Exploring the Economics of Outsourcing Your IT Infrastructure

Just under 19% are ‘certain to outsource more’ of their IT support services − a drop from 25% in 2010, according to the 2012 UK Service Provider Performance and Satisfaction survey.
Published by KPMG, a leading provider of professional services in the UK, the study of 630 ‘client-provider’ contracts worth £14 billion revealed mixed feelings towards outsourcing their IT services and the quality of service provided.
While a positive 76% claim they intend to continue outsourcing, a significant proportion remain indifferent when asked if they would recommend their service provider, and 12% expressed dissatisfaction − highlighting crucial areas for improvement if service providers wish to keep hold of their customers.

Tech Support Outsourcing
Key results from the 200-plus participants also indicated a shift in motivation for companies utilizing outsourced IT support, with expense no longer being the main driver. Down from 82% in the last two-years, the survey showed 70% of businesses are influenced by cost when making their decision. Instead issues like the need for better quality services (46%) and a lack of adequate in-house skills (51%) proved more important than money. Both figures were up on 2010.
Lee Ayling, partner in KPMG’s Shared Services and Outsourcing advisory practice said:

“Outsourcing looks set to remain a large part of IT spend in the UK, but suppliers should not take it for granted that clients will remain willing to put their hands in their pockets.”

The survey highlights that buyers are now using multiple service providers where they didn’t before – hence service providers have to respond to shifting preferences for how IT is delivered if the current trend is set to continue.”
He added: “Just going for a low-cost option isn’t the de facto reason to outsource anymore. Companies are now looking at how outsourcing helps improve the quality of service they can offer to customers. At the same time a thirst for quality improvement means they want access to the skills that may be missing in house and the ability to respond rapidly to change.”
Possible causes for the apparent discontent in IT services appears to fall in the laps of the service providers − 45% of respondents believe “service providers are failing to actively identify opportunities for innovation,” while 3 in 10 cited that “some agreements are not met on time or to budget,” highlighting key concerns within an increasingly common practice.
The International Association of Outsourcing Professionals reported a 6% growth rate within the industry, worth a phenomenal $1.6 billion, so how do you decide whether IT outsourcing is right for your business or not?

Advantages of Outsourcing IT

1. Cost-efficient

Turning over your IT infrastructure or Service Desk to an outside service provider transfers a fixed cost to a variable, freeing up cash to invest in other things. Also the cost it takes to run internal IT services, when you consider staffing and equipment proves more expensive than outsourcing, especially for SMEs.

 2. Time saver

When you put your IT operations in capable hands, it offsets the amount of time you have to spend focusing on other important business matters. It also means that in the likelihood of any technical glitches, expertise is at hand to fix it without jeopardising internal business operations or minimising staff productivity.

3.  Even playing field

By using similar IT services to those of larger companies, it levels the playing fields for smaller businesses to access the same high level support system.

4. Expert advice

Where there are advantages, there are also risks and the first to consider is ensuring that service delivery will be as strong as possible.. A large part of this is down to running through your Service Level Agreement (SLA) with a fine-tooth comb and negotiating it until you’re happy it’s in the best interests of both parties. All agreements must detail how your applications and data will be protected and the policies your IT service provider must follow to maintain your service levels.
transcosmos specialises in the delivery of world class Customer support, IT Service Desk and Infrastructure support tailored to your specific business needs. With 21 years in industry we’ve developed innovative solutions to improve the customer experience.
To find out more about how we can help your business, feel free to browse transcosmos IT solutions. You can also connect with transcosmos on Linkedin.