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What Is the Cost of IT Outsourcing

What Is the Cost of IT Outsourcing


Choosing an outsourcing company, the first step is to study the price policy and the price comparison because nobody wants to overpay. However, if it comes to IT outsourcing, there are some factors that can influence on provider’s offer terms and quality. It makes the process of price comparison rather difficult across the board. As the old proverb goes, “you get what you’ve paid for” and nothing describes IT outsourcing better.

Let’s start from the main thing: outsourcing developers value depends on quality and wideness of service they provide, in addition, not all developers work with the same billing; more detailed in our previous article.

But there is also such kind of service as Software outsourcing in IT outsourcing sphere. Our company representatives decided to share with you their knowledge and monitoring regarding to IT outsourcing cost all around the world.

IT outsourcing average cost

There are many cooperation models that are used by IT outsources but the most common is a fixed price, a complex billing method. IT companies that use this model usually charge from $115 to $170 from user per month. The providers of remote control IT services for В2В and В2С market segment charge more. Providers with a higher price, although, are more likely to provide your business what it needs.

A budget for outsourcing services

Business often complains about insufficient funding for IT outsourcing ordering. However, hiring your own programmer costs in together with hidden expenditures and downtime occurring during a year can be potentially reduced with the help of outsourcing.

Downtime is not limited by server errors or router malfunction but also includes the time when your technologies have a negative impact on stuff productivity. When your staff is limited in time of loading Web pages and applications, printer laggin and documents photocopying, they spend their precious time which could be used for business growth and innovation.

Moreover, some IT service providers receive commissions from selling outside providers services and often require over the cost of technologies and services. Don’t forget to compare your company’s price with the price of other providers and technology sellers not to burden your company with unnecessary costs.

IT services fixed price advantages

At first site the preferred variant for a company is a fixed price: it is very clear how many resources will be taken for the project realization, it seems that you will have no need to pay anything extra. However there is a number of pitfalls. All IT projects involve different risks: from the human resource factor to some technological issues. Project tasks and their requirements are often defined approximately. Sometimes it takes place because of contractor's lack of experience and knowledge regarding solving the customer’s task (some companies follow the principle of “the main goal is to get the contract and how we will do it is the next issue”), sometimes - the reason is lack of time and experience that are given to the pre-project study. Exercising the fixed price an outsourcing company seeks to be on the safe side and includes the additional costs for possible risks covering. The customer loses money. If there was no need in additional work, then he overpays in fact. If there was the need to do something over the specified size of the task, then the project becomes unprofitable for the provider. That is why he will strive to agree with the customer on the budget expansion or changing the size and the project priorities, reducing quality requirements to the established solution: only then there will be a possibility to reduce costs and meet the primary plans. But for the company, in fact, it still means a need for new expenditures of refinement system in the nearest future.

This way resort to the fixed price model is effective only when both the customer and the provider have an exactly submission about what the project should include and how it will be realized. If we take charges by the hourly rate, then such risks are excluded as the project cost is calculated depending on scope of actually done work and professionals rates involved. The company depends on outsourcing as referred it the main responsibilities for development its information systems. Outsourcer, in his turn, is connected with the customer as in case of relationships failure he will have a formed team of specialists left and an infrastructure that are not always possible to connect quickly to another project. Interdependency provides opportunities for establishment of transparent and win-win partnership. Furthermore, there is a little communicative risks in this case. It helps to avoid additional financial costs of eliminating the problems in the project that arise if a customer and a provider are not well acquainted and haven’t got along yet. However, making a resource centre for one or two small projects realization does not make sense: it can lead to centre specialists being out of work between the projects and the customer will have to pay for their service under the contact.

In addition, some companies sell something masked as “all inclusive” or “one-time” payment but most of services are not paid at their price. These providers are not at fault for false advertisement but an incompetent customer may not understand that it will still involve expenditures and how often they need some certain services.

Thunderrise uses a transparent rate that will provide your company with an exact price and foresee some sudden costs. We are working with your organization to provide the best service for the price you pay. If you would like to obtain more detailed information about our quotations, contact our company representative right now.