Are You Covered?

Power Source

In a small company, entrepreneurs often adopt the role of chief technologist. Many reason it's just another hat they have to wear. Or is it? Increasingly, small businesses in numerous industries--from manufacturing and communications to insurance and retail--are outsourcing their computer needs.

Because much of information technology simply isn't a core operation for most companies, outsourcing can be an attractive alternative. It takes the burden of handling certain technology functions off personnel, allowing them to focus on other responsibilities.

Outsourcing relationships vary widely. Companies can outsource specific tasks, portions of information technology needs, or all their computer services.

"The pace of technology changes is overwhelming," explains Allie Young, senior analyst with Dataquest, a research firm in Westborough, Massachusetts. "To be competitive, companies must [upgrade their] technology, but they don't have the expertise in-house, so it's easier for them to turn to an expert."

But outsourcing can do more than relieve the burden on you and your staff. Many experts see value in partnering with larger companies that possess a track record. "The small companies that realize they need something today and want to grow in the future can bring in the leverage of a large company to help expand and grow [their] services," says Kathy Dodsworth-Rugani of Integrated Systems Solutions Corp. (ISSC), an IBM subsidiary in Somers, New York, that began offering its computer expertise to medium-sized and small businesses last December.

Internet site construction and management, computer training and new application development are just some of the duties small companies can relinquish to outsiders. ISSC, for example, provides remote operational support for company servers, help-desk support for employee questions, consulting expertise, and help with transferring between different operating systems, among other things. "Outsourcing these kinds of functions is particularly good for companies that can't get access to skills or find the talent pool [in their area] is diminishing," says Dodsworth-Rugani.

On the downside, while some entrepreneurs believe outsourcing can cut costs, experts say that's a myth. "It's unlikely you'll see a cost savings," admits Dodsworth-Rugani. "What you will see is an improvement in service, better use of technology, and a potential to do something different in the marketplace."

And, in the long run, that can boost your bottom line. No wonder, then, that industry insiders urge even the smallest of companies to consider outsourcing their information technology. Says Young, "This trend is absolutely growing for small business."

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This article was originally published in the October 1996 print edition of Entrepreneur with the headline: Are You Covered?.

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