The Clear & Complete Guide To IT Outsourcing (2021)

IT Outsourcing

Interested in IT outsourcing?

Not every SMB can afford a dedicated team for IT and even large businesses might need that extra IT support to help them focus on their core business outcomes. 

It’s one of the reasons why most companies outsource their IT tasks to dedicated service providers or freelancers. However, IT outsourcing comes with its own set of challenges — especially if you’re outsourcing to a foreign country. 

In this article, we’ll cover what IT outsourcing is along with its different types. We’ll also go over the pros and cons of IT outsourcing in detail. And finally, we’ll highlight the top 3 websites to help you hire excellent IT professionals and get started quickly.

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Let’s get started!

What Is IT Outsourcing?

Information technology outsourcing refers to a business hiring a third-party company or agency to handle their IT needs.

These IT needs can be anything like:

  • Data center and other infrastructure maintenance.
  • Software development.
  • Running technical help desk services.
  • Database administration.
  • Website development process and hosting.
  • Spam protection and other online threat protection.

The main goal of outsourcing IT functions is to get the best possible service at a relatively lower cost. Additionally, as the outsourcing partner performs the task, you’ll be free to focus on core activities that help grow your business.  

However, don’t confuse outsourcing with co-sourcing.

What is co-sourcing?

Co-sourcing involves hiring an external IT company to provide additional technical support to your already existing internal IT team. 

The co-sourced team will provide you with an extra hand to help you in certain IT operations when you’re falling behind.

With outsourcing however, the outsourced team will take over full responsibility for your business’s IT work.

Generally, larger organizations practice co-sourcing since they have the funds for a dedicated IT team and might need a little help from time-to-time when things heat up. This way, whenever there’s a higher workload, they can hire a co-sourced to step-in for added support.

5 Types Of IT Outsourcing

Here’s a quick look at five different types of IT outsourcing services:

1. Offshore Outsourcing

This involves outsourcing your IT functions to a company or freelancer in a foreign country, like India and the Philippines, for cost savings. 

As the costs of living (and salaries) are lower in these countries, you end up paying a lot less than if you had hired someone from your home country like the United States.

And even though it costs less, it doesn’t necessarily mean the quality of work would be inferior as these countries often have tons of talent that specialize in outsourcing activities.

Check out our comprehensive guides on outsourcing to India and the Philippines for more details.

2. Nearshore Outsourcing

Nearshore outsourcing is when you outsource IT-related work to a company from a neighboring country. The idea behind this is that it would be easier to travel and communicate if any clarifications are required.

For example, if you’re based in the United States, outsourcing to Mexico is an example of nearshore outsourcing.

3. Onshore Or Domestic Outsourcing

This refers to an outsourcing arrangement within your own country — either remotely or on-site. It’s an excellent method to avoid communication issues due to language barriers and time zone differences that could crop up when you outsource to a foreign country.

4. Cloud Computing Based Outsourcing

Cloud computing based outsourcing is when you purchase IT related services online. It includes Platform-as-a-Service, Infrastructure-as-a-Service and Software-as-a-Service models.

Here’s a quick overview of each of these cloud computing services:

  • Platform-as-a-Service: services offering the customers a digital platform to run, develop and manage things without having to build and maintain the infrastructure themselves.
  • Infrastructure-as-a-Service: services providing virtualized computing resources over the internet.
  • Software-as-a-Service: services that cover hosting an application online and making it available to the customers.

5. Managed Service Outsourcing

This refers to creating outsourcing contracts with a third-party company for network management functions. The managed service provider offers facilities like firewalls and virtual private networks (VPNs).

The Pros Of IT Outsourcing

It’s clear that outsourcing services is a pretty common activity for most businesses. 


It offers lower costs, better-skilled workers, more flexibility, and even responsive customer service.

Let’s take a detailed look at these key benefits of outsourcing:

1. Reduced Costs 

In most cases, an outsourcing model would be significantly more cost-effective for a business.

Here are two key reasons why:

  • There’s little to no capital investment required for any outsourced resource. For example, you can avoid the upfront cost of servers and other infrastructure, like a data center.
  • Saves a lot of costs that would otherwise be spent on the entire recruitment and training process.

Additionally, you can also hire skilled human resources from developing countries for a fraction of the normal IT cost. For example, you can find a quality offshore developer from India, which can cost you significantly less compared to hiring someone from New York. 

However, while hiring an offshore outsourcing provider, make sure to check their track record and reviews for quality assurance. 

2. Access To A Global Talent Pool

Normally, when you’re hiring locally, you would be limited to talent in your specific region.

However, when you are outsourcing a project to an IT service provider remotely, you can find the best talent from all around the world and hire them to work for you. 

This is especially useful when there’s a shortage of a specific service level or a skill set in your area.

3. Ability To Provide 24×7 Service

Not all of your clients/customers operate in the same time zone as you. That’s why it’s common to receive IT queries or tickets outside of your working hours.

So how are you supposed to provide a quick response to their emails, IT support tickets, or chat questions?


Through outsourcing, your service providers can offer you a dedicated team for round-the-clock availability. You won’t have to worry about hiring talent from around the world — the service provider takes care of it. This way, your IT support can be responsive, 24×7!

4. Added Flexibility

Many SMBs wouldn’t need a specific IT service throughout the year.

For example, if you have a restaurant business, you might need a web developer in the short term to build and launch your website. Then, you might need a professional from time-to-time to take a quick look to ensure things are running smoothly.

In this case, it wouldn’t make sense to hire a web-developer as a full-time or, even, a part-time employee.

A good outsourcing strategy gives you the flexibility to hire and pay for the service when you actually need it. This can make a huge cost difference and increase your business profitability. 

5. Improves business focus

Every IT department needs to be dynamic as the IT industry is always improving with new frameworks and emerging technologies

Normally, you’d need to worry about skilling up your current IT team or, worse, stressing about these IT changes yourself!

Not only is that ineffective since most small business owners aren’t IT experts, but it’ll also take away time and resources from your business processes that actually need it.

The solution?

Let the outsourced IT professionals take care of it while you focus on your core competency to build your competitive advantage.

3 Drawbacks Of IT Outsourcing

While information technology outsourcing is highly popular among successful businesses, it still has its downsides.

Let’s go over the major drawbacks of the IT outsourcing service so you can be prepared to tackle them:

1. Difficult To Monitor

A major problem with hiring external service providers is that they are difficult to monitor — especially when they’re remote.

Think about it.

If you hire a virtual IT support team, how would you know that they are actually billing you for their work hours?

They could be charging you hourly rates to watch Netflix and there’s no way to know. Luckily, this problem can be easily solved with a robust productivity monitoring software (more on that later).

2. Communication Challenges

Communication is a crucial factor in determining business efficiency.

However, communicating effectively with an offshore outsourced team can be challenging due to language barriers. This can often lead to misunderstandings over projects, which ultimately affects work quality.  

To tackle this, you might want to stick to mostly written modes of communication like emails.

However, using only emails as text communication isn’t a good practice. We’ll go into why a little later in the article.

3. Possible Quality Issues

Cost-effectiveness is great but not when it comes at the cost of quality of work.

To avoid running into such issues, you’d need to be extra careful during the hiring process.

Here are a couple of things you’d want to keep in mind:

  • When hiring a company/agency, make sure to do a thorough background check and look at the services they have previously offered to other businesses.
  • When hiring a freelancer, hire from a reputable portal and check the reviews of their IT services.

How Do You Effectively Manage Your Outsourced Help?

Sure, technology outsourcing comes with its own unique challenges. 

However, you can easily overcome most of these by using the right tools. 

Here’s a quick look at three tools that’ll make managing outsourced IT service a piece of cake:

1. Productivity Tracking Tool For Accurate Billing And Productivity Management 

How do you ensure that your outsourcing partner is only billing you for productive hours spent on your project?

Simple: you use a productivity tracking tool like Time Doctor.

What is Time Doctor?

time doctor

Time Doctor is a powerful productivity tracking software used by large companies, like Verizon, as well as small companies, like Firehouse Subs, to efficiently manage in-house or outsourced teams. 

With most teams transitioning to remote work due to the Coronavirus pandemic, Time Doctor is an essential tool to help remote teams and businesses stay productive.

Time Doctor allows you to:

  • Easily track idle and productive time for IT professionals or your remote employees.
  • Analyze the productivity of  IT professionals through easy-to-understand, detailed reports.
  • Bill your client accurately using detailed reports
  • Ensure that your outsourced IT staff is actively working during work hours.
  • Pay your hired professionals with powerful payroll management features.
  • Track productivity across apps using various integrations with tools like ClickUp and Trello.
  • Monitor time anywhere using a powerful Android mobile app.

Additionally, you can monitor web and app activity during office hours to ensure your hired help isn’t binge-watching shows during work time!

2. Communication Tools For Effective Collaboration

Effective communication can be a challenge — especially when you’re dealing with outsourcing services.You need to ensure that the hired IT staff can communicate well with you and your team for your business process to run smoothly.

However, solely relying on emails isn’t going to solve all your issues. For example, it’s very difficult to have task-specific discussions on emails since professionals often get confused about what you are specifically referring to.

What you need is a business messaging software like Slack.

Slack can help you with :

  • Message channels to stay focused and keep your workspace organized. 
  • Message threads for having task-relevant discussions and better collaboration.
  • File sharing capabilities to share task-relevant docs or training videos with your IT professionals.

But that’s not all. You’d also need other key communication solutions like:

  • Video conferencing tools to host virtual meetings for video discussions and instructing your IT hires. Some effective video calling tools include Zoom and Microsoft Teams.
  • Cloud file storage and collaboration tools, like Google Drive and Google Docs. Not only do they ensure secure data storage, but they also support real-time team document collaboration features.  

3. Project Management Tools For Easy Management

A powerful project management tool is a must for any modern workforce.

Let’s see why you need one:

  • You need to assign tasks in a systematic way.
  • You need to set targets, milestones and deliverables for your outsourced staff.
  • You can’t call your outsourced team multiple times a day for status updates.

An excellent project management software can help you with all of that and more!

For example, most project management tools can help you with prioritizing tasks, setting goals, tracking project progress and much more.

All you need to do is pick what suits you best from the tons of project management tools out there like ClickUp, Jira, Trello.

Note: Time Doctor can integrate with most project management tools to ensure your outsourced team stays productive while working in them.

Top 3 Websites To Outsource IT Professionals In 2021

Here’s some good news and bad news.

The Good news: There are a ton of options to outsource from.

The Bad news: This can make vendor selection confusing, as not every outsourcing company offers the quality you need.

Luckily, we’ve handpicked the top vendor sites for your outsourcing needs:

1. Toptal


Toptal is a high-end network to find vetted IT developers. This outsourcing provider has top-ranking software developers and project managers who have worked for huge companies like Apple and Space X.

2. BairesDev


BairesDev is an offshore development company focussing on providing high-performance tech solutions. This IT outsourcing vendor offers software development outsourcing services from the US and Latin America. 

3. N-iX


It’s an outsourcing provider from Ukraine, having a great reputation for offering quality IT professionals. This provider offers technology services in fields like business intelligence, data science, and cloud solutions.

Final Thoughts

IT outsourcing is one of those important activities that you simply can’t overlook.

Not only does it save you tons of money, but it also lets you focus on your core tasks — helping you grow as a business.

That’s why it’s crucial to hire your IT professionals carefully

And while managing your outsourced help can be challenging, with the right set of tools, it’s a walk in the park.

 Additionally, tools like Time Doctor can help you boost your entire team’s productivity, not just your outsourced professionals’. This way, both your on-site and outsourced staff will be performing at levels you’ve never seen before! 

Sign up for Time Doctor’s 14-day free trial to boost your team’s productivity today.

Try Time Doctor

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