How SMBs Can Benefit from the Democratization of IT Outsourcing

IT outsourcing has been known for high-ticket consulting jobs where IT bodies from overseas are used for projects. Once the Fortune 500's playground, IT outsourcing is now being used by small and midsize businesses to build e-commerce sites, use mobile applications to lure customers or integrate open-source tools into tech support. Here, Knowledge Center contributor Srinivas Balasubramanian explains how small and midsize businesses can benefit from the democratization of IT outsourcing.


Especially in an environment that continues to deliver bad economic news, how can a company with tight budgets and stretched resources keep "success" and "profitability" in their vocabulary? Take, for example, a midsized optical equipment manufacturer. Since 2002, they have grown quickly, and currently bring in several hundred million dollars in revenue. But with rapid growth comes a lag in IT. Their internal IT systems couldn't keep pace.

The company was running on a lightweight ERP and CRM solution, and the IT staff was reduced to firefighting individual business unit issues on the most basic business applications. When the new CIO joined, he deemed that the company needed a business intelligence framework, but he was severely hindered by a low-and what some would call ridiculous-budget.

After running fast and hard for so many years, the only way to secure the expert resources to do the work in time and at a reasonable cost was to team up with an outsourcing partner.

By executing the project offshore, the new CIO stayed within budget (at a rate of $25 per hour), implemented an open-source BI solution to which he wouldn't otherwise have had access, and maybe most importantly, over-delivered on his project goal by getting the BI application accessible on mobile devices.

Leveling the IT playing field

Four or five years ago, it would have been impossible for a company of this size to work with outsourcers on this project. Why? Until recently, most outsourcers focused on big-bang projects for Fortune 500 or even Global 2000 companies-such as SAP implementations or mainframe maintenance projects that required "bodies" to write and maintain legacy technologies. Even if they had the expertise, the price was too high. While small independents might have been able to do part of the job for the right price, they weren't able to scale to the complexity required.

All that has changed. Today, a new breed of companies has emerged to democratize IT outsourcing, bringing more value to companies of all sizes with competitive pricing and skills-based expertise for projects such as building e-commerce sites, using mobile applications to lure customers, and integrating open-source tools into tech support.