When does IT Outsourcing work? And when doesn’t it?

IT Outsourcing works when both partners have a “what’s in it for WE” approach. How is that established? And is it even possible in the real world?

IT outsourcing, especially nearshore IT outsourcing, is a big, quickly growing industry. If you are reading this, the chances are you are а stakeholder of one kind or another in the industry, and know that why is not rocket science. Internationally, there’s a skills gap between demand for and supply of IT specialists. And the gap is biggest in the most developed economies, pushing up rates to levels that can be difficult to commercially reconcile with business cases. If the specialists can be hired at all, retention becomes an issue.

Throw in other drivers like organisations ideally, or necessarily, needing different IT specialists at different times, to work on different projects. An inhouse team on permanent contracts, of a relatively stable size and representing a particular tech stack, often just isn’t flexible enough to meet evolving and revolving IT needs.

If you have experience in the IT sector and market for IT specialists you know that IT outsourcing makes a lot of sense for many organisations.

When it works well, it solves all of the problems it’s supposed to:

• Nearshore or offshore IT outsourcing often brings high costs down to more commercially viable levels.
• Flexibility to scale teams up and down as needed by project cycles.
• Flexibility to adjust tech stack, experience levels and other variables as needed by project cycles.

IT outsourcing is a business partnership. Successful, sustainable business partnerships, in fact any kind of partnership, all have one thing in common – they are of mutual benefit to both partners. IT outsourcing relationships are no different. They are successful when both parties adopt, and continually work on a “what’s in it for WE” approach.

IT outsourcing delivers fantastic results when the client organisation’s goals are realised in a way that is commercially viable for the service provider.

It’s not complicated. It’s theoretically obvious. And despite that, many outsourcing partnerships deliver less positive outcomes than would be the case if both parties approached all communication and decisions with it in mind.

Think about the succesful service-based business relationships you’ve had. I bet one thing they all had in common was trust (earned through living up to it) and transparency. Succesful IT outsourcing relationships are no exception. They work when both client organisation and provider are transparent about their needs and business case upfront, and throughout the relationship. Cards on the table.

IT outsourcing is a business partnership. Successful, sustainable business partnerships, in fact any kind of partnership, all have one thing in common – they are of mutual benefit to both partners. IT outsourcing relationships are no different. They are successful when both parties adopt, and continually work on a “what’s in it for WE” approach.

IT outsourcing delivers fantastic results when the client organisation’s goals are realised in a way that is commercially viable for the service provider.

It’s not complicated. It’s theoretically obvious. And despite that, many outsourcing partnerships deliver less positive outcomes than would be the case if both parties approached all communication and decisions with it in mind.

Think about the succesful service-based business relationships you’ve had. I bet one thing they all had in common was trust (earned through living up to it) and transparency. Succesful IT outsourcing relationships are no exception. They work when both client organisation and provider are transparent about their needs and business case upfront, and throughout the relationship. Cards on the table.

When it works well, it solves all of the problems it’s supposed to:

1. Nearshore or offshore IT outsourcing often brings high costs down to more commercially viable levels.
2. Flexibility to scale teams up and down as needed by project cycles.
3. Flexibility to adjust tech stack, experience levels and other variables as needed by project cycles.
4. Our early instincts on people might generally be good.
5. Establishing healthy, long term business relationships should involve taking the same approach.
6. Flexibility to adjust tech stack, experience levels and other variables as needed by project cycles.