Beneficial?

Some businesses outsource all of their IT operations requirements. But that approach typically only makes sense if you're a small organization with limited IT needs and virtually no ability to hire even a tiny staff of full-time IT engineers.

For businesses with more complex IT needs, it's usually wiser to rely on in-house IT engineers to handle certain types of work, even if the bulk of IT operations is outsourced.

Here's a look at IT functions that most organizations should keep in-house.

IT management

Even if you rely on a managed service provider to supply the technicians who do most of the day-to-day work required to monitor infrastructure, respond to incidents, and so on, you'll probably want someone who works full-time for your company to manage the work completed by the outsourced IT staff.

In-house IT managers are important because they help ensure that IT operations align with business priorities. They can also make decisions about how to evolve IT strategies and practices over time. IT outsourcing companies are not in a good position to deliver guidance like this because they don't have an insider's view of the companies they serve.

Related:IT Operations Engineer Salary: What to Expect, and How to Earn More

High-stakes security operations

You can outsource some security work to managed security service providers, who provide the engineers necessary to staff security operations centers, where they monitor for alerts and respond to incidents.

But some systems may be too sensitive to entrust to outsourced staff. The systems may process data that only in-house employees should be able to access, for example. Or you may operate legacy systems that are so unique that outsourced IT teams can't secure them well because they're not sufficiently familiar with the technology. In cases like these, security is best handled by in-house IT or cybersecurity teams.

Compliance management

Likewise, planning and implementing the controls necessary to meet your business's compliance requirements is often a task best assigned to dedicated, full-time staff. Understanding compliance needs and the best way to address them requires deep knowledge of business operations, something that outsourced staff don't have.

Complex incident response

Outsourced IT staff are usually adept at remediating basic incidents, like server failures or application crashes. But when you're faced with a truly complex problem, such as a cascading set of failures whose root cause is unclear, in-house staff tend to be better positioned to solve it.

Full-time staff know your systems more intimately than outsourced IT engineers ever will. That means they are in a stronger position to think strategically and creatively about how to remediate complicated issues quickly while minimizing disruption to the business.

Internal help desk operations

Outsourcing help desk operations is a common strategy for reducing IT costs. Help desk staff focus on responding to user requests — such as assistance setting up a new account or accessing an application — and external hires can handle many such requests as effectively as full-time staff.

But arguably, help desk requests that originate from employees who are internal to your company — as opposed to those from customers — are best managed by full-time staff. The main reason is that if you run internal help desk operations using your own IT engineers, those engineers will build relationships with other employees over time, leading to better interactions. This is less important when you're dealing with external users, who are not likely to forge strong relationships with your support staff.


Before going all-in on IT outsourcing, consider whether certain parts of your business's IT operations would be best handled by your own, internal IT staff. Although many IT responsibilities can be outsourced quite effectively, certain ones — like those involving security, compliance, or IT management and strategy — are better addressed by dedicated, full-time employees.

About the Author(s)

Christopher Tozzi

Technology analyst, Fixate.IO

Christopher 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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