What is IT Outsourcing?

Hybrid IT Outsourcing

IT Outsourcing doesn't have to be an all or nothing option, even though some providers will tell you otherwise. Hybrid Outsourcing is a mix of both, where you have a small team that handles the day to day running of your IT systems, and the outsourcing provider handles the management of more fundamental services such as network security, system security, Cloud services, and so on. At GEN we regularly use a hybrid model to manage our outsourcing clients because its the best of both worlds. In some cases we will even supply the staff that work on site permanently at cost, meaning the client doesn't need to even be involved in the hiring, firing, holidays, pension, national insurance, security, etc.

Total IT Outsourcing

Some companies especially post pandemic are scaling back on their physical offices, and moving more services to the cloud, in order to provide their remotely working staff with the features they had in the office. In such scenario's total IT outsourcing makes the most business sense. With an 'everything' IT outsourcing model, the provider will handle everything from onboarding new staff, right through to managing and administering cloud services. There can be maximum savings and flexibility in this model because the client no longer has any physical IT staff to manage. If they wanted to change system from, for example, SalesForce to Suite or Odoo, they can, and quickly without the need to re-train their IT staff to handle the new system.

But its not all flowers and sunshine, there have been some terrible outsourcing decisions in the past, whereby companies have outsourced their entire IT infrastructure to a incapable or incompetent provider, who themselves outsourced all the support to Asia somewhere, and all promises of savings were offset by the massive reduction in productivity experienced. Do not be that company, read on.

Service Level Agreements

When outsourcing any services, no matter the industry, service level agreements are vital. In such agreements you define the level of service you demand, and your chosen outsourcing provider will price accordingly. Never have just one agreement, even though your chosen outsourcing partner may insist or at least attempt to. You must break down your needs into services, and then have an agreement for each. As an example here, and assuming your business is retail, you may require a 1 hour response, 4 hour fix for your e-commerce website but a 24 hours response and 48 hours fix for your email marketing system, or a 4 hour response, 8 hour fix for your inventory system. You need to negotiate these service levels at the outset and tailor them to your specific needs. Do NOT accept a short selection of pre-written service levels from a provider and be asked to choose.

GEN for example have a wide range of service levels that can be applied with fine granular detail, everything from 15 minute response, through to 7 days, but its not all about response, read on.

Time to Fix (TTF)

Given the option, any IT outsourcing provider will tell you that TTF is not a real thing and no one in the industry would ever be contractually committed to a TTF, but this isn't true and some outsourcing providers will indeed commit to a time to fix for some services.

GEN, again for example, will commit to a TTF for a wide range of services, and will achieve them. However, TTF commitments are not cheap, and neither are they a guarantee of a fix, but instead are a commitment to a fix. There are some scenarios where a TTF commitment is simply not achievable, and example being a TTF on a server that is located at the clients site, and the client has a flood or fire.

Hot and Cold

Business continuity is a large part of an IT outsourcing decision, and ensuring your chosen provider is capable of this is a must. If you rely on cloud services as an example, and have a strong service level agreement for that service, which could be an e-commerce site, then your provider will have that service on a high-availability platform, which basically means that there are more than one instance of the site running at any one time, and if one fails, the other takes over.

But what about on-premise (at your site) servers and services? This is where hot and cold spares come into play. A hot spare is a running server that is ready to take over if the main server fails. A cold server is a spare duplicate of the main server that is held in stock ready to be deployed if needed. The service level for hot and cold are obviously different, but the principle remains the same. GEN for example have an entire floor dedicated to cold spares for our clients, and in the event of a failure, our engineers will collect it and take it to site, swapping it completely, or using parts from it to repair the main server, and for this we can guarantee a TTF of 24 hours or less. With hot spares we can guarantee a TTF of 1 hour or less, so why would anyone want cold spares? Well, that comes down to cost, and continuity.

Surely, a hot spare is better than a cold one right? Well not always, let's assume a company has only one site, and a hot spare running ready to take over, and they have a flood or fire. Now both servers are down and a 1 hour TTF is no longer applicable. If we had a cold spare, we could take the latest backup, power it up, restore that, and have it ready at the customers door as soon as they are ready for it.

Yes you can have both Hot and Cold spares, its not a one or the other, but again, its more cost, and these decisions are a critical part of the outsourcing process.

Pitfalls

Making the right decision is vital, and there are a few pitfalls to be aware of when considering an outsourcing provider.

Off-shore

Many companies in this arena are based off-shore, usually in the far east, and they are cheaper and can often undercut on-shore providers, but there are many reasons to avoid off-shoring. (a) The most obvious reason is language, and this can be a real issue especially when trying to communicate issues with them. (b) Reach, being based 5000 miles away prevents things like same-day delivery and emergency support, which forms a critical component of disaster recovery processes. (c) Timezones, which in many cases will be 7 or 8 hours ahead from your own. So many horror stories are told by companies with off-shore support having to wait until the morning for anything to happen.

In-house

Fixed Term Contracts, with punitive exit clauses are common place in this industry, and you must avoid these at all costs. If you've been using a provider for a few years and find their performance is great, then you can move to a fixed term agreement in exchange for a further cost reduction, but never initially. Always start off with a rolling contract, month by month and with clean exit clauses. Any provider confident in their abilities will be fine with this, disregard those who are not.

Consultants

Make sure the company you are outsourcing with, is the company providing the outsourcing. In this market its fairly common to find the company you're contracting with don't actually provide the service, they just sub-contract it to another company or companies. Subcontracting in itself isn't a bad thing, GEN subcontract some services such as same-day parts to a third party when needed, but primarily GEN ARE the provider. Having a reseller or consultant between you and the provider can complicate things greatly, and effectively takes away control of the vendor.

Data Protection & Security

Something often overlooked is the Data protection issue. You are essentially giving a third party access to your company, its data, its employees, and its sites. This alone is a strong argument against off-shore, but even with an on-shore provider you need to consider the risks, and be confident that the provider has the skills and processes to protect your data and your business. GEN for example, have very strict processes for data protection and security, including but not limited to, full traceability tracking; we track who, what and when for every interaction, and with any part that goes to site, or comes back from site, we track exactly where it came from, where it went to, and who had access to it. Our own HelpDesk teams work on computers that reset every 24 hours, and whilst frustrating sometimes this ensures that any data, scripts, files, or anything that's pulled from a client site/server to be worked on, is lost at the end of the day - so many of our competitors don't do this, slowly accumulating client data and dramatically increasing the risk.

Play the Field

The final part of this article, is to never get one quote. You wouldn't do this for gas or electric, and don't do it for outsourcing. Have at least three providers quote you, and then select not on price alone, but on commitments as well.

Be wary of consultancies who will quote you for outsourcing, but then just subcontract the job to another company and take a commission, Deal direct with an outsourcing provider.

Be very wary of providers who are not UK based. Whilst their prices will be keen, their service level will be poor at best. When the chips are down you don't need a language barrier complicating things.

You want the cover you demand, at the cost you can meet. Many providers, GEN Included will be more than prepared to negotiate, so do not just accept the quotation price, but be mindful that with each re-negotiated price there will probably be a service level concession.

Select your IT outsourcing provider wisely and base your decision on the commitments they make, the price they charge, and the reputation they have. GEN for example has been in business 35 years, and has a strong reputation for delivering quality services, but another provider that's been in business less than a year could well under-price us, but who would you choose to look after your business's vital services?