It Organization Strategies

IT outsourcing strategies

Deividas Umbrasas, Darius Kuncevičius

ISM University of Management and Economics

Deividas Umbrasas, Industrial Technology Management, ISM University of Management and Economics

Darius Kuncevičius, Industrial Technology Management, ISM University of Management and Economics

Vilnius

12.12.2016

Abstract

Upon expanding and searching for more efficient, cheaper workforce, businesses started to look for better and less time consuming ways for testing and performing in their environment. In order to meet this demand for easy job completion some possibilities emerged: Pre-made IT Solutions Platforms, Freelancers, IT Service Agencies.  This paper will analyze the case of the IT outsourcing strategies, going deeper into ways how it can be achieved, by stating each advantages and disadvantages. After identifying current capabilities for these businesses, describing possible alternatives, a solution will be suggested.  

Keywords:  IT outsourcing, Pre-made IT solutions platforms, Freelancers, It service agencies, e-commerce, Shopify, digital marketing, Salesmanago, Oracle Marketing, BigCommerce, Opencart, Facebook, A/B split testing.

IT outsourcing

What is IT outsourcing?

IT outsourcing is delegating IT tasks and challenges to a person, business or a platform outside of business internal team. Generally, it’s part of greater business strategy towards expansion and growth.

The reasons why businesses are looking to outsource IT

The most frequent case why businesses are outsourcing the IT is tied to cheaper cost and better time efficiency. Businesses avoid having to create and develop an internal IT sector, train it, manage it, create whole new line of management to overlook the quality of work they do and of course pay regular, expensive, full-time salaries to IT professionals. Outsourcing does save businesses time in a way that people can be put to work way quicker and it doesn’t take long time to assemble the team. In business everybody knows that time equals money and missed opportunity at certain time can even dictate business future.

What kind of businesses can utilize IT outsourcing the best

IT outsourcing is generally suited for small to medium business as most of these businesses can’t afford to have their own in house IT department and cost wise it is cheaper to have external, outsourced IT team. Bigger businesses and especially the ones that utilize IT systems to operate vital parts of their business should develop their own internal IT team. Of course there are some exemptions even between big corporations. For example, if business sees a sudden opportunity, like in the past apps suddenly bloomed, Instagram marketing emerged and now Snapchat quickly gaining popularity as new emerging digital marketing channel and doesn’t have qualified personnel to manage or develop it, it is wise to not miss the opportunity and is advised to find help outside with outsourcing.

Honorable mention should be given to cyber security firms as generally pretty much all bigger businesses and corporations are outsourcing their services as they can provide higher expertise than any in house IT team in this field.

Business Problem for the Task

Middle sized business currently making and selling natural linen products in live shops within Baltic countries is looking to open their own e-commerce shop and do internet marketing to export products to America. Their goal is to test the demand of products and market possibilities there for the future expansion while still mainly focusing on Baltic countries. Due to this they don’t have a lot of resources to allocate towards this e-commerce project till it is not generating income and not proven to bring value to business. Planned testing attempt to integrate new way of exporting products should last 6 months if no positive results achieved. For this reason, they are looking for the best solution to outsource their “Testing” attempt to the market and only to hire a one full-time person with field specific knowledge to manage this project.

IT Outsourcing Possibilities

 There are various solutions in the market for businesses to outsource their IT work. Each of them has their own advantages and disadvantages and are suitable to businesses depending on their size and business strategy. All the solutions and their advantages with disadvantages will be adapted to our case business problem and in this case the work they need to outsource is creating of e-commerce website and doing digital marketing.  

IT outsourcing possibilities

Pre-made IT Solutions Platforms. Currently market is populated with a lot of out-of-the-box-ready solutions to develop e-commerce website and even to use robotized marketing campaigns that operate on algorithms and machine learning that can allocate your resources and do digital marketing for you. In this case there are a lot of suitable choices for e-commerce platform like Shopify, BigCommerce, OpenCart which are very developed and offers amazing quality solutions for the price. Best thing about these platforms is the facts that then ever new kind of trend in marketing emerges you are always on board and don’t have to pay your developer to program it and then set it up. It’s all done for you for small monthly subscription fee. Last alliteration of such case is new emerging trend of Facebook Chat Bots. Just as all businesses are starting to consider investing huge amounts to program their own bots, Shopify already has this published and availed to all its customers for free.

Talking about the pre-made solutions for digital marketing there is also a lot of businesses offering their services like: SALESmanago, Oracle Marketing Cloud and so on. Most of these businesses run on pre-programmed algorithms that does very systematic and not personalized work. While these solutions are very cheap, they generally really doesn’t help businesses to reach good ROI on advertising. They are suitable mainly for very small businesses that only care about selling the product and doesn’t want to deal with hiring or outsourcing personnel to work with digital marketing.

Advantages:

• Pre-made, pre-qualified solutions.
• Speed of implementation.
• Simplicity of use and integration.
• Less workforce needed.
• Generally cheaper than other solutions.
• Generally, stable and safe.
• High quality, not a lot of bugs in solutions and if there are some they are solved quickly.
• Most of the time has subscription based system that allows business to pay each month, smaller amount instead of one big payment and writing a terminated contract.
• Ability to cancel the services any time.

Disadvantages:

• Lack of customization.
• Lack of in-person and personalized support.
• Lack of features.
• Lack of personal adaptation to business goals and internal structure.
• Not the reaching maximum results and efficiency.

Freelancers. Best thing about freelancers are the fact that there is huge supply of them in pages like: www.freelancer.com, www.upwork.com and their prices are lower because of huge competition there. They are a great choice for a business that does not have regular work to outsource and just needs help sometimes. Using freelancers also allows business to create their own team that is outsourced and not to depend on one sole individual or business.

In our case using freelancer would allow us to create custom e-commerce website, personalize it and using A/B split testing to maximize conversion rates. This would cost way more that pre-made e-commerce solution and most likely would have more bugs and errors. Also payments for up-keeping and support from freelancer for future developments should be made.