Technology becomes obsolete — fast! Breakthroughs in technology have not only opened doors for hyperconnectivity, but also convenience and advancements in many industries. Hence, businesses are now faced with a silent obligation to modernize and keep up with technological advancements.
Even employees, including IT staff, are pressured to upskill to meet industry and business demands. It’s not just that, though. From heavy workload to skill and knowledge gaps, IT teams have become overwhelmed and stretched thin with too many things on their plates.
For forward-thinking companies and employees, one strategy reigns supreme: Information technology outsourcing (ITO). As one of the commonly outsourced departments, IT outsourcing has become a vital avenue for business innovation and success.
Whether it’s hiring external experts for a project or bolstering cybersecurity for an extra layer of protection, outsourcing empowers businesses for the future of IT and futureproofs them against sophisticated cyber threats. This article explores ITO meaning, benefits, and use cases. If you’re looking to harness IT outsourcing, read on below.
ITO Meaning: What Is IT Outsourcing
Information Technology Outsourcing, or ITO in short, is when a company contracts with a third-party outsourcing provider in a developing country to perform IT functions and processes, including cybersecurity, software development, IT support, and web hosting. Businesses engage in ITO to cut costs, maintain competitive advantage, and enhance operational efficiency.
Types of ITO Models
1. Onshore ITO
Onshore outsourcing IT is a practice of partnering with a domestic outsourcing partner. Since the client will be working with locally outsourced employees, this strategy eliminates cultural barriers and promotes a collaborative experience that isn’t bound by significant time zone differences.
However, this model may be the most expensive due to the cost of local labor. With labor shortages and limited geographical scope, companies may find it challenging to hire a specialized IT expert within their home country.
2. Nearshore ITO
Nearshore outsourcing is when a company outsources IT processes to external providers in a nearby geographical location. In this case, a US company outsources IT projects to Brazil, Colombia, or Mexico.
Nearshore ITO offers the right balance of lower labor costs, cultural compatibility, and minimal time zone differences. Unfortunately, political instability and a limited talent pool may push companies away from nearshoring IT.
3. Offshore ITO
Offshore ITO is the full package of outsourcing: Cost savings, a wider talent pool, and linguistic and cultural compatibility. It is when a company partners with an external service provider in a faraway geographical location. Hence, if a US-based business offloads IT projects to the Philippines or Malaysia, it’s considered offshore outsourcing.
Offshore outsourcing companies provide round-the-clock support to ensure faster development cycles and project completion. They also employ IT professionals who are proficient in English for seamless communication with clients.
Although this outsourcing model is the most cost-effective among all models, its success lies in clear, regular communication and effective team management.
5 Benefits of ITO: How This Strategy Can Help Your Business Achieve Success
Businesses — even those with existing internal IT teams — benefit from ITO. Below, let’s explore how the advantages of IT outsourcing pave the way for business success:
1. Increased Access to Cheaper Talent
One of the best benefits of information technology outsourcing is increased access to external experts with the same expertise and qualifications you’re looking for locally. But if there’s one thing that sets global talent apart from local hires, it’s cost-effectiveness.
To begin with, the average hiring costs in the US sit around $4,683 per hire. However, this amount can be higher in the IT industry. Let’s look at how much each IT professional takes home in the US per year:
- Software Developer: $48,000 USD-$166,000 USD
- Web Developer: $35,000 USD-$150,000
- IT Support: $25,500 USD-$96,464 USD
- Cybersecurity Specialist: $45,000 USD-$172,302 USD
- Network Administrator: $33,500 USD-$125,861 USD
On the other hand, here’s how much a Filipino IT professional earns for the same roles annually:
- Software Developer: $6,083.18 USD-$8,180.83 USD
- Web Developer: $7,971.06 USD-$10,068.71 USD
- IT Support: $4,405.06 USD-$336,000 USD
- Cybersecurity Specialist: $24,962.01 USD-$25,381.54 USD
- Network Administrator: $9,229.65 USD-$11,327.30 USD
By hiring talent from a developing country like the Philippines, you can save on labor, training, and equipment costs by as much as 70%!
These professionals are also equipped with world-class skills that they acquire and hone from their college education, certifications, and work experiences. This ensures that all outsourced projects will be handled and accomplished by top-notch experts.
2. Less Expenditure on New Technologies and Software Upgrades
While tools and software are staples of the 21st-century business environment, they constantly evolve. Spiceworks found that IT budget increases were planned by more than half of surveyed companies (66%), citing IT infrastructure upgrades as their rationale (52%).
Upgrades come not just with training and consulting costs, but also operational delays and lost productivity. Hence, companies are then faced with two choices: Keep up or get stuck. However, not upgrading also costs businesses lost opportunities for scalability and innovation and puts them at a higher risk of cybersecurity threats.
If you want that much-needed upgrade without the significant capital investment, you can partner with an IT outsourcing company. The best IT outsourcing companies come equipped with the most sophisticated tools — including artificial intelligence and cloud technology — to support your IT needs and integrate into your workflow. This also minimizes learning curves associated with learning a new tool or software.
3. Heightened Cybersecurity
Speaking of upgrades, enhanced cybersecurity deserves its own spot here. According to the World Economic Forum, survey participants were most concerned about the following organizational cybersecurity risks:
- Ransomwares (45%)
- Cyber fraud like phishing (20%)
- Disruptions in the supply chain (17%)
- Insider threat (7%)
Statistics also found that by 2029, companies can lose $15.63 trillion USD due to cybercrimes, up from a 2025 forecast of $10.5 trillion USD. Thankfully, ITO can help minimize your company’s risk of cybercrime.
ITO offshore outsourcing companies boast secure IT infrastructures, deploy on-site security systems, and implement data security practices. They also employ URL filtering systems, firewalls, VPN tools, updated antivirus programs, and end-to-end data protection solutions for safe data access, processing, handling, and storage.
With a round-the-clock IT team that monitors network activity, conducts security audits, and executes response strategies outlined in the company’s business continuity plan, your business is less likely to face downtimes caused by cyber threats.
To further ensure data integrity and confidentiality, ITO companies conduct rigorous employee background checks to avoid insider threats and internal data breaches. Because these providers train employees on cybersecurity, your company will get the peace of mind it deserves.
4. Improved Operational Efficiency
The fast-paced nature of today’s business environment thrives on productivity and efficiency.
Thankfully, outsourcing brings the gift of operational efficiency. Engaging in information technology outsourcing doesn’t mean laying off or firing your entire internal IT team; it’s about augmenting your organization with the right external expertise.
Collaborating with an IT outsourcing partner allows you to build a dedicated offshore team for non-core IT tasks, enabling your in-house staff to focus on core business activities and IT competencies. This eliminates delays in internal IT projects and builds operational efficiency necessary for business growth.
5. Faster Time to Market
As they say, time is money. After all, the first business to make waves in the market can mean gaining a huge competitive advantage over other competitors. What if your company wants to accelerate development and be the first to release an all-new, groundbreaking software? Of course, the solution is information technology outsourcing.
Partnering with one of the best BPO companies speeds up time-to-hire and helps you scale your workforce, significantly cutting out development time without increasing labor costs. Combine round-the-clock external expertise with the provider’s advanced technologies, and you’ll be launching your software before your competitors do.
ITO Use Cases: IT Services to Outsource to A Service Provider
Here are four examples of IT functions to outsource to an ITO company:
1. IT Help Desk Support
If your business develops software or platforms, you’ve probably had your fair share of making users wait as your help desk specialist escalates the issue to a more qualified specialist.
Increased ticket volume is another problem if your company lacks manpower, which further delays ticket resolution. For customers, this screams poor and inefficient technical support.
Outsourcing help desk support to one of the top help desk outsourcing providers or ITO companies can do wonders. Benefits include:
- Tiered technical support for efficient ticket resolution.
- An integrated help desk support system to enhance productivity.
- A scalable IT help desk support team to cover busy seasons.
- Automation and self-service portals for basic technical support.
2. Software Development
Developing software is a rewarding experience. But the work involved in development is rife with challenges associated with software development. On top of unclear project requirements, software developers are grappling with tight deadlines, quality assurance, frequent upskilling, and evolving software requirements.
Partnering with a reliable IT outsourcing partner eases these challenges. Let’s take a look at the perks of outsourcing software development:
- A dedicated software development team for faster completion of software development projects.
- Internal teams can pool their time on their core competencies.
- Outsourced software developers can close skill gaps with minimal financial investment.
- Software maintenance becomes more cost-effective.
3. Web Development
Those stunning websites you see online are all thanks to the hard work of web developers and designers. But when one website looks good on a certain browser (say Google Chrome or Firefox), but looks bad in another, it’s poor cross-browser compatibility.
If we throw in mobile compatibility, website optimization, user-friendliness, and security threats into the mix, you’ll end up with a stressed-out team of web developers. That’s where outsourcing web development comes into play. By collaborating with an IT outsourcing company, you’ll get:
- A scalable web development and design team that meets your project requirements.
- Innovative outsider perspectives on the potential design and content of your website.
- Platforms and tools to optimize website development.
- Unmatched security in every step of the project cycle.
4. Cybersecurity
Whether your customers are using desktop computers or smartphones, cybersecurity should never be taken for granted. Alarmingly, cyber threats have now permeated mobile phones through dubious applications, unsecured networks, and network spoofing.
With the sophistication of cyber threats, businesses are left scrambling for the best cybersecurity talent. Looking at the average salary of a US cybersecurity specialist, hiring one costs a lot of money. Labor shortages at home add to the challenge, as well.
On the other hand, cybersecurity specialists struggle with not just stress, but also with compliance and security management. After all, businesses rely on these professionals to protect and ensure resilience against cyber risks and disruptions.
As mentioned earlier, ITO can bolster cybersecurity. The benefits of outsourcing cybersecurity include:
- Opportunities to work with talented cybersecurity professionals who can provide insights and best practices for addressing cyber risks.
- Access to advanced security solutions that boost your business’s resiliency against security threats.
- Enhanced compliance with security standards, thanks to the deep regulatory knowledge and experience of outsourced cybersecurity specialists.
- Higher cost savings for cybersecurity infrastructure and personnel.
Be KDCI Outsourcing’s Next ITO Client
As companies rely on technology for productivity, ITO has inevitably become the present and future of business strategies. IT outsourcing enables businesses to find qualified IT talent, adopt new technologies, drive innovation, and reallocate resources to high-value IT operations. In the Philippines, there are a plethora of IT outsourcing providers.
The best one is no other than KDCI Outsourcing. Our offshore staffing solutions are designed to harness your business’s growth potential in your industry, whether that’s finance, human resources, IT, property management, or real estate.
From software developers to security analysts, our outsourced IT professionals will handle your non-core IT tasks and fortify your business security framework with cutting-edge cybersecurity solutions.
Ready to outsource your next (or pending) IT projects? Get in touch with our outsourcing team today, and let’s help you get started!
