Global outsourcing is growing like never before, with the United States at the forefront, outsourcing around 300,000 jobs yearly. In addition, two out of three US businesses rely on external vendors to handle at least one department.

Information technology (IT) stands out as one of the most outsourced functions worldwide, growing by 8.48% annually. By 2029, the IT outsourcing market is predicted to soar to USD 812.70 billion, with the US continuing to be a major revenue driver.

Companies are eager to outsource the following IT functions:

• software application development and maintenance;
• data center governance;
• IT infrastructure services;
• technical helpdesk;
• network solutions; and
• systems integration.

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Case study: Slack’s strategic outsourcing success

IT outsourcing isn’t just about cutting costs anymore. Chief Information Officers (CIOs) are turning to BPO vendors who offer not only deep technical ability but also the strategic insight and agility needed to thrive in a complex, rapidly changing landscape.

When Slack launched in 2013, it had only four employees. To scale and refine their platform’s visual design, they turned to an outsourcing company. This strategic decision led to the development of the Slack experience we know today. In 2023, Slack boasted 32.3 million daily active users and over 1 million subscribed organizations, showcasing the power of effective outsourcing.

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How to turn IT outsourcing into a strategic decision

Slack’s case proves how powerful outsourcing can be. How can CIOs, whether they’re leading a massive or lean team, replicate this kind of success?

When making the decision to outsource your IT process, remember that it requires careful consideration. When selecting the right BPO partner for your firm, you must scrutinize a range of factors. Key considerations include the impact on information security, business continuity, quality and productivity, finances, and alignment with your company culture.

Below are five critical factors to consider when making IT outsourcing decisions.

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1. Guarding your data

When working with a BPO firm, CIOs should examine how information is transmitted, stored, and shared. When multiple suppliers are involved, consider the volume and type of data they each handle and how often data is processed. As data volume increases, so do the security risks, especially when dealing with financial or personal data.

Nick Espinosa, founder of the agency Security Fanatics, emphasizes the gravity of these challenges in his TED Talk, where he outlined the five laws of cybersecurity. He expressed, “If there is a vulnerability, it will be exploited,” followed by “Everything is vulnerable in some way.”

Today, IT organizations need robust data protection measures to stay safe from cyber threats. They must be thoroughly knowledgeable about different security standards to ensure effective protection. Here are six best practices:

• Conduct site visits. Visiting high-risk vendors in person allows you to fully grasp their data protection measures and find potential vulnerabilities.
• Regular security audits. Regular audits ensure that your providers follow established security protocols and support essential certifications like ISO 27001, PCI DSS, and other industry-specific standards.
• Develop a comprehensive IT outsourcing contract. It should clearly outline security requirements, expectations, and protocols to keep all parties aligned.
• Define clear roles and responsibilities. This helps close security gaps and ensure accountability.
• Appoint a Chief Information Security Officer (CISO). A designated CISO must oversee and govern the outsourcing arrangement and manage all security initiatives.
• Include incident response provisions. This helps ensure that both parties are prepared to act swiftly and effectively in case of a security breach.

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2. Preventing disruptions

We live in an always-on world where the ability to operate continuously has become a reflection of a brand’s reliability. For global businesses, every minute of downtime comes not only with a financial loss; it also erodes customer trust. And when customers lose trust, they often don’t come back.

That’s why business continuity is vital for long-term success. BPOs that can withstand and recover from disruptions can give IT organizations a real edge, ensuring that your services stay consistent even as challenges arise.

When partnering with an IT outsourcing vendor, make continuity a top priority by keeping these three best practices in mind:

• Develop a tailored continuity and recovery plan. Collaborate with your vendor to create a plan that covers all critical processes, data, and systems to minimize downtime and information loss.
• Set clear service level agreements (SLAs). Define your expectations for uptime, response speed, and other markers. This ensures that you and your vendor are on the same page while improving responsiveness.
• Choose vendors with geographically dispersed operations. Opt for BPOs with multiple centers, teams, and infrastructure spread across different locations. This setup not only protects your business from localized disruptions like natural disasters and power outages but also adds layers of redundancy and failover support.

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3. Avoiding quality and financial pitfalls

Cost reduction continues to drive IT organizations to outsource some of their functions. While more C-level executives are increasing their budgets for outsourcing projects, cutting costs remains one of the top reasons behind these decisions.

When assessing the financial aspect of outsourcing, look beyond your upfront savings. Hidden costs can quickly add up. Consider change request fees, implementation setup costs, currency fluctuations, and contract lock-in periods.

Even more concerning is the risk of poor quality from your IT vendor. Subpar performance can lead to low productivity, extensive rework, and revenue losses—all of which may offset any initial cost savings. To avoid these pitfalls, thoroughly vet your IT vendor to ensure they can meet your quality needs.

Here are three ways to protect your investment:

• Factor in all costs. Consider not only the direct costs but also potential hidden expenses that could arise.
• Conduct thorough due diligence. Study your vendor’s portfolio and don’t hesitate to ask for feedback from their other clients.
• Prioritize quality over cost. Cost savings are important, but quality is even more crucial. Make sure your vendor aligns with your broader business goals even as they change over time.

By anticipating these financial risks, you can ensure that your outsourcing arrangement is both cost-effective and growth-targeted.

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4. Breaking communication barriers

Outsourcing may introduce challenges mainly because of differences in working environments, organizational structure, culture, and even communication styles. One of the most significant adjustments is losing the ability to interact with your team face-to-face, which may make it harder to build strong working relationships.

Another challenge is getting teams to work together harmoniously across varying time zones. Scheduling meetings and ensuring prompt responses can become difficult, which may slow down project progress.

Moreover, maintaining strategic alignment over time can also be tricky especially as your business needs evolve. Keeping your vendor updated on these changes can be a constant struggle.

To navigate these challenges, you’ll need a comprehensive communication plan that spans not only vendor engagement but also employee scheduling and overall management.

Here are four tips to make it work:

• Adopt flexible working models. Consider flexible schedules to create overlapping hours where teams in different time zones can work together in real time.
• Use asynchronous tools. Leverage project management platforms, document-sharing systems, and messaging apps to ensure smooth communication even when teams aren’t online at the same time.
• Schedule periodic site visits. In-person interactions can help build trust, improve collaboration, and strengthen work relationships.
• Hold regular strategic planning and business reviews. Regular reviews can help keep your outsourced operations aligned with your long-term goals.

With a well-crafted communication plan, you can bridge geographical gaps and management challenges, ensuring a productive relationship between you and your BPO partner.

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5. Cultivating culture and boosting engagement

IT outsourcing offers undeniable benefits, but it’s essential to consider how this can affect your company’s culture and your team’s engagement levels.

A vibrant, positive work culture leads to higher productivity. Happy and motivated employees keep your business thriving, so make sure that outsourcing doesn’t affect morale or disrupt your internal culture.

Keep in mind that as you outsource some tasks, your in-house team may feel they’re being replaced or they’re not meeting performance targets. Also, working with an external vendor may disrupt your daily workflow.

Here’s what you can do to integrate your outsourced team seamlessly into your company culture:

• Deliver a unified onboarding experience. Ideally, outsourced teams must undergo the same onboarding process as your in-house employees. This sets the stage for smooth integration and helps everyone understand goals and expectations.
• Share your core values. Introduce your core values to your outsourced team to foster mutual understanding, aligning all efforts toward your priorities.
• Foster collaboration and open communication. Break down barriers between teams by encouraging real-time collaboration. Create channels for open and transparent communication through regular check-ins and feedback sessions.
• Celebrate achievements together. Recognize milestones as a team, whether it’s hitting project goals or completing major deliverables. Acknowledge the efforts of your teams to reinforce a shared sense of accomplishment.

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Leverage outsourcing as a game-changer

In today’s global economy, it’s rare to find a successful business that doesn’t leverage outsourcing in some capacity. That’s because IT outsourcing has become a strategic move that can give tech brands a competitive edge. However, the key to a winning approach lies in selecting the right partner.

Your ideal vendor should bring technical expertise, a proven track record, transparency, and cultural compatibility. A commitment to quality is also crucial, as it ensures that your partner can contribute to your goals.

While outsourcing does come with its set of risks, these can be managed and even turned into strategic advantages with careful planning. With the right approach, outsourcing can become a powerful tool for achieving your goals, improving profitability, and driving sustained growth.

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Partner with Sourcefit

At Sourcefit, we combine technical expertise, a proven track record, and cultural compatibility to turn IT outsourcing into a strategic advantage. Let us help you navigate the risks and transform them into opportunities for growth.

Contact Sourcefit today and discover how our tailored outsourcing solutions can help you achieve your business goals.