6 Potential Risks in Outsourcing IT Infrastructure

Outsourcing for software infrastructure brings a myriad of benefits for your business, but that neither eliminates nor mitigates the risks it brings.  

Majority of these risks have a heavy impact on business, such as under-provisioning or over-provisioning, hardware incompatibility, software incompatibility, network issues and outages, migration issues, downtime, disaster recovery, vendor reliability, and unexpected costs.  

Before we take a deeper look at risks, let’s touch the basics of outsourcing. 

What is IT Outsourcing?  

IT Outsourcing is a business practice where tasks, more specifically IT-related processes, are contracted to third parties.  

It involves service initiation with a technology provider who will handle a range of the client’s business departments. These operations could either form the IT functions in their entirety or tend to discrete, individual IT components. 

Potential risks of IT outsourcing and how to mitigate them 

Working with third-party technology partners isn’t risk-free but preparing for anticipated concerns will be a huge help in the long run. 

Here are a few risks that you will most likely to encounter when initiating an outsourcing relationship. 

1. The Trust Issue 

The way you handle your business processes can make or break your business. Most of the time, business leaders struggle with determining the credibility of their potential outsourcing partner. How can you address this roadblock? 

Solution: 

Perform risk analysis and choose a company based on the following criteria: 

• The maturity of the organization: Consider the company’s length of experience, average project size, and total number of employees. 
• The number of long-term projects and the number of successful projects. 
• The company’s official website, portfolio pages, client reviews, or simply how they present themselves professionally to clients. 
• The company’s ranking on independent review platforms such as Clutch.co and Google My Business. 

2. Lack of Control

If you’re outsourcing to third-party technology partners, you’ll experience a subtle lack of control because you’re relying on a third-party IT provider’s expertise, resources, infrastructure, and skill. You won’t have direct and immediate supervision over what goes on behind the scenes. 

Ideally, this works out for all businesses. But if things go south, you need to do a lot more than find a new vendor and start from scratch. Outsourcing mishaps can eat up time and other valuable business resources.  

Solution: 

The ideal way to avoid this potential obstacle is to establish clear communication on level of control with your IT outsourcing partner.  

3. Falsified Quality Standards

Falsified quality standards plague the outsourcing industry. Many businesses fall prey to these incorrect claims, but it’s not impossible to avoid with due diligence. 

Solution: 

Here’s a quick due diligence checklist to mark off the rights from wrongs: 

• Cross-check the vendors’ self-proclaimed reputation 
• Check vendor’s history -- the delivery rate, projects taken, and successful deliveries 
• Review vendor’s current market share 
• Check the vendor’s data-centers, their location, and server uptime 
• Check for vendor’s experience and bandwidth for your current and future technological implementations 
• Check for their current partnerships and associations in your respective industry 

4. Security Issues

To promote scalability and cut costs, cloud computing services are often shared by multiple businesses. That said, multiple companies’ data are stored and accessed through the same servers and associated devices.  

Sharing cloud space with other companies, though economical, raises serious security issues. These issues need to be addressed and planned for in advance, especially if your company has strict compliance requirements.  

Solution: 

Double check if your IT Outsourcing vendor uses technical protection such as protocols for access to data, physical safeguards to prevent unauthorized entry into premises, and administrative safeguards for regulating operations and employees’ conduct. 

5. Lack of Flexibility

Different businesses have different requirements. Outsourcing your IT processes to the wrong partner might require you to work with a propriety software or comply with an existing legacy system.  

Solution: 

Review your requirements, ask the right questions, test the networks, and select a quality managed IT provider for your business after a thorough background check of your potential partners. 

6. Loss of Productivity

Relying on a third-party IT service provider can contribute to downtime. In case of a sudden system failure, your business is likely to face a loss of productivity.  

Attending to your business problems could sometimes take days, leaving other resources idle and causing thousands of dollars in lost revenue. 

Solution: 

Establish regular reporting (daily, weekly, or monthly) and keep a close eye on your IT processes even while it’s being handled by a third-party partner. There’s no such thing as being too careful or too diligent in business. 

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