Outsourcing IT tends not to be a particularly visible activity, a lot happens in behind the scenes – so we’ve decided to dig through some of the reports and statistics out there and pull out some statistic that might help to create a real picture of IT outsourcing today.
1. It’s not just about saving money
While 59% of businesses say the main reason they outsource is to save money on IT, 40% say it’s to enable them to focus on their core business activities.
This is becoming more and more important year on year. As companies vie to gain a competitive advantage in their industry, focusing staff-hours on delivering core competencies is essential, and regaining wasted time spent on IT can facilitate this.
2. IT outsourcers are satisfying their customers
78% of businesses worldwide are happy with the relationship they have with their outsourcing partner according to a Deloitte 2016 outsourcing survey. This bodes well for any of those hesitant businesses worried about picking making the wrong choice of IT provider.
3. It can save your company’s life (and save on costs!)
In a 2016 survey by Computer Economics, 92% of organisations said that outsourcing their disaster recovery structures cost the same, or less than keeping it in-house.
Disaster recovery is a highly outsourced practice because it requires a degree of expertise that many business lack internally. As a result, the peace of mind given by outsourcing, and the regular upgrading that comes from working with a partner that really understands your needs, gives these businesses the edge both financially and in having a resilient, confident attitude.
4. Outsourcing is actually shrinking! (but it’s evolving)
Source: Computer Economics, 2018
As shown above, the percentage of the total IT spend being allocated to outsourcing declined from 11.9% in 2017 to 9.4% in 2018. This is a major decrease considering this spend had stayed between 10.2% and 10.6% in the previous years.
David Wagner, VP of Research at Computer Economics notes that larger companies are actually increasing their outsourcing, while small and midsize companies are cutting back. The smaller companies are now making better use of cloud solutions and so have fewer legacy systems. Without as much infrastructure to maintain, they don’t need as many service providers.
The current trends also see IT outsourcing evolving, and becoming more sophisticated, leading to a more hybrid approach to outsourcing, whereby companies balance in-house competencies with outsourced expertise. The result is a balanced IT structure where each organisation benefits from a bespoke approach to its own IT needs.
5. Outsourcing IT can drive organisational transformation
In a recent survey, 17% of companies said this is true – and there are fascinating examples to be discovered.
For example when a British burger chain outsourced their IT, they ended up with virtual interns from around the world. It was a Japanese intern, educating herself about the business, who spotted that many artisan burger customers Instagram their food and suggested creating Instagram kits at each table to encourage this activity.
The result: a 24% increase in online bookings and the ability to cut their advertising budget by 10%. The chain owner says, “Our staff were not natural Instagram users, but through this innovation we’ve all become much more aware of food blogging and how to use social media to promote our burgers – it’s been a revolution.”
6. The majority of IT outsourcing is development-based
It’s a real surprise even to many industry specialists to discover that in 2017, 64% of IT outsourcing was actually in software development, rather than in direct service and support.
This shows that IT outsourcing is a major contributor to innovation and productivity in a wide range of organisations and industries – the days that IT outsourcing simply meant somebody else was hosting your data are long gone.
7. Over one third of businesses are focused on IT security
37% of businesses using IT outsourcing partners are focused on IT security. IT security outsourcing is increasing at the fastest rate of all outsourced functions in terms of the percentage of work outsourced. 48% of respondents in the Computer Economics 2018 survey reported that they will be increasing the amount of security work that they outsource.
8. IT Outsourcing spend depends on your business size
Ok, this might not come as a surprise. The IT Outsourcing Survey 2014/15 showed that while large organisations spend 7.4% of their IT budget on outsourcing, it’s only 4.6% for middle-sized companies and rises to 6.1% for small firms. In 2018, these figures are fluctuating somewhat with large companies increasing their outsourcing and small and midsize companies cutting back.
9. 15% of companies outsource to speed up projects
For many organisations, having an IT outsource partner means they get project work done quicker, which puts them ahead of the game in competitive situations and where referrals are a significant part of their business growth strategy.
10. IT outsourcing is a dynamic field
In the USA last year, 57% of companies increased their use of outsourcing, 34% restructured their outsourcing agreements and 9% terminated an outsourced relationship and brought the function back in-house.
The industry doesn’t sit still and as it evolves, this isn’t likely to change!
If you need to speak to a specialist about outsourcing your business IT, get in touch today and speak to one of our team about your requirements: firstname.lastname@example.org.