The Future of IT Outsourcing 

7 min read Oct 06, 2023

The concept of outsourcing IT services has been around for a while. The inspiration? The incentive of accessing a pool of most talented resources without the hassle of managing them in-house, more efficient utilization of time and efforts, and unparalleled cost savings.  

We live in an era where technological advancements reshape industries every day, and IT outsourcing is an approach that stands at the crossroads of innovation and adaptability. Primarily known for the cost-saving it offers, IT outsourcing also empowers businesses to harness global expertise. Here, it is worth mentioning that the future of IT outsourcing not only promises enhanced operational efficiencies but also the potential to drive transformative change.  

Before we dive deeper into the more technical aspects, let’s quickly brush up on the basics. 

What is IT Outsourcing?  

Gartner defines IT outsourcing as the use of external service providers to effectively deliver IT-enabled business process, application service and infrastructure solutions for business outcomes. 

In simpler terms, outsourcing IT services means delegating your IT related tasks to a third-party for a multitude of advantages including cost savings, skilled personnel, and increased bandwidth to focus on what matters the most – developing your business. 

If you are looking to avail yourself of IT outsourcing solutions, there are three models of IT outsourcing you should be familiar with. 

Project-based Model 

Project-based model involves contracting an IT outsourcing company to complete a specific project within a stipulated timeframe. This approach is best suited for projects with clear specifications where little to no change is expected during the development process. 

  • Clear and well-defined requirements at the outset. 
  • Fixed budget based on the project scope. 
  • Short to medium-term engagement. 
  • IT outsourcing company takes full responsibility for project management and delivery. 

Dedicated Team Model 

In this model, the outsourcing company will provide you with a team of IT professionals who work exclusively on your projects, acting as an extension of your in-house team. If you have a long-term project, startups, or a business that requires specialized skills not present in your in-house team, a dedicated team model will make things easier for you. 

  • Long-term engagement. 
  • Flexibility to scale the team up or down based on project needs. 
  • Close collaboration and communication between you and the dedicated team. 
  • Billing is typically monthly and based on the team size and composition. 

Outstaff Model 

Outstaff model will enable you to hire individual IT professionals or entire teams from an IT outsourcing company to augment their existing staff. These professionals will work under your management while following your processes and methodologies. You should opt for this approach when seeking IT outsourcing services if you need to quickly augment your team with specific skills. 

  • Flexibility to choose and manage external talent. 
  • Professionals can be integrated into existing teams and projects. 
  • Cost-effective way to quickly scale teams without long-term commitments. 
  • You retain control over project management. 

Do you think you’d prefer the benefits of one outsourcing model while enjoying the flexibility that comes with another? 

Seasia is a top-rated IT outsourcing company that also offers a mixed model approach for maximum client satisfaction and most efficient solutions. 

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IT Outsourcing Over the Years  

IT outsourcing has come a long way since its inception in the 1980s. Outsourcing was largely associated with cost savings, and that too within just a few industries. Now, increasingly more businesses across industries are turning to IT outsourcing solutions given their strategic importance as a powerful tool to outshine competitors. 

Even though certain experts had predicted a downfall in the outsourcing domain, the pandemic proved them wrong. It unlocked several new possibilities while emphasizing the significant benefits of outsourced IT. 

Cost Savings 

One of the primary drivers for IT outsourcing is the potential for significant cost savings. Outsourcing allows businesses to avoid the expenses associated with recruiting, training, and maintaining an in-house IT team while also giving them the liberty to allocate resources more efficiently. In addition to that, when you factor in the cost differentials due to currency exchange rates and the lower operational costs in certain outsourcing hubs, the financial benefits become even more apparent.  

Access to Expertise and Specialized Skills 

Housing domain experts can be incredibly challenging in a fast-evolving IT landscape. What’s working today might get replaced with something new tomorrow and keeping up with such changes is a breeze when you can outsource. IT outsourcing provides an avenue to tap into a vast pool of specialized talent. Irrespective of the field you are seeking expertise in, IT outsourcing companies often have niche specialists, ensuring top-notch quality and innovation. 

Focus on Core Business 

Every business has its core competencies. When you outsource technology functions, you can redirect your focus from peripheral activities and channel your resources and energy into what you do best, ensuring the primary business functions get the attention they deserve. 

Scalability and Flexibility 

The needs and priorities of a business are often dynamic. IT outsourcing offers the flexibility to scale IT operations based on current needs. Whether you're launching a new product or scaling down post-project completion, outsourcing ensures you always have the right amount of IT support

Risk Mitigation 

Information technology is a vast domain with multifaceted risks ranging from data breaches to project failures. Established IT outsourcing companies come equipped with standardized, industry-specific protocols for risk management. Their experience across various projects and industries means they've tackled a plethora of challenges, ensuring your business benefits from this collective wisdom. 

24/7 Support and Continuous Operations 

In our globalized world, business doesn't sleep. Many IT outsourcing companies offer 24/7 support to ensure that any IT challenges are addressed as they arise. This continuous support guarantees minimal downtime and smooth business operations irrespective of time zones or geographical boundaries. 

IT outsourcing benefits businesses in numerous ways. According to a Statista report, revenue in the IT outsourcing market is projected to reach US$460.10bn in 2023. In addition to the above-mentioned advantages, it also helps reduce time to market, address security and privacy concerns, and stay ahead of the latest technology trends. 

Not sure if IT outsourcing is for you? 

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Emerging Trends in IT Outsourcing  

Now that we know what IT outsourcing is and the potential it holds, it’s about time we talked about what the future of IT outsourcing looks like. Some of the trends we believe will impact outsourced information technology services are discussed below. 

Cloud Services Integration 

The current wave of digital transformation has brought cloud computing to the forefront of all things IT and IT outsourcing is no exception. Outsourcing companies are increasingly offering solutions that are inherently designed for cloud platforms for smooth integration and scalability. Combining cloud services with IT outsourcing can help achieve greater cost savings and enhanced collaboration. 

Automation and AI 

There has been a substantial rise in the popularity of automation solutions and artificial intelligence. RPA tools are being used everywhere to handle repetitive tasks and reduce manual intervention. IT outsourcing empowers you to leverage the best of robotic process automation without the overhead of constant updates. Likewise, outsourcing IT services to companies with AI capabilities will result in predictive analysis and improved decision-making. 

Cybersecurity Emphasis 

IT outsourcing companies will continue to take a proactive approach to implementing advanced security protocols and continuously monitoring for threats. 

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Essential Considerations  

IT outsourcing is a tried and tested approach to achieving cost savings and impeccable technology services. However, it is of utmost importance that you opt for IT consulting or services from a reliable name in the field. 

There are certain things that must be considered when making outsourcing decisions. These include: 

Industry Expertise and Experience 

Make sure you carefully gauge your potential provider’s experience and expertise in offering IT outsourcing services. Seasia has over two decades' experience offering top-notch IT outsourcing services and a vast clientele that vouch for our domain expertise. 

We are more than just a software development company, we are your hub for all things IT. 

Costs Involved 

It is important to ensure that you are on the same page as the IT outsourcing company as far as the costs involved are concerned. While it is vital that you do not burn a hole in your pocket, it is also worth mentioning that going with the cheapest provider is almost never a good idea. Make a well-calculated decision for a smooth IT outsourcing journey. 

IT Infrastructure 

An IT outsourcing company is as good as their personnel and their IT infrastructure. Don’t forget to check if the company you are looking to go ahead with has the tech stack that aligns with your vision. This will go a long way in terms of ensuring uninterrupted progress. 

Preferred Type of Outsourcing 

IT outsourcing is typically categorized into three segments. 

Onshore Outsourcing 

  • Hiring professionals in the same city or nearby 
  • Reasonable costs for high-quality services 

Nearshore Outsourcing 

  • Hiring professionals from neighboring countries who share your time zone 
  • Allows for easier communication, but not very profitable 

Offshore Outsourcing 

  • Outsourcing to any country across the globe irrespective of the time zone difference or distance

Maximum savings 

Last but not the least, opt for a company that offers the level of control and savings you’re seeking. Partner with someone who takes the hassle out of the process altogether.  

Final Thoughts 

IT outsourcing is emerging as a beacon of adaptability and innovation in the current digital landscape. A Clutch survey report published in January 2023 also pointed out how 83% of small businesses are likely to maintain or increase their spending on outsourced business services.  

Even though the roots of IT outsourcing services are firmly planted in cost-saving benefits, the branches extend to global expertise and transformative potential. As we explored the various facets and models of IT outsourcing, it is evident that the approach is not just about external partnerships but about crafting strategic alliances for continuous growth.  

Seasia promises a confluence of efficiency, expertise, and evolution with comprehensive IT outsourcing services. Schedule a consultation today to take the next step in your digital transformation journey.  

Frequently Asked Questions 

What is IT outsourcing? 

IT outsourcing is the practice of hiring external service providers to handle various IT related functions instead of handling them in-house. It covers several areas including software development and app development, cyber security, IT consultancy, quality assurance and testing, infrastructure management, and more. 

How much does IT outsourcing cost? 

The cost of IT outsourcing depends on a number of factors including but not limited to the scope of work, geographical location of the IT outsourcing company, expertise required, and duration and complexity of the project. On average, hourly rates can range from $20 to $250. 

Is IT outsourcing a good idea for small businesses?   

Certainly. IT outsourcing is an idea worth considering for small businesses because of benefits such as cost savings, access to expertise, flexibility, and increased focus on core business. 

Should a company ever outsource its core competency? 

It is advised that companies retain and nurture their core competencies in-house. Outsourcing your core competencies may lead to dilution of your brand and over dependency on external service providers. However, if you have managed to establish a trusted partnership with an IT software development outsourcing company, outsourcing your core competency may be worth it. 

What is an example of information technology outsourcing? 

A classic example of IT outsourcing is when a company contracts an external agency to develop a mobile application for its business. Instead of hiring a full-time team of app developers, the company outsources this task to specialists who have the expertise and resources to complete the project efficiently. Another example is when businesses outsource their IT helpdesk support to external firms that specialize in providing 24/7 customer support services. 

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Surbhi Sood

Surbhi is a passionate reader and writer. She has been writing for several years now, and enjoys demystifying complex topics to make them understandable for a broader range of readers.