IT Managed Services: Managing Risk, Reaping Rewards


We blogged previously about some of the advantages of outsourcing your information technology services: more manageable and predictable costs, less downtime and greater productivity, more secure systems with fewer distractions from your core business, better physical environment for your IT systems, and more.

Some of our clients have reported productivity gains of up to 20% due to the ability to focus on their core business without interruptions caused by issues with their information technology. However, the decision to outsource your information technology to a managed services outsourcing firm is a big decision that can carry with it some risks.

In this post, we’ll discuss what some of those risks are, and how can they be managed to reap the greatest rewards from your decision to outsource.

Risks of Outsourcing Information Technology Services

Although outsourcing information technology services turns out to be the right choice for many companies due to the advantages outlined above, there are also some areas of risk that you should consider carefully when making your decision to outsource to an outside firm. These risks are rare, but it’s important to know what they are so that you can make them part of your decision making process.

Some of the risks that companies should consider as they decide whether or not to outsource their information technology functions can include:

Delays – Many believe that an in-house IT team is more motivated to perform their duties quickly and get your systems running again, than an outside firm that doesn’t have to “live with” the consequences.

Lower Quality – An oft-cited concern around outsourcing IT functions is that an outside vendor doesn’t have enough “skin in the game” to ensure that quality is a top priority.

Confidentiality – Confidentiality of your important business information is another concern companies frequently have when considering outsourcing their information technology services.

Loss of Control – The concerns about delays, quality and confidentiality could just be boiled down to one simple idea: worries about loss of control when you outsource an important function to an outside firm.

Long contract lock-ins – Many outsourcing companies may require you to sign a yearly contract, which makes it more difficult to react flexibly to changes in the needs of your business.

Negative impact on morale – If the decision to outsource leads to an employee losing their job, it can have a negative impact on others in the organization. However, for most small and medium size businesses that don’t have an actual IT function, outsourcing the IT responsibilities can actually raise morale by removing a burden for which staff members are not properly trained or experienced.

How to Mitigate the Risks

Most of these risks can be eliminated or managed by following a few simple steps:

Do Your Due Diligence: To ensure you choose a firm that can deliver the highest quality and fewest delays, be sure your IT outsourcing firm is qualified to handle your needs, and check references to see if they have a positive reputation for timeliness and quality.

Work with a Local Firm: If quality, timeliness and loss of control are a concern, working with a local firm is an excellent way to retain as much control over these factors as possible. Local firms depend on their reputation and references for business success, and may be more motivated than a larger or overseas firm to ensure you are completely satisfied with the service you receive.

Understand Your Contract: Thoroughly review the contract to ensure that you understand what services will be provided. Many times, managed services outsourcing firms offer more than one service level. If this is the case, make sure you understand your specific plan. You should also discuss with your account manager what the exit plan is for either poor performance on the outsourcing firm’s part, or if your business circumstances change.

Communicate the Change: Communication is an essential part of managing any change to your business, and the decision to outsource your IT is a very important change that should be managed carefully. Make sure employees understand how to communicate issues to the outsourcing staff, and if any staffing changes result from the decision to outsource, be sure to handle these sensitively.

The decision to outsource your information technology services is a big one that can make a huge difference to your company’s bottom line.

Are you considering outsourcing your IT to a managed services or outsourcing firm? Leave us a message below about the risks that most concern you and how you plan to manage them.