IT Outsourcing for small businesses: How do you do it?

IT Outsourcing for small businesses

According to a Clutch survey, 80 percent of small businesses in the United States intend to outsource their IT functions to reap a variety of benefits. However, in order to fully realize the potential of IT outsourcing within small businesses, you must first understand appropriate IT outsourcing models, how to successfully implement them, and how to avoid common pitfalls. Lotus QA will provide you with an in-depth guide to IT outsourcing for small businesses in this article.

Why do small businesses need to outsource their IT functions?

There are numerous reasons for a small business with a limited budget and a small number of employees to outsource their IT functions. Among these reasons are:

  • Cost savings 
  • Opportunity to consult and collaborate with subject matter experts 
  • More time to focus on core business functions
  • Adaptability
  • Increased business growth through IT outsourcing

Cost savings 

The primary reason for the popularity of IT outsourcing among small businesses is cost reduction. Because of the lower overhead offered by IT Outsourcing, your company can have an outsourced team work on your project without spending money on recruitment, utility, office expenses, and employee benefits.

IT Outsourcing for small businesses - Cost reduction
IT Outsourcing for small businesses – Cost reduction

Because of geographical pricing, the labor cost is even lower in the case of offshore and nearshore IT centers. Hiring a software engineer in the United States, for example, would cost approximately $157,570 per year, including taxes. The cost of using an outsourcing vendor, on the other hand, is reduced to $50,000 per year. This includes the operational costs as well as the benefits.

The additional tools and infrastructure also contribute to the cost savings. The tools and systems are provided at an all-inclusive price by an IT Outsourcing vendor, which can save you a fortune.

Opportunity to consult and collaborate with subject matter experts 

The assistance of experts in the field is critical for the growth of a business. However, unlike large corporations that have the reputation and resources to hire IT experts, small businesses have limited hiring resources.

IT Outsourcing for small businesses - Subject matter expertise
IT Outsourcing for small businesses – Subject matter expertise

As a result, rather than investing in a time-consuming and costly recruitment process, many small businesses have turned to IT outsourcing for assistance. This provides these businesses with the opportunity to gain access to subject-matter expertise, leverage knowledge and ability, and thus improve their IT functions.

More time to focus on core business functions

When you outsource the thing you don’t know and the thing you’re not good at to a supplier, you’re no longer bothered by the mundane and complicated tasks. You now have more time to concentrate on your core business. You now have the time to focus on what you know while delegating the rest to experts in their fields.

As a result, IT outsourcing in this case has assisted the company in increasing work efficiency.


Small businesses have a greater need for short-term and temporary workers, which increases the demand for flexibility. In fact, 33% of small businesses outsource to gain access to flexible resources. You will not have to deal with the hiring and contracting processes as a result of this.

IT Outsourcing for small businesses - Flexibility
IT Outsourcing for small businesses – Flexibility

Another important feature is the flexibility with which the outsourcing team can be scaled. Because the trajectory and business needs of a small business can change within a day, flexibility in IT outsourcing will be more convenient for you than an in-house team.

Increased business growth through IT outsourcing

Scaling and expanding may be the ultimate goal for small businesses. According to Clutch, one-fifth (19%) of small businesses with 251 to 500 employees use outsourcing primarily to scale their business.

Working with an IT outsourcing vendor has given the company better access to more customers in a wider geographic area. Assume you own a retail chain. You want to hire a group of software developers to work on an application that will allow you to start selling online. By expanding your IT department, you are now exposing your company to greater e-commerce opportunities.

2. The best IT outsourcing models for small business

Each outsourcing model has advantages and disadvantages. The most important thing is to know exactly what you expect from the IT outsourcing team.

  • If your IT functions are only going to be needed for a short period of time (less than two years), it’s best to go with a more time-flexible option: Staff Augmentation. With this model, your company can save money on recruitment, payroll services, and project implementation. Staff augmentation is also a very scalable solution.
  • If you already know what you want and have a budget for it, you should create a project-based model.
  • If your company wants a team of IT experts to work solely for it, it is best to have a dedicated team that handles all IT operations.

3. Six tips for small business IT outsourcing success

IT Outsourcing for Small Businesses necessitates strategic planning in order to be successful. Because the scope of work and operations in small businesses differ from those in medium and large businesses, there are some considerations to make.

Learn about your expectations

A small business does not have the luxury of experimenting with IT outsourcing. In fact, they are working with a limited budget, which necessitates careful consideration of what they hope to achieve from the project.

Small businesses must understand the project’s objectives and goals in order to know what to expect from IT outsourcing. These must also be broken down into smaller phases, such as requirement analysis, planning, execution, and reporting.

Negotiating reasonable service level agreements (SLAs) is critical to ensuring that both parties have the same expectations and understand the consequences of failing to meet them. The metrics that will be used to measure performance and how they will be reported should also be defined in SLAs.

Prepare carefully for the project’s checklist

This checklist should include:

  • What kind of expertise is required
  • What security process and assurance methods are to be applied
  • What communication process and platform to have
  • What technological feature is to be covered
  • What IT outsourcing model is for you
  • Consider biddings from different providers

You should compare bids from multiple providers to get the best price. For example, if you want to outsource your data center, you should approach three service providers and inquire about their offerings. Choose the option that best meets your needs and fits your budget.

Because you lack IT experience and expertise, learning more about the service offerings can help you gain a better understanding of the situation.

Begin with a small trial run

A small business can reduce the risk of working with an IT outsourcing vendor by first conducting a small trial. In this manner, you begin your project with a limited scope of work and a clear set of objectives and deliverables. The outcome of this project may serve as an indicator of their future competence and performance. This method will allow small businesses to “test the waters” and gain experience with IT outsourcing.

Ensure team integration and communication

Again, due to a lack of experience, small businesses may struggle with integration and communication. However, in the world of IT outsourcing, these two characteristics are of the utmost importance. A good communication process can always improve your IT project because both the vendor and the client are now part of a cohesive unit working on the same project. Everything is communicated and handled harmoniously with few or no barriers.

IT Outsourcing for small businesses - Integration and communication
IT Outsourcing for small businesses – Integration and communication

Make the work process easier to understand.

A small business’s working process differs greatly from that of a large corporation. A small business does not have enough personnel or time to follow through on every single step of legal matters and other trivial matters. A large number of contracts, agreements, and documents make the outsourcing process appear difficult, which you should avoid at all costs. To accomplish this, your company should consult with the vendor to see if there is a way to simplify the work process to the core, so that neither party has to get involved in the lengthy and timid details. All of this is done to ensure that your project runs as quickly as possible.

4. Some common mistakes you must get rid of

IT outsourcing for small businesses is a difficult task. There are a few common blunders you should avoid at all costs if you don’t want your IT functions to fail.

Allow cost-cutting to be the deciding factor.

The lowest price does not always imply the highest quality. Sometimes a vendor will offer you a low price because they lack the resources to provide competent services. Don’t sacrifice quality for a lower price. The cost of repairing the problems caused by poor quality work may be much higher than the money you thought you could save. When deciding to outsource, look for cost-effectiveness.

IT Outsourcing for small businesses - Consider bidding
IT Outsourcing for small businesses – Consider bidding

Go loose with management

Small businesses are unlikely to have management experience with an IT outsourcing team. They do not have the personnel to manage the project, nor do they have a clear management process in place to work on it. This type of lax management can have serious consequences if the vendor slacks off and derail the project with incompetence. Operations must be closely monitored so that any fraudulent activity can be dealt with immediately.

Not think about a vendor’s communication capabilities.

Communication is one of the most important aspects of a successful IT Outsourcing project. However, small businesses, for the most part, do not prioritize it. It is extremely difficult to keep up with updates, changes, and requirements in your project without effective communication. With just one communication issue, the entire outsourcing project can derail and fail.

5. Begin with Lotus QA outsourcing for small businesses.

IT Outsourcing for Small Businesses can help you scale and deepen your IT functions. Lotus QA’s goal is to assist you in achieving successful digital transformation at a reasonable cost, with expertise, and flexibility.

If you are interested in IT outsourcing for small businesses, you can contact Lotus QA expert for more information:

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