With more and more Australian employers turning to outsourcing their technology departments to specialist and overseas providers, there has been concerns raised as to whether Australian jobs are being lost and if it’s as cost effective as the outsourcers would have you believe.

There have been many debates from advocates on both sides of the argument but here are some of the key advantages and disadvantages of both side of the debate.

ADVANTAGES

Cost management control:

• You have increased visibility of how budgets are spent.  Highlighting the costly areas and where improvements to systems/infrastructure need to be made.
• You only pay for what you need in terms of billable hours.
• You pay for the expertise that you need when required, rather than maintaining salaries for technologists in house.

Minimise staffing levels:

• Staffing levels can be adjusted to suit busy times within the company, as well as not needing to worry about attrition or hiring contract teams.
• Consultants provided by outsourcers should be fully trained and accredited in their subject fields which are particularly helpful when dealing with niche or aging technology.
• Ensuring that coverage is constantly maintained and not becoming reliant on key internal personnel.

Improved quality of services

• Outsourcers can provide 24/7 support (Overseas support functions are often cheaper than hiring shift workers locally).
• Performance reporting can ensure that service level agreements (SLA’s) are met.
• Inter-department relationships within companies are strengthened as an improvement of service is recognised and appreciated.

Focus on core business strengths:

• Companies are able to focus on building the cash generating areas of the business whilst leaving the technical areas to experts.

DISADVANTAGES

Relinquishing Control

• Giving up the responsibility of your technology to a company that has no connection or significant best interest in your organisation.
• Will the outsourcer provide the best solution to your company or just services that are easiest for them to implement?

Lack of “in house” knowledge

• You don’t retain any intellectual property within your business, should the partnership go sour for any reason.

Is the solution as cheap as it’s supposed to be?

• Costs can often spiral if SLA’s are not appropriately scoped.

The fear factor

• Employers of a company that outsource departments can often feel threatened and could think who’s next.  This may create a larger attrition rate across the company.

Increased information security issues

• Data is often the backbone of any company and appropriate measures need to be put into place when relinquishing the management of your company data to a third party.  Do you want all of your sensitive company information managed by someone else?

There are many other factors to think about on both sides of this argument but I hope that these points stimulate your thought process when considering outsourcing your Technology department.