Cost of Outsourcing It

Wondering if you should outsource to save on start-up finances?  An entrepreneur wanting to start a business should consider all the cost a...

Wondering if you should outsource to save on start-up finances?  An entrepreneur wanting to start a business should consider all the cost and compare it against his return of investment in order to determine if the business is feasible. So does this mean that one has to do a feasibility study before venturing into a business? The answer is both a yes and no.

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For instance, if you will be venturing into a business that has no available information as to its feasibility in a given location and there are no business models that you can use to start your business, then a feasibility study is called for. However, if you are planning to outsource, you can find helpful information over the internet. Some of them are even based on sound research data and experience.

Business entrepreneurs have different reasons for outsourcing. Gartner, Inc, one of the world's leading information technology research and advisory company conducted a survey of 945 IT professionals in 2006 regarding outsourcing. The research results revealed that there are two types of results that business entrepreneurs look for in outsourcing namely:

  • Expect to see significant cost savings
  • Make their company more competitive in the market.

Looking at it closely, the business enthusiast will basically be more competitive when they get significant cost savings through outsourcing. Therefore, these two types of reasons for outsourcing go hand in hand.
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There are three issues that may pose a challenge to anyone looking to outsource:

Responsibility issue. When you outsource IT professionals, you will be looking for individuals who will provide the information to you. It is up to the owner to implement the solution. This, however, may vary. For instance, if you are selling software products, troubleshooting will need to be addressed by a couple of people. They may not need training on providing solutions, but they will definitely need training in communicating their solutions through phone or chat to clients. On the other hand, responsibility for website coding or troubleshooting an online system or set of programs may be easier for outsourced vendors since they can readily access the software, program or website.

Cost issue. A business entrepreneur would want to save on cost. This is basically the reason he wants to outsource IT vendors or professionals for his business. As a businessman, you may find outsourcing costly if you are left on your own to deal with what the IT vendors cannot do. This should be addressed early on. The contract between you and the IT vendor should be clear and enumerated in a contract. This can also be addressed by proper as well as sufficient testing and filtering of IT vendor applicants or professionals.

Transition challenges. If you are used to running your business physically, where you go to an office and instruct IT professionals what to do or what you expect, you may find telecommuting challenging. If you’re used to showing what you want by being physically present, you should learn to show what you want by explaining them or using online resources to get your idea across.

Outsourcing needs will depend on the type of business that you have. It is recommended that you tread lightly and carefully as well as consider all possible results and be ready with alternative plans should the first one won’t work.


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