IT Outsourcing: Concept, Future Prospect, and Trends in 2024

Written byIkhsan Hanif

24 Jun 2024

IT Outsourcing: Concept, Future Prospect, and Trends in 2024

In today's digital revolution era, many companies have realized the importance of IT professionals through IT outsourcing services to enhance their business operational tools.

This awareness stems from the organization's limitations in having skilled human resources ready to manage IT aspects when needed.

In this article, SALT will delve into IT outsourcing, its intricacies, and how it will impact the future of businesses and industries, especially in Indonesia. Read on to learn more!

In the business world, we know that "Outsourcing" is a strategy companies use to delegate job functions, either partially or entirely, to a third party.

In this context, IT Outsourcing involves delegating tasks related to developing and managing a company's IT sector to a third party, such as platform development (website & application), software, systems, or maintenance and repair of other IT infrastructures.

The scope of IT outsourcing services can vary, depending on the resources available from the outsourcing company. Generally, the services encompass Development, Management, Analysis, Maintenance, and Support.

So, who are these IT outsourcing services for?

IT outsourcing services are offered to companies facing various limitations, such as:

  • Limited internal resources to manage IT infrastructure effectively and efficiently
  • Limited expertise for specific IT infrastructure development and maintenance needs
  • Operational cost constraints, particularly in workforce expenses
  • Limited access to the latest technology
  • Technical limitations allow the company to focus on core business activities

IT outsourcing also comes in various models and types due to the diverse demands, requiring companies to be selective in choosing services that meet their needs.

There are 3 common types of IT outsourcing services: Onshore Outsourcing (By the same country), Nearshore Outsourcing (By adjacent countries), and Offshore Outsourcing (By geographically distant countries).

IT Outsourcing Models

There are 3 common outsourcing models for executing client companies' IT projects:

  1. Project-based Model
    This model assigns specific projects to the outsourcing service provider within a defined timeframe and scope.
  2. Dedicated Team Model
    This model provides a dedicated team to work exclusively for the client company on various ongoing or future projects within a specific period.
  3. Outstaff Model
    This model requires the outsourcing service provider to supply additional resources to the client company, placed directly under the client's supervision.

IT project outsourcing offers several strategic benefits for client companies, depending on the optimization areas within their business.

Here are some general strategic benefits of using IT outsourcing services:

  1. Labor Cost Effectiveness
    By delegating IT project responsibilities to a third party, companies can expedite execution time while reducing operational, infrastructure, development, and maintenance costs, as outsourcing providers typically have more significant economies of scale.
  2. Access to Broader Expertise & Technology
    Utilizing IT outsourcing services allows companies to access expertise, experience, and technology that may not be available internally. This enables them to obtain the best solutions without training or hiring additional employees.
  3. Focus on Core Business
    By entrusting IT system development projects to a third party, companies can focus on their core business activities, making them more effective in determining business strategies and enhancing competitiveness.
  4. Scalability and Flexibility
    IT outsourcing services, like those offered by SALT, can be tailored to the company's specific needs, allowing clients to adjust their demands in line with business growth or changes.

Examples of IT Outsourcing Strategy Utilization by Companies

Outsourcing, particularly in the IT sector, is legal, safe, and widely practiced by companies globally.

Examples of big companies that used IT outsourcing strategies to optimize costs and projects in their business include WhatsApp, Alibaba, and Slack, which outsource platform development at early stages, and also GitHub, which used it as a cost-effectiveness strategy.

While some large companies have successfully used this strategy, choosing an IT outsourcing service provider without careful consideration does not guarantee success for your company.

It would be best to consider various factors, such as the provider's credibility, trustworthiness, and the quality of IT talent they offer, as SALT has consistently demonstrated through its Talent Augmentation services.

Here are some examples of client case studies that showcase SALT's expertise:

Discussing the future of IT outsourcing in Indonesia cannot be separated from global developments.

According to data from Grand View Research, the global outsourcing market is projected to reach $525,2 billion by 2030. This indicates that the demand for outsourcing services, such as IT outsourcing, will continue to grow over the next 5 years.

In line with this, the future of IT outsourcing in Indonesia looks promising, driven by key factors such as a growing population with increasing digital literacy and a skilled workforce with relatively lower living costs compared to developed countries.

However, challenges must be addressed to realize the full potential of IT outsourcing in Indonesia, such as the need to enhance IT infrastructure and the threat from global competitors continuously improving their innovation and service quality.

IT Outsourcing Trends in 2024

Considering the global and Indonesian conditions in 2024, several trends regarding the future of IT outsourcing will remain relevant in the coming years:

1. Outsourcing Strategies will Emphasize Strategic Partnerships

The first trend in IT outsourcing is that strategies focus on long-term business partnerships rather than just cost optimization. These partnerships will create value for each organization, such as increased innovation, quality, market penetration, and aligned objectives and growth.

2. IT Outsourcing will Focus on Compliance and Data Security

The rapid advancement of digital technology encourages leaders to strengthen security and compliance regarding sensitive company data. This navigates the second trend in IT outsourcing, where specific roles are needed to maintain system stability and optimal security.

3. Demand for Specialized Skills in Outsourcing

The next trend concerns companies staying relevant with technology advancements, mainly digital technology.

Companies will adopt the latest technology while considering the effectiveness of their strategies, including outsourcing IT professionals with specific skills such as data expertise, security, cloud computing, and more.

4. Challenges in Attracting and Retaining Top IT Talent

An interesting aspect of the fourth trend is IT talent, where there has been a shift in work and cultural practices, especially post-pandemic. Companies must now offer added value to attract talent, such as flexibility and various other benefits.

5. Cloud Technology will Maximize Outsourcing Strategies

The fifth trend is closely related to the increasing development of cloud computing technology. Outsourcing service's potential is increasing, with efficiency, scalability, and cost-effectiveness significantly more optimized than before.

a. What is the Difference Between IT Outsourcing vs Insourcing?

Besides Outsourcing, the business world also recognizes the term Insourcing. Fundamentally, these terms mean:

  • IT Outsourcing means delegating the responsibility of developing and managing IT projects to third parties or external entities.
  • IT Insourcing means internal company parties take over responsibility for all IT operations or projects without involving external parties.

In summary, the main difference between outsourcing and insourcing lies in who handles the project—internal or external parties.

Both have their advantages where outsourcing can be cost-effective and provide access to broader expertise and technology, while insourcing offers more control and visibility over the IT project.

b. What are some Examples of IT Outsourcing Jobs?

There are numerous examples of IT outsourcing jobs covering aspects of Development, Management, Analysis, Maintenance, and Support, such as:

  • IT Developer Outsourcing (Software Engineer, Front-end, Back-end, Full-stack)
  • IT Helpdesk Outsourcing
  • IT Support Engineers Outsourcing
  • Data Expert Outsourcing (Data Engineer, Data Analyst, Data Scientist)
  • Project Manager Outsourcing
  • And many more

c. How do Companies Utilize IT Outsourcing Services?

We know that there are various types, models, and scopes of work offered by IT outsourcing service providers. Therefore, as a guide for companies looking to utilize IT outsourcing services, you should consider these 3 things:

  • The Credibility of the outsourcing service provider, which can be seen from the company's dedication to relevant fields, is proven by the trust of its previous clients.
  • The Quality of IT Talent provided is assessed by how the company recruits and aligns IT talent with the client's needs.
  • The Company's Experience is evaluated by how long the company has been in the field, yielding positive impressions.

One of the leading IT outsourcing service providers recommended in Indonesia is SALT, which has provided IT services to local and international companies for over a decade.

With Talent Augmentation services, SALT strives to deliver the best IT talent through IT Outsourcing, IT Headhunting, and IT Talent Pool to provide the best technology solutions for your company.

With the continuous advancement of technology, the presence of IT outsourcing services, both globally and in Indonesia, holds the potential to keep growing.

By understanding and leveraging the benefits of this service, companies can enhance operational effectiveness and efficiency, allowing them to focus on their core business.

Thus, IT outsourcing is not just a solution for current technology needs but also a pillar for driving business growth in the future.

In line with this, as a Technology Development Partner, SALT Indonesia can be a strategic partner in providing the best IT talent for your company.

Let's explore our various Talent Augmentation services, and embark on your transformation journey with us by clicking the banner below!


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