IT outsourcing – which model to choose? | Insight

What can you expect to learn from this article?

1

What are the reasons behind the growing popularity of IT outsourcing?
2

What factors should the organizations consider while choosing the IT outsourcing model?
3

Which organizations can benefit from Managed Delivery Model?

In 2021, the largest number of IT professionals, i.e. as many as 72 percent, were employed by companies that outsource IT services to other entities (according to a Bulldogjob report). This statistic results directly from the fact that outsourcing is a cost-effective solution as thanks to it, organizations reduce costs and improve service quality. With IT talent shortages reported by more than half of companies (according to McKinsey Global Survey 2020), this situation is likely to get worse. So, which IT outsourcing model is the most beneficial?

1

The size of the global IT outsourcing market was valued at $556.67 bn in 2020. This accounts for 77.75 percent of the total outsourcing market (GrandViewResearch).
2

90% of the largest G2000 companies outsourced IT services in the past 5 years (Statista).
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IT outsourcing is no longer just for large companies. 37 percent of small businesses outsource at least one business process (Clutch).

It is clear from the above data that companies, regardless of their size or industry, are no longer questioning the very idea of IT outsourcing. The question now is: which model of cooperation with an external IT company is worth choosing?

A popular option is not necessarily the best solution

One of the most common outsourcing models involves the IT service provider creating a team of specialists with competencies and experience that closely match the client’s needs.

In this model, often referred to as Team Leasing, the IT provider recruits consultants from whom team with competencies that meet the client’s specifications and needs is built. What are the disadvantages of such a solution? Responsibility for service delivery, budget management and risk remain with the client coordinating the project themselves, with access to individual consultants. These are activities that require additional commitment from the client and the time needed for the implementation of the same.

Less risk for companies – more benefits from outsourcing

Cooperation based on the Managed Delivery model can be an effective response to such challenges. In this model, the IT service provider creates a complete team of consultants for the client. This team is assigned to a specific project or product, and its work is coordinated not by the client, but by an IT Delivery Manager, as the IT service provider is responsible for the entire solution provided.

In which companies will the Managed Delivery model work best and what are its key advantages?

Outsourcing in the Managed Delivery model is most effective in large organizations with standardized processes. It helps to ensure easily measurable work results that are in line with mutually agreed indicators and comparable to the performance of other teams. Managed Delivery is designed for long-term cooperation involving the implementation of a project from scratch and the subsequent development of a given product or service. If one team is responsible for IT activities for a long time, it knows the project very well, maintains close contact with the client and understands their expectations and business goals better. A team like this is also a cohesive whole, guaranteeing continuity of work – even if someone leaves the team, the rest of the consultants can easily replace that person and put a new person in charge.

Włodzimierz Jakubczak,

Head of Managed Delivery at 7N

The fact that team members in the Managed Delivery model work closely together under the guidance and supervision of an IT Delivery Manager ensures greater project stability. Knowing the client’s needs, consultants can efficiently propose compatible tools and courses of action, and constantly improve the product or service subject to development. A great advantage of cooperation based on Managed Delivery is also that the service provider is responsible for preparing and updating documentation and transferring the necessary knowledge to the client.

In the Managed Delivery model, by taking over the implementation of the IT solution, the provider supports the business activities of the client who does not have to control the work of the consultant team on an ongoing basis and can devote more time to the implementation of strategically important initiatives and projects. Detailed information is obtained by the client through cyclical reports and the predetermined quality indicators contained therein. The Delivery Manager is responsible for defining activities and communication between the team of specialists and the client. The Delivery Manager is the one who works with their team on a daily basis, ensures that results are achieved and solves the issues within the team.

Managed Delivery can also be the answer to the problems of shortage of specialists and high rates for IT services that many organizations face. They expect comprehensive, thoughtful and competitively priced outsourcing solutions, and Managed Delivery can meet these conditions, especially for long-term projects.