Advantages and Disadvantages of IT Outsourcing Services

Stfalcon has been a player in software development and IT services for already 15 years. During these years, we’ve carried out almost 350 custom projects. They are for transportation, logistics, delivery, travel, healthcare, and fintech industries.

No wonder, after several hundreds of projects, the company knows all the imaginable pitfalls, common mistakes, and critical standards of these industries. This means Stfalcon is a reliable vendor aware of all the pros and cons of outsourcing IT services. Our customers avoid unnecessary costs. We effectively help clients move from ideas to results in software development. We also optimize outdated solutions.

We follow all market trends and modern technology. By 2029, the IT Outsourcing market revenue is expected to show a CAGR of about 8.5%, resulting in a US $ 812.70 billion market volume. In 2025, spending on software is predicted to grow 14% and constitute $1.23 trillion. IT services are anticipated to grow by 9.4% to $1.73 trillion.

Outsourcing Software Development

Most businesses do not develop their software solutions. Three in five organizations turn to outsourcing for app development. 92% of G2000 companies use IT outsourcing.

But why?

IT infrastructure is the backbone of the modern business environment. It's a vital ingredient for an organization's success. However, not all companies have access to the same resources, assets, and experts as others. When a company lacks on-site developers, outsourcing is a means to fill the gaps and not lose out. Higher-end businesses stay on the leading edge of modern technology due to contracting projects out.

From Stfalcon’s experience, the reasons a business outsources may be variable:

- Software solution development or modernization,

- Decreased business efficiency,

- Cybersecurity issues,

- The need for a recovery plan in case of lost data,

- Lack of staff to cover the overall scope of IT issues, etc.

Outsourcing allows the incorporation of services and experts into business infrastructure. It can use the skills of IT experts proficient in various aspects, issues, and technologies. It is a good idea when your budget is tight and hiring an in-house team is impossible.

What businesses seek IT services? The ones that do not have their own IT departments, but not only. The companies that do have such specialists need more free resources or sufficient experience to implement their projects. Sometimes, subcontracting is needed to develop certain functionalities. These may include development, maintenance, or support, cloud networks, virtualization, data scraping, etc.

However, contracting out IT services has both benefits and drawbacks. This article is grounded on Stfalcon’s first-hand 15-year-long experience. We've gained with different clients, countries, industries, and projects. We hope it’ll help you understand how outsourcing can work for you. It’s a crucial factor for making related long-term decisions and well-versed plans. Stfalcon experts aim to help you realize all the advantages and disadvantages of outsourcing IT services. Keep reading the cross-examination below.

Advantages of IT Outsourcing

Hiring an external company is usually realized through a contract. It transfers all the project details from a client to a vendor. Outsourcing is popular for many reasons. The main of which Stfalcon experts gather below. Go on reading for a more detailed overview.

Cost Savings

This factor comes first among the most critical competitive advantages of IT outsourcing. Technology is evolving at seven-league strides, and the industry is consequently ever-changing. Hiring and training an in-house team for a single project is unproductive. It can result in needless overhead costs. Contracting out gives you access to highly experienced professionals. They often work at lower rates due to their location. For instance, Eastern European countries are known for their lower development costs. A vendor team usually provides the required IT infrastructure, software, virtualized services, etc.

Improved Focus

Businesses outsource to patch up their weaker areas or assist in-house teams with large projects. That’s one of the most significant advantages of outsourcing IT services. The in-house staff can then keep focus on their specialties and prioritize goals. Cybersecurity monitoring, new infrastructure installation, and network improvements are better fulfilled on-site.

Ivanna

Client Manager

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Gaining Essential Functions

Outsourcing does not mean experts alone. However, if your project requires specific skills, you are not restricted to a single vendor. You can cooperate with several third-party providers, depending on your tasks and requirements. You can outsource data storage or security monitoring. You can work with multiple IT companies and integrate virtualized soft into your infrastructure. The benefit of outsourcing is that you can get the best available technologies, experts, and functions in different areas.

The Ability to Focus on Core Competencies

When you trust the work you are not an expert at, you can focus on your core business. This indisputably leads to better business results. Nurturing your original idea and being able to direct all your energy in its development is priceless. Outsourced employees can strengthen your staff in case of need and relieve the latter from demand swings. Thus, it helps establish stronger bonds with your regular employees.

Easy Access to Skilled Resources

Talents are scattered all over the world. Outsourcing allows you to efface any boundaries and hire an expert wherever he is. A broader range of qualified professionals worldwide helps craft software leading the market. Skilled experts can handle tasks efficiently. You can outsource to better-qualified specialists at the click of your mouse when the deadline is tight, and the in-house team may fail.

Security Benefits

Outsourcing opens access to extra security services, like data backup, protection, and monitoring. Vendors you cooperate with can uphold good cybersecurity practices, monitor your network activity, and flag susceptive actions. They can also maintain and update essential software, such as anti-virus software. Thus, IT companies close the gaps, threatening with potential intrusions and downtimes. However, they are often overlooked by businesses. This is one of the not evident advantages of outsourcing IT, bringing benefits to your business.

Minimized Downtime

As mentioned above, extra security minimizes downtime in your company. Reliable and well-organized infrastructure also benefits overall business efficiency. Natural disasters, software or equipment failures, expired licenses, and more pose risks.

However, IT experts like Stfalcon can offer you proactive solutions to сut the possible downtimes to a minimum. Professional developers can advise you on disaster recovery planning and share backup strategies. It provides your company with essential IT preparedness.

Disadvantages of IT Outsourcing Company

There is no garden without its weeds. This section is about the disadvantages of IT outsourcing. They are an indispensable part of the cooperation process. Let’s proceed to the details.

Losing Control

When you hand over a large part of the infrastructure management and processes to a third party, you may feel like you're losing control. It's rather unpleasant and confusing. Many business owners believe an external team will never achieve the level of in-house staff service and response.

However, we will share some tips to solve the control-related issues. It'll help avoid the possible unwanted consequences.

- Make your interaction with the vendor team transparent.

- Agree on the way, form, and frequency of your communication and updates.

- Set clear metrics and focus on outcomes criteria. Let your vendor be flexible in how the results can be achieved.

Intellectual Property and Security

Outsourcing is not only about cost-saving and effective project fulfillment. With it come intellectual property and security concerns. Remote cooperation also increases the threat of cyberattacks on sensitive data. So, make data protection your primary focus, and make sure you use safe transfer protocols. Check the provider’s security measures as well.

When signing a contract, determine the project scope and the specific intellectual property to be shared or developed. Include articles on usage and ownership rights for software code, algorithms, or tech know-how. Set restrictions on using your proprietary info when working with a vendor company. Ensure third-party employees have signed intellectual property protection and confidentiality-related provisions.

Unexpected Costs

Strange as it may sound, but this is also a risk of outsourcing, even though it’s often expected to reduce costs. If you want to benefit, ensure lower rates do not result in longer timelines or poorer quality. Be explicit about the quality standards, on-site visits, and working overtime from the beginning. Arrange the cooperation process to provide a robust quantitative quality measurement. It will allow you to determine if the quality has fallen short or if there is a qualitative feedback loops. Motivate your employees to highlight any concerns or advise on improvement opportunities.

Morale

Outsourcing may impact employee morale and efficiency. When a company outsources some part of a job, employees consider their jobs at risk. This sense of job insecurity can be detrimental to morale. If the workers grow frustrated with their environment, they feel undervalued or disposable. This results in quality loss and may even influence turnover.

However, the impact of outsourcing on employees’ morale and productivity can be managed. Clear communication, rewards, employee training, and development opportunities can help mitigate adverse effects. Consistently foster a positive culture. Nurture a supportive environment for your employees, whether in-house or outsourced.

Let’s proceed with how to find the right team to trust.

How to Choose the Right Outsourcing Provider?

Every business owner naturally desires to involve the best specialists in their company. So, in addition to discussing the pros and cons of IT outsourcing, we share Stfalcon’s workable tips on choosing a reliable IT vendor.

Choose a Provider with an Established Track Record

Expertise, experience, and feedback are the three pillars you should lean on. Look for companies experienced in IT development of the products you need. Select the companies that have proven expertise in your niche.

Check the references, case studies, and feedback from the former clients. You can do it on professional platforms and resources, like Clutch, or contact some clients directly. With each step, the list of potential partners will become shorter. When you have several vendors with high-quality projects and the necessary knowledge, proceed to the next step.

Infrastructure and Technology

It’s critical to assess a potential partner's capacity. Ensure the company has all the needed resources, technology, and infrastructure. Specialists should have a profound knowledge of the platforms and technologies relevant to your project. Discuss programming languages, frameworks, and tools required. Ensure the experts are up-to-date with industry trends. Check their ability to navigate and resolve challenges. They should also have a genuine interest in what they are doing. Importantly, select the vendor that can scale resources up or down according to the project needs.

Communication

Even the best expertise can fail where communication suffers. Evaluate your potential partner's communication channels, openness, and readiness to provide regular updates. Transparency in communication helps to address concerns quickly. It facilitates seamless management and project coordination. Moreover, it confirms that both parties are on the same page regarding goals and expectations.

A significant time zone difference can seriously impact collaboration. If you are in different time zones, make sure that working patterns are agreed upon.

Stfalcon - Your Reliable Partner in IT Outsourcing

Stfalcon has been a confident leader in web and mobile development for over a decade. Annually, we are recognized on the Clutch 1000 list, selected from 280000 vendors worldwide. Clutch is a leading global marketplace for B2B service providers.

For almost 15 years, Stfalcon’s team has been servicing various businesses in different niches. Our clients are in Europe, Great Britain, Cyprus, Nigeria, the USA, Canada, and Saudi Arabia. Large enterprises, medium-sized companies, and startups have chosen our company as their vendor. Our clients often get more than expected. Large businesses are usually tight on time. Outsourcing projects to our company allows certain companies to get quickly started. They receive the desired product in the short term without building an in-house development team from scratch.

On the majority of projects, we worked fully as a dedicated team. We started from R&D and launched the product developed from scratch. Some companies involved our experts as additional resources. This helped strengthen their in-house team with the appropriate expertise.

So, Stfalcon is experienced in various niches. We have expertise in developing variable software products. Our management system complies with ISO 9001:2015 requirements. Our clients' cultural backgrounds and time zones are also variable. We know how to arrange cooperation comfortably and effectively. We make it convenient and transparent for all parties.

Conclusion

I hope we have clarified all the advantages and disadvantages of IT outsourcing. You are now well-equipped with knowledge on how to choose the right outsourcing partner for your IT project. If you still have questions, feel free to contact us and discuss them. Stfalcon is a steadfast partner in outsourcing. We are eager to become your vendor and provide consultation if needed.