Organizations are frequently confused about the distinctions between IT outsourcing and IT out-tasking. They often use the terms interchangeably, even though they are very different strategies with different implementation timelines and complexity.
Out-tasking is a service that falls somewhere between contracting and outsourcing. Out-tasking enables organizations to augment full-time labor capacity quickly while maintaining their current operating model without adding headcount.
This method is more organized and measured than staff augmentation, and it is far easier to implement than outsourcing. When comparing traditional outsourcing to out-tasking, there are a few key distinctions to keep in mind.
In a nutshell:
- Outsourcing is the process of delegating total management of your IT services to an outside service provider. It is usually done on a multi-year contract, which means that the provider is fully responsible for managing your IT.
- Everything falls under the purview of the outsourcing provider, from data center management to storage, networking, and security. This approach works well for organizations with limited internal personnel or IT skills, giving them peace of mind that their IT environment is in expert hands and always have a single point of contact if something goes wrong.
- Out-tasking, on the other hand, is more subdivided. With this approach, in-house IT decision-makers assess which specific functions they want to manage themselves and prefer to delegate to specialists.
- Out-tasking enables IT staff to concentrate on their core competencies while delegating low-value maintenance tasks. Storage maintenance, backups, security operations, and helpdesk functions are all examples of functions that could be trusted.
What is Out-tasking?
Out-tasking is a business model in which a supplier performs tactical or project-oriented tasks or processes. Contracting and licensing engagements are examples of out-tasking, which are less complex than Business Process Outsourcing (BPO) engagements. It necessitates little to no integration of training processes across functional training areas. These agreements are more commonly used for project or technology-oriented sourcing.
What is Outsourcing?
Outsourcing is the process of a company hiring out some of its responsibilities to another company. For example, a business may decide that hiring IT engineers from another company is more efficient than hiring them as employees. Work can be outsourced to a company in the same country (known as “onshoring”) or a company in another country (known as “offshoring”).
Difference Between Outsourcing and Out-tasking
The most significant difference between these two approaches is the level of responsibility your team has for IT.
Using an out-tasking approach means that your internal team maintains complete control and governance of the environment from start to finish while receiving external assistance from various providers.
As a result, your staff is responsible for architecting the solution to meet the needs of the business and acting as ‘project managers’ for its implementation.
If IT services fail to deliver, you have complete visibility into the problems and can work with providers to get everything back on track.
The following are the said distinct differences of the two:
Differences in Operations
Out-tasking entails hiring a service provider to complete a specific task with a short deadline. Out-tasking necessitates service recipients negotiating appropriate service agreements and managing service delivery from beginning to end.
Such management skills entail project planning and implementation, with proper “project management office” oversight before completing and implementing the delivered project integration.
The outsourcing service provider will handle all of your operations when you outsource. The service provider will provide the working model, processes, and tools to complete all functions as planned.
It means that the company seeking the service will completely turn everything over to the service provider.
The difficulties of out-tasking are not the same as those of outsourcing. Typically, the service recipient assigning a task oversees identifying the elements required for performance and supervising, verifying, and testing how the work product is delivered.
Out-tasking typically entails specific deliverables upon completion, with intermediate milestones to ensure appropriate progress is being made in the interim before completion.
Differences in terms of commitment
Outsourcing does not entail the long-term commitments between organizations that are found in an outsourcing relationship. It is easier for an out-tasker to end the relationship and find a replacement when problems arise. Outsourcing has higher switching costs and risks than out-tasking. Cultural fit is less critical in out-tasking than in a long-term outsourcing relationship.
It is essential because a poor call in choosing between outsourcing and out-tasking can make or break your company, so you should know how to use these two properly.
Outsourcing is used when something ongoing within the company needs to be completed. It means that if you hire an outsourcing provider, they will most likely be a long-term employee of your company.
For example, you require a service provider to assist you with your advertising agendas. While you do not have to create TV commercials or advertising campaigns daily, you will need the services of an advertising agency when you do. You should establish a working relationship with an advertising agency to help you with this.
On the other hand, out-tasking must be used for a one-time project, i.e., for a shorter period. It means that a project will be completed after a specific time, and you will only need to form an ad hoc team to complete the project. You will no longer require the services of your out-tasking provider once the project is completed.
When is an Out-tasking Strategy Appropriate?
Outsourcing is an appealing strategy, particularly for smaller organizations that are growing and require flexibility without the sophistication, commitment, and overhead associated with an outsourcing arrangement.
It is frequently the transition from a large contingent of independent contractors to a more organized out-tasking provider.
Clients who fit the following profile should consider out-tasking:
Top-Line Growth trumps Bottom-Line Savings
Outsourcing requires a significant investment of money, resources, and management attention for 2-3 years to reap long-term benefits over the next 10+ years. Outsourcing is unlikely to be pursued if the client organization is small-medium in size and growing at an uncertain rate.
The client wishes to expand and scale to handle top-line growth with variable, rather than fixed, expenses in this environment. On the other hand, outsourcing is about a stable, predictable service model, forecasted volumes, and predictable lower long-term costs.
Scalability and Reliability are Necessary
Outsourcing is a longer-term commitment requiring a fixed commitment with a scale up and down within a tolerance band. Outsourcing requires little initial investment and can be scaled up and down with little restriction.
In a client function, too many contract workers lack standards. If the client already has a stream of freelancers, the out-tasking provider is probably a better option. Outsourcing providers will manage resource replacement, the recruiting funnel, onboarding, training, offboarding, performance, and productivity reporting.
Why Consider Out-tasking?
The latter method is more granular and involved than large-scale outsourcing. While it is not appropriate for every environment, it has many advantages that appeal to IT decision-makers.
These are some examples:
Having complete control over your IT environment and day-to-day operations puts your team in charge. You clearly understand all current projects and processes, so you know what needs to be done and which tasks require additional assistance. With this level of oversight, your team is never at the mercy of third-party decision-makers in IT.
Internal Leadership Development
Outsourcing allows your team to take on more leadership responsibilities within the company. IT is now playing a more significant role in various aspects of business operations, such as customer service, marketing, and business analytics. Thus, there is a growing demand for guidance on how to get the most out of IT investments.
Your team will operate with greater agility if valuable IT functions are kept in-house. Their focus can be on core operations, while external partners find redundancy and scale to manage more laborious or mundane tasks. Having a clear distinction between which work produces the best commercial results can assist IT in becoming a source of innovation and differentiation within the organization.
A company’s requirements can change dramatically from week to week. You want your IT infrastructure to scale up to meet demand in times of high need. When you outsource IT services, you may discover that the contractual terms make it difficult to change your requirements, limiting your ability to adapt. Out-tasking gives you control over your contract with suppliers, allowing you to scale up and down the level of support based on changing needs.
Adapting to a rapidly changing IT landscape
IT is one of the most dynamic industries. As innovations such as IoT, big data, machine learning, and blockchain become more widely adopted, the pace of change accelerated by the emergence of cloud computing will only accelerate. Maintaining control over IT functions entails being nimble enough to adapt to a rapidly changing technological landscape by constantly adjusting your requirements to capitalize on new opportunities.
The Verdict: Out-tasking vs. Outsourcing: Which is Better?
The decision to outsource or out-task is about more than just how much control you want over your tasks. Beyond mere cost-cutting, it should be considered holistically, considering various aspects such as innovation, flexibility, monitoring, and staff skill development.
Please take note that staying in touch with out-taskers can help your team learn new IT planning and project management skills. Though different companies must approach out-tasking differently based on their specific needs, it is worth giving it a shot.