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How to Overcome IT Outsourcing Challenges

Posted On: October 27, 2020

Topic: Managed Services

Nowadays, many organizations eagerly use IT outsourcing to remediate IT skills shortages, control cost and gain access to world-class capabilities. Statistics show that the market size of the outsourcing industry in the US in 2020 is $132.9 billion and it is going to grow by 1.6% the same year. And while this approach has many benefits, it is not without challenges. 

Here are top 4 IT outsourcing challenges companies facing today and how to overcome them:

1. Choosing the Right Capabilities to Outsource – It’s important before an organization asks if they can outsource, that they know why they want to outsource.

Solution: Take a functional approach. Determine your reason for outsourcing:

  • Tactical – Eliminating cost, reducing investment or freeing up resources 
  • Strategic – Gaining strategic advantage or operational value from having an expert third party manage their IT infrastructure. 

The right option should be selected based on your unique business requirements and the outsourcing motivations of your company. Finally select a partner whose core competencies address your requirements.

2. Lack of Control You’ll experience a perceived lack of control as you’re now relying on a third-party provider’s expertise, resources, infrastructure, and skill to manage and maintain your environment.

Solution: The key to overcoming risk and fear is proper management of the relationship. If they are managed correctly through well thought out policies and procedures, these problems and fears can be mitigated.

3. Unforeseen Costs – Additional service requests or projects not covered by the scope in your initial contract may cause you to spend more than your contract suggests.

Solution: Make sure you clearly define the scope of work to help reduce the chance of unexpected costs. Get acquainted with pricing models offered by the provider and choose an engagement model that best fits your requirements.

4. Vendor Lock-in – Becoming dependent on a single managed IT services provider and technology implementation can lead to substantial costs, legal constraints, or technical incompatibilities.

Solution:The best way to avoid a potentially unpleasant and hostile situation is to negotiate both an entry and exit strategy upfront with your vendor. And remember there are plenty of managed services providers in the sea, so don’t settle if the provider isn’t a good fit for your organization – don’t be afraid to shop around.

Outsourcing your IT needs can help you lower costs, focus on core competencies, and ultimately achieve increased productivity. With the right approach, and the right managed services provider that has your back, you will easily resolve the aforementioned IT outsourcing challenges and ensure your customer/service provider relationship is mutually positive for both parties.

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