Whether seen as a necessary part of modern business or a vital strategic tool, outsourcing is now a permanent feature of business life. As companies actively search for more effective and efficient ways of operating, handing over non-core functions to specialist providers is an alluring prospect.
We view this move as a strategic shift, which contrasts with traditional in-house IT models, offers significant benefits, as we explore in this post.
IT Outsourcing has evolved from a cost-cutting measure in the 1980s and 1990s, focused on labor arbitrage and outsourcing low-value tasks, to a strategic partnership model that drives innovation and scalability today. Over time, technological advancements and changing business needs shifted the focus from simple cost savings to leveraging global expertise, enabling companies to access specialised talent, improve operational efficiency, and foster digital transformation across entire IT estate, including Infrastructure, Helpdesks, and User Support.
As outsourcing delivery models continue to mature, with a growing emphasis on value-based relationships to unlock new areas of business, here are benefits of Outsourcing IT Service Delivery:
Benefits of Outsourcing IT Service Delivery
Cost-related benefits
While cost reduction is no longer the central focus of modern IT outsourcing, it remains a significant factor in the decision.
Just five years ago, 70% of organisations cited cost savings as the main reason for outsourcing. This figure has seen a notable drop, sitting in the 40% to 57% range three years ago, and falling to just 34% last year. Organisations that leverage advanced, value-based delivery models are even less focused on cost savings as the primary driver—at only 30%.
The financial benefits are still substantial with reduced operational costs and more predictable IT expenses.
Reduced operational costs
Outsourcing allows businesses to convert high fixed costs into predictable variable outgoings. Organisations avoid the considerable fixed costs and hidden administrative burdens associated with an in-house IT department.
These avoided overheads include:
- Recruitment and Staffing: The high expense and time consumption of recruitment, onboarding, off-boarding, and maintaining staff, which drains internal management resources.
- HR Management: Handling associated HR tasks, performance management, and administration, reducing the complex administrative load on the business.
- Employee Welfare: The cost of employee benefits, such as pensions, medical insurance, and sick pay, as well as managing associated illness risks, which represents a significant, long-term commitment and financial liability.
Furthermore, outsourcing firms like Total IT Global, leverage cost differentials across global markets. This practice, sometimes known as labour arbitrage, means they provide access to specialist talent from regions with lower wage structures and operating costs. This is not about cutting corners; it is about accessing high-quality skills at a competitive price.
Ultimately, outsourcing provides highly predictable IT expenses. Many outsourcing providers offer flexible, pay-as-you-go, or fixed-fee pricing models. This effectively converts capital expenses (CapEx) into variable operating expenses (OpEx), making it far easier to budget for IT operations and avoid surprising costs. A Deloitte survey indicated that companies can save up to 70% on operational costs for certain IT functions by outsourcing, allowing them to reinvest their savings back into their core business.
Economies of scale & up-to-date technology
While outsourcing firms benefit from economies of scale, the true advantage transfers directly to the customer through superior service delivery.
Outsourcing firms manage services for multiple clients, allowing them to share infrastructure, technology, and highly specialised talent. This scale means the firm can invest in top-tier training, sophisticated monitoring tools, and resilient service infrastructure that would be prohibitively expensive for a single organisation to acquire alone.
This investment translates into:
- Higher Quality Service: Access to the latest tools and dedicated specialists (e.g., in advanced cybersecurity or cloud architecture).
- Faster Resolution: Shared knowledge bases and centralised support systems result in quicker and more effective problem-solving.
- Cost-Effective Service: The shared investment significantly lowers the unit cost of high-quality services, such as advanced security monitoring or 24/7 helpdesk support.
The customer ultimately gains access to a level of service sophistication that is only viable because of the outsourcing firm’s sheer scale.
Expertise and talent benefits
Outsourcing provides immediate access to a pool of professionals with deep knowledge in specialised IT areas, which is often difficult and expensive to cultivate in-house. Outsourcing gives businesses instant access to a vast pool of skilled IT professionals who are experts in niche fields like data centre maintenance and networking without the long-term cost of a full-time employee.
Improved service quality
Outsourcing firms, like us, specialise in delivering high-quality IT services. We work under Service Level Agreements (SLAs) that we agree upon with you, our customer. This established framework ensures faster and more effective problem resolution and supports proactive system maintenance. A small in-house team often finds this level of continuous, specialised focus challenging to maintain.
Strategic and operational benefits
By delegating non-core IT functions, companies free up internal resources and management attention to focus on what generates revenue and fosters growth.
Focus and Strategic Alignment
By delegating non-core IT functions to a third party, a company frees up internal resources and management attention to focus on its core competencies. This drive for innovation, strategic growth, and improved customer service is a key motivator for outsourcing.
Flexibility & scalability
Businesses easily scale IT services up or down based on current needs, market demands, or seasonal fluctuations without the hassle of hiring or downsizing full-time employees. This agility enables companies to respond to market changes more effectively.
Improved risk management and compliance
Outsourcing to a managed service provider (MSP) helps mitigate risks associated with regulatory compliance and business continuity. Providers offer 24/7 monitoring and robust solutions that would be prohibitively expensive to build in-house, ensuring the organisation meets strict industry and governmental standards without the constant internal overhead.
24/7 support availability
For organisations with global operations or critical customer-facing systems, continuous availability is a strategic necessity.
By leveraging teams across different time zones, outsourcing firms provide round-the-clock IT support. This continuous service delivery ensures that critical issues are addressed promptly, regardless of time of day or location, leading directly to faster issue resolution and sustained operational uptime. This capability significantly increases system reliability and contributes to higher customer satisfaction across all markets.
Global Reach and Local Presence
For businesses with an international footprint, managing IT in different regions is a nightmare. Outsourced partners often have a network of technicians and support staff, providing on-the-ground assistance wherever your operations are located. This on-the-ground assistance is often provided through services like Smart Hands Support, a topic we delve into further in our detailed blog post on the subject.
Conclusion
Outsourcing delivery models continue to mature, with a growing emphasis on value-based relationships. This strategic shift sees outcome-based delivery models gaining traction, favouring results-driven partnerships focused entirely on achieving specific business goals.
Partnering with a third-party provider, like us, businesses improve efficiency and gain a competitive edge. This partnership covers the full asset lifecycle, including services like remanufacturing as a service and Green IT asset disposal, ensuring your technology is handled responsibly from start to finish. Ultimately, this is an investment that allows organisations to focus on their core mission while a specialist team manages their technology estate.
