What is an IT Outsourcing Company? (In-depth Guide)

We all look for ways to curb stress in our business operations and eventually improve outcomes and reduce expenses in the process. This is where partnering with an IT outsourcing company can help.

IT outsourcing companies specialize in the end-to-end management of various IT services on behalf of their clients. You can outsource your IT functions to develop innovative technological solutions as needed to streamline business workflows. They also help businesses strategize their digital transformation for IT-enabled growth. 

Interestingly, as per Statista, the annual revenue growth rate of IT outsourcing is expected to cross US$20.09 billion with a CAGR of 17.58% by 2028. So, why not benefit from this growing market and future-proof your business with IT outsourcing?

Let’s begin by understanding what an IT outsourcing company is and proceed to learn about its types and benefits. 

IT Outsourcing Company: Definition

An IT outsourcing company is an external service provider known for offering various IT services and resources to organizations. They host various professionals you can hire as dedicated developers, a development team, or to augment your IT team. They can take care of all your IT-related requirements, covering software and web development, cybersecurity, infrastructure management, tech support, and more. 

Hence, connecting with an IT outsourcing company can lead to quality outcomes, reduced costs, and 24/7 support services. So, you can focus on your core business operations with experts taking care of your digital needs.

Now that you are familiar with the idea of an IT outsourcing company, let’s understand the different forms that you can consider routing for. Jump on to the next segment.  

Types of IT Outsourcing Services

There are different types of IT outsourcing that you can consider for hiring services, depending on your business needs. Check it out below:

Onshore Outsourcing

Onshore outsourcing involves partnering with service providers located within the same country or geographic region. For example, if your business is based out of San Francisco and you outsource your IT projects to a company in California, It offers advantages such as cultural alignment, close collaboration, and easier communication due to proximity, but at higher costs compared to offshore.

Nearshore Outsourcing

Nearshore outsourcing, or nearshoring, is where the service providers are in neighboring countries or regions, typically in the same time zone. It offers benefits such as cultural similarities, communication ease, and cost advantages. For example, many US companies partner with service providers in Mexico for nearshoring.

Offshore Outsourcing

Offshore outsourcing involves collaborating with IT service providers located in a different country or region. It provides access to a larger talent pool, cost savings, and flexible operations to match time zone differences. However, its biggest benefit is the reduced development costs due to lower wages in distant nations like India, Mexico, Brazil, and other Asian countries offering round-the-clock support to their clients. However, it also entails risks of cultural misunderstandings and communication difficulties over distance.

These types of IT outsourcing are available under numerous models to avail their services conveniently. So, let’s understand these models in the next segment.

Also Read: Why Outsourcing to India?

IT Outsourcing Service: Models You Can Consider

Below are the different forms of IT outsourcing models that you can consider for your business needs.

Project-Based Outsourcing

In project-based outsourcing, organizations outsource specific IT projects or tasks to external service providers. It could be a short-term or long-term engagement where the end-to-end project is taken care of with managed resources. This model offers flexibility, scalability, and cost control as organizations pay for the deliverables of a specific project. 

Offshore Development Centers (ODCs)

In Offshore Development Center, the vendor fully facilitates the development and various IT process management from a remotely-based infrastructure, following well-defined processes. This houses all the resources and involves developing and monitoring infrastructure and applications 24/7 and fixing any issues. It is ideal for long-term, intensive projects as it reduces overall development costs and frees internal resources to focus on core tasks.

Also Read: How to Setup Offshore Development Center In India?

IT Staff Augmentation

In the Staff Augmentation model, the vendor provides dedicated developers or an offshore team of professional programmers and other experts who work exclusively for the client. They work remotely and extend the skills of the client’s internal IT team. The client has full control of its team while the vendor manages these resources. It offers more control and flexibility than managed services. This team augmentation model is perfect for long-term projects and handling fluctuating workloads or strategic projects. 

Also Read : IT Outsourcing models and how to choose the Ideal One

Server Hosting

This outsourcing model serves the specific purpose of hosting and managing the client’s server and data storage needs for the service provider. They are hired for their skills, storage spaces, related equipment, and management on behalf of the companies that cannot do so within their organizations.

Now, let’s look at how an IT outsourcing company helps you as a business.

Reasons to Hire an IT Outsourcing Company

Here are the reasons that show why you should not think twice and consider connecting with an IT outsourcing company.

Global Talent Access

By partnering with an software development outsourcing company, organizations can tap into a worldwide talent pool, accessing highly skilled professionals and specialized skills that may not be available locally.

More focus on core business.

Outsourcing your large, high-tech, expertise-demanding projects or non-core IT functions enables organizations to redirect their resources and attention toward strategic initiatives and core business functions. It improves efficiency, productivity, and organizational agility.

Cost control

No matter which model or type of outsourcing you choose, you are definitely going to save a lot. Outsourcing IT services allows organizations to convert fixed costs into variable costs, enabling better budget management and cost control. It eliminates the need for investing in IT infrastructure, hiring, training, and retaining in-house staff.

Accelerates growth and helps with short-term needs.

IT outsourcing offers scalability and flexibility, allowing organizations to quickly adapt to changing needs. They can scale up or down their operations with ease and even meet short-term project needs without long commitments.

Shared risk

IT outsourcing companies bring industry knowledge, best practices, and proactive risk management strategies to mitigate potential risks. When an organization outsources its IT functions, the providers take responsibility for cybersecurity threats, breaches, and regulatory compliance. This protects organizations from the financial and legal risks of managing technology independently,

If you are considering what services you can hire from them, then the segment below can assist you with that.

Also Read: Pros and Cons of IT Outsourcing

Commonly Outsourced IT Services

Take a look at the wide range of commonly outsourced IT services that you can consider for your benefit:

• Development and Maintenance: Outsourcing development and maintenance services encompass the designing, developing, testing, and ongoing support of custom software and web applications tailored to meet specific business needs.
• Cybersecurity: Outsourcing your cybersecurity needs involves partnering with experts who offer threat monitoring, vulnerability assessments, security audits, incident response, and data protection to safeguard organizational assets.
• Infrastructure Management and Support: IT outsourcing companies provide infrastructure management and support services, including network management, server administration, database management, cloud infrastructure management, DevOps Outsourcing and IT support.
• IT Consulting and Strategy: IT consulting services assist organizations in defining their IT strategies, aligning technology with business goals, optimizing IT infrastructure, and leveraging emerging technologies to gain a competitive edge.
• Data Analytics and Business Intelligence: IT outsourcing companies provide data analytics and business intelligence services, helping businesses extract valuable insights, make data-driven decisions, and improve operational efficiency.
• Data Storage and Management: With years of experience, IT outsourcing service providers can efficiently manage your data using the cloud and other modern techniques. Their expertise in specific areas, like compliant data storage and disaster recovery, protects your valuable business information.

Harikrishna Kundariya

CEO, eSparkBiz

Harikrishna Kundariya, a marketer, developer, IoT, chatbot and blockchain savvy, designer, co-founder, Director of eSparkBiz @Software Development Company where you can Hire Software Developers. His 14+ experience enables him to provide digital solutions to new start-ups based on Web app development.