Tech Outsourcing: What to Outsource and What to Keep In-House
Outsourcing is a proven strategy for tech businesses to optimize operations, cut costs, and improve efficiency. External specialists provide access to expertise that a company might not have internally. However, not all functions are equally suited for outsourcing; some are best managed in-house to control core business areas and sensitive information. Additionally, outsourcing can introduce risks such as communication challenges and dependency on external providers.
Therefore, it’s crucial to carefully consider which functions to outsource versus those that should be retained internally. Let’s explore the key areas where outsourcing can be beneficial and might not be the best option.
Functions Ideal for Outsourcing
1. IT Support and Infrastructure
IT support and infrastructure are essential functions but are also very resource-intensive. Smaller businesses can’t always afford to keep them in-house, especially if they need round-the-clock access. Outsourcing IT support and infrastructure is a reasonable solution and typically cheaper.
In addition to cost-effectiveness, outsourcing IT support and infrastructure gives businesses unlimited access to expertise. Unless you have a large company, you cannot have an in-house team as competent and diverse skillset-wise as a business that specializes in IT support.
2. Software Development
Software development is one of the core functions of tech businesses, which explains why many are reluctant to outsource it. However, keeping it in-house is expensive, as is IT support and infrastructure.
What’s more, outsourcing software development increases the business’s flexibility and reduces the average time to market. Scaling is quicker and easier when it doesn’t require months of hiring, which is a massive competitive advantage in an environment as fast-paced as the tech industry.
3. Customer Service
Customer service is central to customer satisfaction and loyalty, one of the most critical business functions. However, most tech businesses don’t need an in-house customer support team.
Outsourcing customer support to companies specializing in it — such as SupportYourApp (https://supportyourapp.com/) — offers affordable round-the-clock, multilingual support. It’s a chance to save costs while improving quality, a rare combination.
4. Digital Marketing
Some tech companies, especially the newly created ones, treat digital marketing as an afterthought, but that’s a big mistake. Marketing builds brand awareness and drives growth, so it needs to be done well.
The problem is that a comprehensive digital marketing strategy requires various advanced tools and specialized knowledge. A small business rarely has all the necessary resources and sufficiently diverse in-house expertise, so outsourcing marketing makes perfect sense.
5. HR and Payroll
There are several reasons to outsource HR and payroll. First, compliance is a big deal if your business operates or at least has clients in multiple locations. Outsourcing HR and payroll to external providers will ensure your business complies with local regulations and laws, reducing the risk of potential legal issues and penalties.
Other arguments supporting outsourcing — such as efficiency and nearly unlimited access to expertise — also apply to HR and payroll. These business functions are a huge administrative burden; there’s no need to overload internal resources with them.
Functions That Should Be Kept In-House
1. Core Business Operations
A tech company’s core business operations—the most important operations that make up its revenue stream—are the foundation of its value proposition. As a business owner, you need complete control over them to uphold the company’s vision and standards.
2. Product Development and Innovation
Product development and innovation require close collaboration between everyone involved. If you outsource them, there’s a risk that external experts will inadvertently mess up the company’s strategic direction. They don’t have the same understanding of its vision as the in-house team does.
3. Strategic Planning and Decision-Making
There’s hardly a company that would even consider outsourcing its strategic planning and decision-making. These functions rely on internal knowledge and a deep understanding of the company’s long-term vision and goals. Also, in-house teams make decisions and react to the changes quicker, critical for maintaining an effective strategy.
Key Takeaways
Outsourcing is an excellent way for tech businesses to reduce costs, increase flexibility (for example, when it comes to scaling), and achieve a lower time-to-market. It’s a way to leverage external expertise while controlling core operations.
That being said, not every business function can and should be outsourced. IT support and infrastructure, software development, customer service, marketing, and HR and payroll can benefit from outside expertise. In contrast, core business operations, product development and innovation, strategic planning, and decision-making should be kept internal.
