We recently did two articles, Outsourcing Solutions and Outsourcing on outsourcing and how it can benefit your business.

While the benefits of outsourcing are undeniable, it is clear that outsourcing is not for everyone. The level to which you outsource will largely depend on the laws and regulation governing a country and the nature of your business. If you are dealing with sensitive information, you need to tread very carefully.

So when does one outsource and what does one outsource? What are the drivers that businessmen need to look out for?

The new age criminal

Cyber crime is a major issue in the world today. Nations are setting down cyber crime action plans and standard operating procedures when it comes to responding to a cyber threat. In addition, companies are also spending top dollar on cyber protection and insurance policies.

An interesting article on channele2e.com shows the importance of outsourcing cyber security.

The article points out that in the cases of IT security and disaster recovery, the motivation to outsource is typically not about saving money and more about the skills of the internal staff.

Security risks are changing and growing at an alarming rate, and being up to date with the latest know-how can be a full time job on its own. Outsourcing these tasks makes sense for a company that is having a hard time keeping up with these trends, as can be the case with many smaller firms where technicians are expected to perform multiple functions.

The things smart devices are made of

The article adds that application development is the most-frequently outsourced functions in the study. According to the report, 37% of organizations that outsource this function are planning to increase the amount of work they outsource.

Application development continues to take larger parts of the IT budget, and many IT organizations are looking to optimize internal staffing through the use of outside development firms, that can specialize in creating or improving these applications.

The report shows that not only smaller firms with limited skills are outsourcing, but large organizations have increased the percentage of their IT budgets spent on outsourcing from 6.3% to 8.7%. Small organizations are now spending 7.8% of their IT budget on outsourcing at the median this year, compared to 6.7% last year. Midsize companies have increased their spending at the median from 4.7% to 6.5%.

Driving outsourcing growth

So how much of an influencer is security threats when it comes to driving growth in outsourcing? An article on information-management.com paints an in depth picture.

While organizations are not broadly increasing the number of functions they choose to outsource, they are increasing the amount of work they offload to outside service providers.

The article points out that the percentage of total IT budgets being spent on outsourcing rose from 10.6% in 2016 to 11.9% in 2017, the report said. That represents a major increase as organizations have hovered between 10.2% and 10.6%  for the previous four years.

Finding and maintaining the right skills to meet these threats can be a challenge, Wagner said. Turning to experts to supplement internal IT security skills is a smart choice for most organizations, he said. Other areas growing quickly include disaster recovery and network operations. Like cyber security, these are important areas and require specialized skills that are not necessarily core to the business, Wagner said.

Power in numbers

The article adds that outsourcing is becoming more attractive to all organizations, the study said, but large organizations are growing IT outsourcing budgets the fastest. At the median, large organizations have increased the percentage of their IT budgets spent on outsourcing from 6.3% to 8.7%.

Small organizations are now spending 7.8% of their IT budget on outsourcing at the median this year, compared with 6.7% last year. Midsize companies have increased their spending at the median from 4.7% to 5%.

Hopefully this article, along with the previous articles we published, paints a wholesome picture of outsourcing and how it can benefit or not benefit a company.

In my previous article, we focused on outsourcing and the benefits it can provide for companies. The point of the article was to highlight the issue and to get business owners asking key questions about their business and whether outsourcing certain business functions would benefit them.

Perhaps the key take away from that article was the fact that any business owner approaching this decision must know their business intimately. Just as buying a family holiday home at the coast is a big decision, making key decisions relating to a business that supports a family is equally a significant decision. In this article, we will focus on the how outsourcing helps failing businesses. We will also focus on the types of companies who benefit from outsourcing.

Providing a lifeline

Outside of a franchising, where you are taking over an established brand and a well-known product, being a business owner in the current economic climate can be a tough ask.

One of the biggest killers of business ownership is cost. Spiralling costs affects bottom lines and companies may find themselves spending obscene amounts of money just on cost containment.

This is where outsourcing can offer major benefits. An article on the business.com website showed that with outsourcing, companies can bring in top-quality professionals for a fraction of the price it would cost to hire them in-house. Companies don’t have to worry about obligatory benefit contributions, sick pay, retirement contributions or any of the other extras that pile on top of a normal employee’s salary, and it grants you more flexibility, as you can bring them in as and work arises.

**Access to specialist skills **

The business.com article added that with a limited budget, it’s difficult to entice star employees to join your start-ups or smaller companies. However, outsourcing provides easy access to talented professionals from across the globe at low costs.

Most companies need a marketing person, sales manager, IT technician, bookkeeper and head of HR, but they don’t have the budget or the workload to sustain a full-time, skilled employee.

Outsourcing means that small firms can find the expert assistance they require on a part-time or even hourly basis.

**Stronger team **

The final advantage that the business.com article discusses is the fact that you can build a stronger team through outsourcing.

The article points out that whenever a young entrepreneur asks for advice, they often get told that you can never underestimate the power of working with a team of skilled and passionate people, which means investing a lot of time into recruitment.

GTconsult has seen the benefit of this. Over the past six years, we have been building and cultivating our A Team, a team which provides best quality software consultancy skills and advice to customers to optimise their business processes. While we don’t outsource this function, it is an example of how a strong team that has key skills can benefit a business.  Sometimes outsourcing this function is the only way to access these skills.

IT-Based Solutions

The IT industry is a specialist industry where core skills are hard to come by. An article on thesouthafrican.com shows that outsourcing this function can be a turning point decision for a company.

The article points out that if you take a look at resource centres such as SelectHub.com, you will notice that there is a solution for every business process. Whether you need to tackle HR-related challenges or you want to manage your company’s resources better, you can always find a solution that fit the needs and specific requirements of your business perfectly.

IT-based solutions are leading the charge in this department. Instead of hiring extra employees to do specific tasks, companies in South Africa – primarily small and medium enterprises – are streamlining their business processes with the help of software and pre-built solutions.

Push for Efficiency

The article adds that the big shift towards IT-based solutions and outsourcing began with the need for efficiency. As the market became more competitive, businesses had more steps to gain a competitive edge and stay ahead. This meant doing so much more than cutting costs and streamlining their operations.

Businesses who achieved better efficiency with the help of outsourcing and IT-based solutions were able to lower their overhead costs by a substantial margin. This resulted in lower prices and more leeway when dealing with competitors. At the same time, efficient businesses can allocate the money they save towards marketing and advertising, expanding their reach and bringing their products to more potential customers.

It seems that these solutions are the way forward for small and medium-sized enterprises across South Africa. How can it benefit your business?