BPO (business process outsourcing) has evolved to include information technology services previously deemed too technical to be farmed out. Today, emerging markets like India, China and the Philippines are offering everything from IT management to software programming to match the needs of global companies that range from startups to conglomerates.
Information technology outsourcing (ITO) refers to the practice of companies subcontracting information technology services, usually to third party providers in developing economies where labor costs are low. BPO and ITO go hand in hand; ITO enables BPO. As BPO firms improve their tech capability, they enable clients to move quickly and scale up and down.
Companies use ITO for a multitude of functions, including software development, programming, infrastructure, IT maintenance and IT support. Many organizations use ITO to cut costs significantly. Studies show that ITO can slash your business costs by more than half annually.
For example, company ABC in the U.S. chooses to outsource software programming because it is significantly cheaper to hire a programmer in the Philippines than to hire, train, and support a local programmer. Company DEF, on the other hand, farms out IT management services to a third party because it takes too much trouble to buy, run and maintain its own data storage devices.
Some companies prefer to establish dedicated IT headquarters outside the organization, but most outsource only a portion of their IT functions. A growing trend in ITO is called "hybrid offshoring," a business model that features insourced and outsourced services. For companies looking to outsource their IT services to the Philippines, it's great to have a game plan. Identify your strength and weaknesses, and evaluate which IT functions are better performed by an ITO provider than by your in-house department.
The biggest reward of IT outsourcing is monetary for most business owners, but the benefits go beyond the bottom line. Back in 2000, Outsourcing Institute's Outsourcing Index listed several reasons you should offshore, and these reasons are equally relevant to ITO.
While India remains the biggest player in ITO, the Philippines is fast becoming the alternative destination. According to data released by the Department of Science and Technology (DOST), the Philippines has the third largest IT talent pool in Asia Pacific, and the country's ITO costs are among the lowest in the world.
To learn more about IT Outsourcing please read IT Support: System / Network Admin Outsourcing.