IT Outsourcing Cost Divided by Types and Regions In 2025
Every business strives to save money wherever feasible. For some, opting for IT services from a software development company to a Managed Service Provider (MSP) can substantially cut down IT Outsourcing costs and time for large projects. Others benefit from the strategic technology expertise that MSPs offer, which may not be available within their in-house teams. Additionally, in certain scenarios, businesses seek external assistance because their internal IT teams are overwhelmed and require additional support.
But you should know that many factors affect IT Outsourcing costs, and it would be wise to consider first before deciding whether you need to outsource or not!
1. What Is IT Outsourcing?
A company may use one provider for all their IT requirements or multiple service providers to deliver different elements
A company may use one provider for all their IT requirements or multiple service providers to deliver different elements. So what is IT outsourcing?
“Outsourcing is an agreement in which one company hires another company to be responsible for a planned or existing activity that is or could be done internally, and sometimes involves transferring employees and assets from one firm to another.” – Wikipedia
IT outsourcing refers to the use of an external service provider to deliver some or all of the IT functions required by a business, including managing infrastructure, directing strategy, and running the service desk.
It can take full responsibility for all IT maintenance and support—often called a fully managed service—or it can provide additional support for an internal IT team. This is sometimes referred to as co-managed IT services and is usually an approach taken by larger organizations. According to Statista, the global IT outsourcing market size was projected to reach approximately $410.2 billion in 2021.
2. Aspects That Will Be Costly When You Use IT Outsourcing Services
Engaging in IT outsourcing involves a series of processes that can incur costs, often beyond the direct fees paid to the outsourcing provider. Understanding these processes can help buyers anticipate and manage their budget more effectively. Below, we outline the key steps involved in the IT outsourcing process and identify where costs may arise.
Needs Assessment and Planning:
- Conducting a comprehensive needs analysis to determine which services to outsource may involve hiring consultants or dedicating internal resources to evaluate core and non-core activities.
Vendor Research and Selection:
- Consultation Services: If businesses hire third-party consultants to help identify potential vendors, costs can add up.
- RFP (Request for Proposal) Development: Crafting RFP documents requires time and expertise, which may necessitate additional resources or external assistance.
Contract Negotiation:
- Legal Fees: Hiring legal advisors to review contracts can lead to significant expenses, particularly in complex agreements involving international laws and regulations.
- Negotiation Time: Time spent negotiating terms can delay the project and accrue costs, especially if legal counsel is involved.
Project Kick-Off and Initial Setup:
- Onboarding Costs: Training sessions and materials to bring the outsourced team up to speed may incur costs.
- Infrastructure Setup: Depending on the type of services being outsourced (e.g., cloud services), initial setup costs can be significant.
Ongoing Communication and Management:
- Management Oversight: Regular meetings and project tracking can divert internal resources and time, including platform subscriptions for project management tools.
- Travel Costs: If face-to-face meetings are needed for relationship management, travel expenses can add up.
Performance Monitoring and Quality Assurance:
- Quality Assessment: Implementing measures for quality assurance may require additional resources.
- Audit Services: Engaging external auditors to verify compliance and performance can lead to surprise costs.
Change Management and Adaptation:
- Scope Changes: Changes in project scope or additional requirements that arise during execution can significantly impact costs, necessitating renegotiation or additional funding.
- Training for Changes: If there are changes to technology or processes, further training sessions might be necessary.
Exit Management:
- Transition Costs: Transitioning from one vendor to another or bringing services back in-house can involve data migration, knowledge transfer sessions, and potential downtime.
- Legal and Financial Costs: There may be penalties for terminating contracts early or costs associated with clearing outstanding obligations.
3. IT Outsourcing Cost Divided by Types and Regions
Types of IT Outsourcing
Project-Based Outsourcing:
- Definition: This model involves hiring an external vendor to complete a specific project from start to finish, handling elements such as planning, development, testing, and implementation.
- Best Fit For: Companies that have defined projects with clear objectives and timelines, such as software development initiatives or product launches. This model works well for organizations looking to access specialized expertise for a limited time without committing to long-term staffing.
Staff Augmentation:
- Definition: Staff augmentation allows organizations to supplement their existing workforce by hiring external professionals for specific roles or periods, providing flexibility without a long-term commitment.
- Best Fit For: Businesses experiencing fluctuating workloads or those needing to quickly fill skill gaps in their teams. This model is ideal for companies that have ongoing IT projects but require additional resources temporarily for peak periods or specific expertise.
Managed Services:
- Definition: This model involves outsourcing the management of specific IT functions to external providers who handle ongoing maintenance, monitoring, and support.
- Best Fit For: Organizations looking to offload routine IT management tasks to focus on strategic initiatives. Companies with limited IT staff or those seeking to improve efficiency and reduce operational risks often benefit from this model, especially for functions like network management, cybersecurity, or cloud services.
Regions
There’re 3 main regions where most people will look for IT outsourcing services:
- North America – Typically has the highest labor cost, reflecting the higher cost of living and wage standards.
- Europe – Offers a mix of reasonably priced services, especially in Eastern Europe, that still maintain high skill levels.
- Asia-Pacific – Known for significantly lower costs, making it a favorable destination for companies seeking cost-effective IT solutions.
Comparative Table of IT Outsourcing Costs Divided by Types and Regions
| Type of IT Outsourcing | North America | Europe | Asia-Pacific |
|---|---|---|---|
| Project-Based Outsourcing | $100 – $200/hour | $75 – $150/hour | $40 – $60/hour |
| Staff Augmentation | $75 – $150/hour | $50 – $120/hour | $35 – $70/hour |
| Managed Services | $80 – $160/hour | $60 – $130/hour | $45 – $80/hour |
4. Consider IT Outsourcing to Savvycom
Vietnam is the ideal location to outsource
Savvycom is among the top IT Outsourcing Companies in Vietnam, specializing in providing Digital Transformation consulting services and software solutions in finance, healthcare, and retail for domestic and international businesses. Headquartered in Hanoi and with three representative offices located in Ho Chi Minh City, USA, and Australia, the company’s mission is to leverage engineering resources in Vietnam and empower businesses worldwide by utilizing the power of technology, becoming a leading IT company in the ASEAN region and beyond.
| Learn More About Savvycom On: | |
| Savvycom Website |
The Manifest: |
Vietnam is widely known as the destination for many companies looking for high-quality software testing outsourcing companies. Vietnam IT outsourcing attracts companies with favorable rates, experienced teams, professionalism of developers, a pool of talent, high-quality tech education, cultural similarities, and much more.
Below you can find some general recommendations matching the IT outsourcing trends that will ensure that everything runs smoothly:
- Identify your business and technical goals as early as possible
- Plan the project budget and timeline considerations way in advance
- Ensure that the vendor utilizes adequate project management processes and development tools
- Set up the payment process clearly
- Sign NDAs and clear agreements
- Plan to be involved in the development process greatly, especially in the beginning
Additionally, as you explore options, consider reaching out to some of the top IT outsourcing companies in Vietnam to see how they can assist you in maximizing your productivity and innovation.
Looking To Find A Trusted Tech Partner?
Tech Consulting, End-to-End Product Development, Cloud & DevOps Service! Since 2009, Savvycom has been harnessing digital technologies for the benefit of businesses, mid and large enterprises, and startups across the variety of industries. We can help you to build high-quality software solutions and products as well as deliver a wide range of related professional services.
Savvycom is right where you need. Contact us now for further consultation:
- Phone: +84 24 3202 9222
- Hotline: +1 408 663 8600 (US); +612 8006 1349 (AUS); +84 32 675 2886 (VN)
- Email: [email protected]
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