Outsourcing – know your options

Dawie Bloomberg, The Webcom Group
Dawie Bloomberg, Business Services Director at The Webcom Group, proposes different scenarios for IT outsourcing that might just give organizations better ideas than the cloud computing option.

Cloud computing is the latest buzzword to hit the IT industry the world over. However, due to connectivity and infrastructure issues locally, this model has been slow to take off, as cloud applications tend to be bandwidth intensive and South Africa’s networks have not been able to support them.

However, cloud computing is only one type of outsourcing of IT services, and there are a number of other models that could be more applicable in the local market, including full outsourcing, co-sourcing, and managed and hosted services; each of which offers different business and strategic benefits.

Full outsourcing. This scenario involves completely handing over control of the entire IT environment to an outsourcing provider, from the desktop to the network through to connectivity. The client does not have to manage the complex IT infrastructure and places the implementation, maintenance and control of the environment in the hands of a vendor.

This model is particularly useful for small and medium enterprises (SMEs) as it removes the need for them to spend large amounts of capital outlay when deploying, maintaining and upgrading their IT infrastructure. It also gives smaller enterprises access to a wide range of specialized skills that they could not afford to hire on an in-house basis.

The main benefits of this scenario are significantly reduced IT cost, access to a range of skills and resources, and reduced lead times when implementing or maintaining, as the business only needs to deal with one supplier. The relationships that outsource vendors have with their suppliers can also be leveraged, as they can often get reduced costs and pass these savings onto the client.

One thing to bear in mind is that when looking for an outsource vendor, a business needs to ensure they can deliver as promised and support the organization’s requirements. Otherwise an enterprise may find itself locked into a contract with a supplier that cannot deliver, causing major problems for the business as well as additional expense.

Co-sourcing. The co-sourcing model involves having some internal capabilities and resources and then outsourcing one or several aspects of the IT environment. This may be useful for organizations that have a certain level of skills, but need to bring in specialized resources for certain tasks, or for businesses that have very specialized skills and wish to outsource the more labour intensive tasks such as desktop support. This scenario is well suited for medium to large businesses that have some in-house IT resources and wish to outsource others.

Co-sourcing enables organizations to reduce head count in terms of in-house IT resources, as well as better utilize skilled resources when and where they are needed while the rest of the IT work is covered by an outside vendor.

When using this model, however, it needs to be ensured that there is no overlap in terms of skills, as using both in-house and outsourced resources for the same tasks is unproductive and inefficient. The process also needs to be well managed to prevent breakdown in communications between the teams resulting in slow response and resolutions.

Managed Services. Managed services take place on the infrastructure side. The outsourcing supplier will provide technical expertise in areas that are required to be up, running and available at all times, such as data centres, networking equipment, servers, backup and so on. The vendor will provide 24/7 monitoring of these environments and proactively fix problems to prevent downtime.

This model is ideal for large enterprises that cannot afford downtime and the risks and cost associated with it. There is also a cost saving aspect as the company does not need to purchase and maintain expensive monitoring equipment and software. There is a reduction in risk resulting from downtime and access to specialized skills.

This type of outsourcing requires careful consideration, as valuable processes are handled by the vendor. Businesses need to select the right partner – if an unreliable outsourcer is selected it could cause large and costly problems for the organization.

Hosted services. Hosted services may be Software as a Service (SaaS) or hosted hardware services. This model offers a variety of services to businesses as a hosted option, meaning that the organization ‘rents’ the service from a provider that has the infrastructure. This means that there is no need for large capital outlay in order to take advantage of the services.

Hosted services are useful to any size business depending on the organization’s needs. Some examples of hosted services are website hosting hosted email environments and application services.

The major benefit of this model is a major reduction in capital outlay, and the ability to run IT infrastructure through operational expense instead of capital expenditure. It is also a very flexible solution that can be implemented on demand. The possibility exists to have the entire environment hosted, which would be a good option for businesses that have a large mobile workforce, allowing the business to reduce office size and save money.

Once again it is necessary to select the right supplier to ensure quality of service. It is also important to bear in mind that hosted services are entirely dependent on third party connectivity suppliers so when fixed ADSL lines go down the quality of service may be affected

Outsourcing of IT services has many applications and many different models that can provide a host of benefits to businesses of all sizes. With so many different models to choose from, an organization should select the option that best suits their business model.


  1. Nice post and well explained. Our experience has been that CIO’s and companies delve into outsource agreements very quickly without considering how they plan to measure and manage SLAs. It’s a key component to control, thus avoiding service degradation and getting what you paid for…. and PLEASE don’t let you’re outsource partner mark their own homework!!!!

    (Your comprehensive ability to police SLAs, and manage infrastructure will improve staff efficiency and increase productivity!)

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