Small businesses use IT outsourcing services to access new technologies and in order to reduce IT costs. IT outsourcing may improve a small firm’s speed to market for new services and products. Small businesses tend to look locally first for IT outsourcing needs, but more often are now conducting IT outsourcing through an offshore provider. However, there are disadvantages for small businesses in IT outsourcing. These disadvantages include losing control over a critical business service or activity and also a lack of flexibility.
What IT services do small businesses typically outsource?
Small businesses decide to outsource various IT operations such as:
- Development and implementation of IT systems
- Development and maintenance of applications
- Business process outsourcing- front and back office functions
- IT service desk and support
- IT security
- IT maintenance and backup and recovery
- Running of core business applications
Offshore IT outsourcing versus local outsourcing for small businesses
Offshore IT outsourcing providers usually offer cheap, affordable rates for small businesses. However, these outsourcing companies are located in different countries, and the small businesses may struggle with monitoring the legal and regulatory practices of the offshore outsourcing firm. The small businesses should conduct regular audits with an offshore IT outsourcing firm. On the other hand, local outsourcing provides usually higher rates but offers a better relationship for the small business. The small business can communicate more effectively and faster with a local IT outsourcing company. Furthermore, a local company may reduce communication costs.
In addition, a small business will be faced with the decision of whether to outsource to a large firm or a small firm. A small firm offers the ability to have a close partnership with better service. However, a small outsourcing firm may be limited in resources and skill. Small businesses can also outsource to large companies such as Accenture. These large companies may offer more resources, skills, and can be cheaper. However, the quality of service may suffer and they might not have a deep understanding of the needs of a small business.
How to price IT outsourcing effectively for small businesses
Increasingly, small businesses are creating payment schedules that are meant to incentivize success for the outsourcing firm. These include fixed price and time and materials pricing. Fixed pricing involves the outsourcing firm taking on the majority of the risk. The price is fixed per job, and the requirements are outlined. Time and materials pricing gives the outsourcing firm flexibility in the firm defining the scope of the project. The outsourcing firm uses the amount of time and materials needed in order to complete the job at the cost of the hiring company.
However, some of the most successful pricing approaches being taken by small businesses are combing both pricing options. For instance, small businesses are splitting outsourced IT projects pricing into two parts. The first part is well defined, usually through a SLA, and most likely will not change. The second part is the part that is likely to change as the results of each phase are shown. This is usually seen in web design outsourcing where the price will be fixed at price per page. Then, additional changes requested by the hiring organization will be paid per time basis. The combination of the pricing models allows for flexibility but prevents spiraling costs for the hiring organization.
Small business IT outsourcing trend- operational outsourcing
A fast growing trend among small businesses in IT outsourcing is to outsource ongoing processes, not just IT project outsourcing. For example, system maintenance, system security, and hosting are all examples of ongoing process outsourcing. This requires that the outsourcing firm have greater responsibility and understanding of the hiring firms’ business and its operations. This requires a stronger and often long-term partnership. It is important for hiring organizations to evaluate outsourcing firms to see if they have a strong understanding of legal and regulatory issues. This is important if the outsourcing firm is to manage many of the hiring organizations’ ongoing processes.
Recommended companies for IT outsourcing for small businesses
Velorium: Velorium is an IT outsourcing firm specializing in providing low cost outsourcing for small businesses. Velorium’s infrastructure allows their clients to outsource various critical and repetitive tasks to overseas employees at considerably lower costs than United, Canada, or Europe. They provide IT outsourcing needs such as customer service, order processing, online marketing, data entry, trends analysis, graphics design, 3D animation, website development, and software programming and process automation.
Comm Solutions: Comm Solutions handles the daily operations of a hiring organization’s network. Comm Solutions small business IT outsourcing can help to enhance a hiring organization’s internal IT staff or serve solely as a company’s internal IT department which would allow a company’s staff to focus on different areas of business. The company offers a wide-ranging suite of infrastructure, security, and assessment it outsource support solutions to help strengthen and support a client’s network environment.
DCG Technical Solutions: DCG Technical Solutions provides outsourced IT services to small business clients who depend on reliable servers and PCs for cheap operating costs. DCG’s outsourced IT support programs are designed to make the IT infrastructure reliable and robust. DCG is a leading provider of IT Outsourcing, Computer Network Services, and IT support. Their knowledgeable network engineers, combined with good IT best practices, helps their clients better utilize their network servers and PC’s.