What Are the Key Drivers of IT Outsourcing?

Outsourcing is an integral part of most corporate restructuring activities. It plays a very significant role in IT services and several drivers contribute towards a successful IT outsourcing arrangement. By being aware of the key drivers of IT outsourcing, partners can considerably increase their chances of attaining success. From an outsourcing partner’s perspective, the following are the key drivers that enable success:

Quality of Service – Service quality is considered to be the conformance to customer requirements by many experts. The higher the quality of service, the greater the satisfaction level of the outsourcing partner. Understanding the importance of quality and not trading it for price can have a huge impact on the success of the outsourcing relationship. The main objective of outsourcing is optimal value creation and there is no two ways about the fact that quality is the most crucial driver of IT outsourcing. Criterion such as tangibles, reliability, responsiveness, assurance and empathy can be measured and documented to review the quality offered by an IT outsourcing company.

Profitability – Outsourcing of IT processes has many economic implications and gains. Outsourcing helps organisations to save on costs and to take advantage of globalization, hence boosting ROI and profitability. Leading businesses, especially from North America and Europe cite the key drivers to be cost reduction, efficiency and profitability. Outsourcing is value enhancing and hence organisations that engages in an IT outsourcing contract enjoys higher profitability.

Performance – The ultimate benefit of IT outsourcing that is openly proclaimed by many CIOs is that it gives them the opportunity to focus on the core competencies and key strategic initiatives. Thanks to outsourcing, many CIOs today can focus on endeavors that can have a positive impact on the long term growth.

Risk awareness – The ups and downs of business can easily be associated with the inconsistencies and uncertainty in the IT operations. Outsourcing of IT operations not only makes an organisation aware of these uncertainties, but also provides cushioning against the involved risks, provided the SLAs and deliverables are well-defined.

Other key drivers of IT outsourcing are improved business focus, adoption of best practices, diminished complexity, stabilized environment, enhanced systems, improved scalability and business agility, strengthened controls and compliance measures and high availability.

The benefits of IT Solutions and Infrastructure Services are immense. Growing costs, risks and complexity of technology can present huge challenges to the internal IT operations of any organisation. By entering into a contract with IT outsourcing service providers, CIOs can not only leverage the expertise, performance and economies of scale of service providers, but can also pave the way for innovation and value creation.