Outsourcing IT needs in the corporate world has become extremely popular because it is cost-efficient and it gives IT resources to companies that may not otherwise be able to afford them. Another positive side effect of IT outsourcing is that it has brought many technology jobs back to the United States.

As convenient and patriotic as IT outsourcing has become, it also have several limitations that have caused many companies to re-think the idea of funding their own internal IT group. It is important for a company to be completely familiar with these limitations before developing any kind of company policy in regards to IT.

The Customer Could Outgrow The Outsource Company

When an IT outsourcing company first takes on a new client, the relationship is beneficial to both sides. But things can start to get inconvenient for the client when the client's business starts to outgrow the capabilities of the IT outsource group.

An IT outsourcing company can become entrenched in the daily routine of its clients, which is great at first. But when the IT company can no longer keep pace with the growth of its clients, then the clients are stuck trying to find a new solution and keep track of its own IT assets at the same time.

The IT Outsourcing Company Lacks The Necessary Technical Expertise

IT outsourcing clients like to believe that their support company knows everything there is to know about computers and the Internet. But every IT support company has its areas of expertise and they have the technical areas where they are not quite as strong. If the client starts to experience needs from the areas where the IT outsourcing company is not so strong, then that can become a significant business issue.

This problem can be amplified if the client is a small business experiencing growth. An IT outsourcing company is not as likely to bring on new personnel for a smaller client, which leaves the client without a solution.

The Client Losses A Measure Of Control Over Its Data

No matter how large or successful an IT outsourcing company may be, there will always be the limitation of client security and the protection of critical customer data. All it takes is one rogue employee of the IT outsourcing company to compromise all of the client's critical data.

Some IT outsourcing companies have safeguards put in place to try and prevent client data compromise, but those safeguards are limited by how much access the IT company has to the client network. In most cases, that access has to be comprehensive for the IT outsourcing company to be able to do its job.

Outsourcing IT responsibilities can take a lot of stress off of a client and allow that client to operate his business by focusing on his core competencies. But there are limitations to IT outsourcing that could make it necessary for a client to do his own IT support and pay the extra costs.

There are normally two sides to the story when it comes to employment. On one hand, employers hold the view that the right candidate is a hard find; while on the other, job hunters think that it’s a tasking affair to land a decent job out there.

Regardless of which side of the divide you lay, landing good work or workers is a tedious endeavor. For those looking to hire, a single job opening could attract hundreds or thousands of applicants. Sifting through the lot in hope of finding the right fit is no doubt time consuming. Conversely, a job seeker may hold the opinion that he or she is submitting resumes into the big black hole of the Internet, never really anticipating a response, but nevertheless sending them out rather than sit back doing nothing.

A recruitment agency normally keeps an internal database of applicants and resumes for current and future opportunities. They first do a database search to try and identify qualified and screened candidates from their existing crop of talent. Most often the case, they’ll also post open positions online through industry websites and job boards so as to net other possible applicants.

When it comes to IT staffing needs, HR managers even find a more challenging process in their hands. This is because the IT department is one of the most sensitive in any given organization where a single slip-up could be disastrous for the company (think data security, think finances when the IT guys are working in tandem with accounts). You get the picture, right?

IT Outsourcing came to foray as a means for corporations to focus on critical business operations while having a specialized IT company take over the responsibility of managing the IT infrastructure and application development. For corporations especially in the developed countries, IT outsourcing provided two fold advantages, one was access to a highly talented pool of engineers and that too at a lower cost since countries like India were quickly growing their stature as an IT outsourcing hub.

IT Outsourcing is now as mainstream as ever and almost every leading organization outsources some or all parts of its IT infrastructure to a specialized company. It makes pure business sense and with tightening budget controls, IT outsourcing has become one of the strategic cost reduction driver for most organizations. Moreover, IT outsourcing is no more restricted to companies in USA & Europe outsourcing their IT projects to countries like India. Domestic companies within India itself actively use IT outsourcing including the Indian government like the India Post project given to TCS.

Is it then a no brainer that IT Outsourcing is critical to your business? Well, if it is cheaper and does not seem to have any inherent disadvantages why not!! Not really, IT Outsourcing despite proven benefits has its limitations and you should be cognizant be of the same before considering outsourcing your IT operations.

·         Limitations in estimating the actual cost of IT outsourcing:Let’s tackle the biggest driver of IT Outsourcing-Cost Savings. For anyone to estimate the cost savings from IT Outsourcing one needs to be able to predict the cost of outsourcing which then helps understand the cost savings from the same. Yes, at a higher level it is a matter of a simple $ per man-hour costs and IT outsourcing will appear to be cheaper in almost all cases. However, “hidden costs” are commonplace with IT outsourcing and it can be immensely difficult to accurately predict these hidden costs. For example, you need to be able to identify the costs of transitioning your in-house IT to an outsourcer, management overhead needed to manage the outsourcing relationship etc. In addition, IT outsourcing contracts are fixed at the start of the contract and as a result any additional requirement/change tends to be charged additionally. It is no surprise that IT requirements can change frequently and if your outsourcing contract doesn’t account for flexibility, you might be limited in the actual cost savings you might make. There is no surprise that there have been so many instances of IT outsourcing projects overshooting their budgets by a huge margin such as the one government shared services project going 500 million pounds over budget

Information Technology (IT) tools are here to support your business in the global market. Effective communication is key for IT and business experts to collaborate effectively in search of solutions. Consulting, reaching out for help to a third-party, can bridge the gap between your business marketing experts and IT operations experts, especially with the emergence of big data analytics and its implication on the global market. Having the right consultants equipped with business knowledge and data technology expertise can make a difference.

Your marketing organization is probably familiar with digital tools and conducting global research. Its results can uncover the journey customers take to purchase your products or use your services. It can highlight the pain points and frictions that prevent their experiences with you to be delightful and amazing. Armed with this knowledge and beautiful compelling presentations, marketing executives expect that IT operations leaders will translate these insights into actions.

But people in IT operations are too involved in meeting key performance indicators that have nothing to do with the end customers. Meeting requirements of faster and cheaper don't translate very well into customer satisfaction. A classic breakdown in communication is described in a Harvard Business Review article, “A Technique to Bridge the Gap Between Marketing and IT.” The author goes on to describe how a new CIO at a bank found IT to be focused on the internal organization as their customers, rather than the real end customer. Moreover, no one was looking at the incident reports which clearly showed that incidents were increasing. And nobody looked at what these incidents were doing to the bank’s customers. The startling and scary numbers of incidents were caught and addressed and brought down from 1,000 to 600 or (40%) and later to 450 per week.

Surprisingly, these type of seemingly isolated scenarios are still being discovered within organizations presently, sometimes internally, and through third party insights such as consultants.  By engaging consultants to provide a perspective based on what they’ve experienced before, they can often bring new and innovative ideas or possible challenges to the table that an internal processes probably wouldn’t have been able to see on their own.  Often, third party input can help to provide the translation needed to go from marketing research results into actions that IT operations can understand and make sense in their high-performance culture. When companies understand and use this knowledge to reassess how to improve their customer experiences, they work backward from what customers want to achieve significantly higher improvements. 

IT and business management are more and more being asked to move away from their traditional roles, such as IT being the "technology infrastructure gatekeeper", and instead become enablers across the enterprise of effective collaboration, big data consumers, and key players in driving desired business outcomes. Marketing leaders look to technology as a way to facilitate the customer's journey and his positive experience of it, bring more clients, and meet increasingly higher loyalty goals. They rely on IT projects to enable big data-based behavioral targeting anywhere in the global market. This means projects to analyze search engine results, improve website personalization and optimization, and building of mobile applications for a more personal experience. All these are projects that consultants with their communication, consulting and technical expertise are well prepared to help in order to bridge the expectation gap between IT and other business organizations.

In order to meet these 21st-century business challenges, Information Technology organizations have been transitioning from waterfall stage-gate project management approaches to agile development. The stage-gate method applies a step-by-step approach where waiting, reviewing and approving are required before moving to the next step in the project. Agile management emphasizes collaboration, no decision hierarchies, and few people roles for making quick, customer-focused small changes over time to deliver solutions that delight and amaze customers. Agile development has allowed many businesses to respond quickly to changing customer desires and expectations. But moving to continuous delivery is a struggle requiring focused, dedicated teams that are not well suited to the traditional matrix organization where people are resources whose time must be "chopped" into many pieces and shared among many projects. Agile teams meet frequently as often as daily but never waiting more than a week to do so.

Marketing people are externally focused. IT people are internally focused. The first works with customer emotions. The second works to increase efficiency. Big data analytic tools are used by the first and supported by the second. Consultants can be the glue that helps both come together in effective collaborations that deliver positive business outcomes in both global and local markets.