Outsourcing IT needs in the corporate world has become extremely popular because it is cost-efficient and it gives IT resources to companies that may not otherwise be able to afford them. Another positive side effect of IT outsourcing is that it has brought many technology jobs back to the United States.

As convenient and patriotic as IT outsourcing has become, it also have several limitations that have caused many companies to re-think the idea of funding their own internal IT group. It is important for a company to be completely familiar with these limitations before developing any kind of company policy in regards to IT.

The Customer Could Outgrow The Outsource Company

When an IT outsourcing company first takes on a new client, the relationship is beneficial to both sides. But things can start to get inconvenient for the client when the client's business starts to outgrow the capabilities of the IT outsource group.

An IT outsourcing company can become entrenched in the daily routine of its clients, which is great at first. But when the IT company can no longer keep pace with the growth of its clients, then the clients are stuck trying to find a new solution and keep track of its own IT assets at the same time.

The IT Outsourcing Company Lacks The Necessary Technical Expertise

IT outsourcing clients like to believe that their support company knows everything there is to know about computers and the Internet. But every IT support company has its areas of expertise and they have the technical areas where they are not quite as strong. If the client starts to experience needs from the areas where the IT outsourcing company is not so strong, then that can become a significant business issue.

This problem can be amplified if the client is a small business experiencing growth. An IT outsourcing company is not as likely to bring on new personnel for a smaller client, which leaves the client without a solution.

The Client Losses A Measure Of Control Over Its Data

No matter how large or successful an IT outsourcing company may be, there will always be the limitation of client security and the protection of critical customer data. All it takes is one rogue employee of the IT outsourcing company to compromise all of the client's critical data.

Some IT outsourcing companies have safeguards put in place to try and prevent client data compromise, but those safeguards are limited by how much access the IT company has to the client network. In most cases, that access has to be comprehensive for the IT outsourcing company to be able to do its job.

Outsourcing IT responsibilities can take a lot of stress off of a client and allow that client to operate his business by focusing on his core competencies. But there are limitations to IT outsourcing that could make it necessary for a client to do his own IT support and pay the extra costs.

The line between IT consulting and management consulting is quite often blurred, with overlaps between the two fields habitually happening. Worse still, most people do not understand who an IT consultant really is, or what he/she does. There are those who think the job entails fixing computers, others – selling computers and associated accessories. This is misleading though.

In a nutshell, IT consultants are professionals who aid businesses in deciding what computer tools and technologies are best placed to grow and sustain a profitable business. They work hand in hand with clients to help integrate IT systems into the latter’s business. They show clients how to use technology more efficiently, and in so doing, the client is able to get a higher return on their technology investments, and ultimately, increase the bottom-line.

IT consultants, or IT advisories, could work independently or for a consulting firm, with their clientele spread across all sorts of businesses and industries. Companies hire or contract the consulting firm to come in and analyze their IT systems and structure.

The job itself is not short of challenges, however, and the path to becoming a successful IT consultant is fraught with its fair share of ups and downs. But hey, which job isn’t? Experience is the best teacher they say, and only after you’ve worked as a consultant for a number of years will you finally gain invaluable understanding of what is expected of you. Learning from the experiences of those who’ve been in this business for long is a good starting point for those who decide to venture into the world of IT consultancy.

The consulting industry is fiercely competitive and nets between $130B and $150B a year. In fact, professional consultants earn more money than many lawyers, doctors and other professionals. 

Offering free consultations is a common way for a software consultant to seize new accounts. But is there a red flag where a consultant may be giving away too many services for free? The worst scenario for a professional software consultant is to offer free services to the client and then never hear from them again once they no longer need their help. 

Although having the best intentions, many people will waste a consultant's time (i.e., client ignores or rejects any suggested approaches or solutions given by the consultant and seek the services of someone who will do it cheaper or will attempt to do it themselves). Small business owners especially can be challenging to work with. Some clients have a tendency to jump into projects before having adequate resources to finish what they have started, decide to go in a different direction midstream, while others simply don't want to spend any money when getting professional services. It's hard to believe, but some clients actually expect to receive free services for life. To counteract this notion, a software consultant can draw the line by offering free services within a promotional time frame and then begin charging a fee for services rendered after that time.

A good indicator of what a client's true intentions are is to monitor their activity within a specified period to see if their consultation activity bears fruit in the form of a contract. One big red flag is non-commitment on the part of the client. If they seem indecisive or vague about what they want it may be time to move on. Although there are times when a free consultation results in a paying client years later, who can wait that long? 

Less of Your Time is Wasted When You're Upfront

After being burned, some professional software consultants no longer give free consulting. They find that clients are much more willing to follow their advice when they have paid something. In order to close an account, a happy medium can be agreed upon by both parties involved as a way to build a long term relationship with highly qualified prospects. 

A software consultant's work, knowledge, skills and time are valuable. They can offer a potential client general solutions instead of addressing specific challenges. If a specific topic of discussion, troubleshooting session or other issue needs to be addressed, the consultant can inform the client of any upfront costs to receive a particular service if they need further assistance. Really, a free software consultation (if one is given) should be presented in a very similar way someone would hand out samples of a product at a grocery store. A professional consultant ideally wants clients to see how they can benefit using their services on a trial basis with a pitch leading to more extensive services which would only be available if they sign a contract with their firm. 

 Red Flags

Another blanket article about the pros and cons of Direct to Consumer (D2C) isn’t needed, I know. By now, we all know the rules for how this model enters a market: its disruption fights any given sector’s established sales model, a fuzzy compromise is temporarily met, and the lean innovator always wins out in the end.

That’s exactly how it played out in the music industry when Apple and record companies created a digital storefront in iTunes to usher music sales into the online era. What now appears to have been a stopgap compromise, iTunes was the standard model for 5-6 years until consumers realized there was no point in purchasing and owning digital media when internet speeds increased and they could listen to it for free through a music streaming service.  In 2013, streaming models are the new music consumption standard. Netflix is nearly parallel in the film and TV world, though they’ve done a better job keeping it all under one roof. Apple mastered retail sales so well that the majority of Apple products, when bought in-person, are bought at an Apple store. That’s even more impressive when you consider how few Apple stores there are in the U.S. (253) compared to big box electronics stores that sell Apple products like Best Buy (1,100) Yet while some industries have implemented a D2C approach to great success, others haven’t even dipped a toe in the D2C pool, most notably the auto industry.

What got me thinking about this topic is the recent flurry of attention Tesla Motors has received for its D2C model. It all came to a head at the beginning of July when a petition on whitehouse.gov to allow Tesla to sell directly to consumers in all 50 states reached the 100,000 signatures required for administration comment. As you might imagine, many powerful car dealership owners armed with lobbyists have made a big stink about Elon Musk, Tesla’s CEO and Product Architect, choosing to sidestep the traditional supply chain and instead opting to sell directly to their customers through their website. These dealership owners say that they’re against the idea because they want to protect consumers, but the real motive is that they want to defend their right to exist (and who wouldn’t?). They essentially have a monopoly at their position in the sales process, and they want to keep it that way. More frightening for the dealerships is the possibility that once Tesla starts selling directly to consumers, so will the big three automakers, and they fear that would be the end of the road for their business. Interestingly enough, the big three flirted with the idea of D2C in the early 90’s before they were met with fierce backlash from dealerships. I’m sure the dealership community has no interest in mounting a fight like that again. 

To say that the laws preventing Tesla from selling online are peripherally relevant would be a compliment. By and large, the laws the dealerships point to fall under the umbrella of “Franchise Laws” that were put in place at the dawn of car sales to protect franchisees against manufacturers opening their own stores and undercutting the franchise that had invested so much to sell the manufacturer’s cars.  There’s certainly a need for those laws to exist, because no owner of a dealership selling Jeeps wants Chrysler to open their own dealership next door and sell them for substantially less. However, because Tesla is independently owned and isn’t currently selling their cars through any third party dealership, this law doesn’t really apply to them. Until their cars are sold through independent dealerships, they’re incapable of undercutting anyone by implementing D2C structure.