Is Outsourcing the Key to Bigger Recurring Revenue Streams?

As an IT solution provider, your customers are outsourcing their IT management to you. But, there are parts of your business you should consider outsourcing, too.

Outsourcing Business

Outsourcing has become one of the pillars of the emerging “gig economy.” Believe it or not, the outsourcing market reached $92.5 billion in value in 2019.

More than 300,000 jobs per year are outsourced in the US alone. In 2020, experts predict that the outsourcing industry could grow up to $413.7 billion.

Business leaders say it’s no longer a question whether you should outsource, but how much. What may come as a surprise to some MSPs is that the latest outsourcing statistics show that 60% of the outsourced work in the US relates to the IT industry, with all signs pointing to an upward trend.

So, what’s the catch? How can your managed services business benefit from this model?

Reasons to Consider Outsourcing Some of Your IT Services

Studies show that the top reason for using this model is cost-efficiency. Aside from reducing costs, outsourcing can also help with freeing up your in-house employees or infrastructure. Likewise, outsourcing provides companies with an opportunity to hire experts in a specific sector.

At the same time, the economic paradigm is shifting towards a “sharing economy.” What this means is that IT businesses are transitioning to models that offer a sustainable income through an extended period. More and more enterprises realize the importance of periodic service charges. Thus, this trend has wide-ranging consequences on the industry.

Of course, these long-term strategies require that you maintain customer engagement throughout the subscription period.

In short, subscription models are becoming the foundation of the IT industry. For that reason, every IT solution provider should consider implementing these models.

What Type of Services Can IT Providers Outsource?

While there are lots of services and business tasks that can be outsourced, IT companies predominantly outsource database administration and customer service activities. For instance, technical support and helpdesk functions are often transferred to a third-party entity.

Likewise, remote monitoring and network management are near the top of the list. Companies outsource these tasks either because they lack expertise or because they’re missing the necessary tools to do it themselves.

With that said, some corporations also outsource training or even recruitment, and plenty of businesses use third-party firms to deal with security management and remediation issues. The same goes for disaster recovery services.

Last but not least, many IT corporations outsource application development. What’s more, a vast majority of software solutions in the IT community are a product of outsourcing policies.

The Verdict

Whether you lack a technical skill or area of expertise, your customer needs help with, or you want to save your technical resources for more profitable opportunities, outsourcing can be an excellent option. Not only can you expand your overall offerings, but you can boost your recurring revenue and optimize your business operations at the same time.

However, it’s imperative to look for reliable vendors and only collaborate with trustworthy partners. Even though they’ll be doing the work, your customers are trusting you to take care of their business needs and keep them up and running.

Tamara Backovic

Content Specialist at Pizza addict, comic books and fantasy enthusiast. When I leave my basic nerd cocoon, I like to be in the know about the latest trends, and struggles, of the startup phenomenon and contribute to the wonderful tech community.