IT outsourcing

Pros and Cons of IT Outsourcing for Insurance Agents

October 23, 2017

Small to mid-size insurance agencies have a lot of choices related to IT technology and how to use it. One of them is whether to select IT outsourcing as a viable part of their business strategy. While there are many benefits to IT outsourcing some or all of your agency’s technology infrastructures and workflows, there are also some “cons” that agents feel might make it too risky to consider.

This article looks at the current state of IT outsourcing for insurance agents and some of the hindrances and reasons for partnering with a technology vendor.

The Current State of IT Outsourcing

Cloud technology has propelled IT outsourcing down new revenue streams. Now you can outsource just about everything but the computer you’re using to reach this blog. IT outsourcing options include the following:

  • Advisory services that could include consulting, assessment, and strategy development. IT outsourcing in this category could include developing a disaster recovery plan. Or, an assessment of current on-premise technologies and an action plan for migrating services to the cloud.
  • Operational outsourcing could include installing new software or setting up networks. It could include managed security services or handling the purchase and upgrade of equipment. It could even include management of overall IT services such as software-as-a-service (SaaS) contracts and vendors.
  • Maintenance includes the actual running of your computer and application infrastructures, upgrading security patches, or new hardware.

Within the concept of IT outsourcing falls cloud service providers, hardware and software vendors, security experts, or managed service providers like TOSS C3 who can handle your entire technology infrastructure and keep it secure. Computer Economics breaks out IT outsourcing into the following categories:

  • Application development
  • Application maintenance
  • Data center operations
  • Database administration
  • Desktop support
  • Disaster recovery services
  • IT security
  • Network operations
  • Web operations

In 2016 Deloitte reported in a global survey that 31% of all IT functions are now outsourced – and that number is increasing.

IT Outsourcing Pros

Insurance agencies choose IT outsourcing for all kinds of reasons and all kinds of functions. Some of the typical reasons we’ve heard include:

  • It reduces the cost of doing business. Small agencies can save by buying software in the cloud instead of installing costly hardware on-site. They can also save by avoiding the expense of a full or part-time IT executive.
  • Because they lack the on-site expertise. IT security is increasingly a big concern for businesses of all sizes. It is typically not an affordable option for a small agency to hire one of these specialists.
  • Reduce risk by moving to cloud technologies. Cloud providers spend billions of dollars on keeping their infrastructures secure.
  • To upgrade office technologies. To stay competitive, IT outsourcing offers the latest technology, the best software applications, and the most robust security controls.

IT outsourcing offers a way for your agency to streamline the technologies and workflows associated with your most important business functions. You can pass along these improvements and use them to capture and retain more clients. It’s in this way that most agencies tell us IT outsourcing virtually pays for itself.

Should you outsource? Find out – get a free assessment.

IT Outsourcing Cons

Ultimately, as the state of IT continues to evolve more heavily toward technology-centric cloud-solutions, insurance agencies that fail to take advantage of the benefits of IT outsourcing will struggle to stay competitive and may eventually fall behind.

The reality is, IT outsourcing is a great way to streamline processes and save money. It offers opportunities to enhance security, to access and use the latest technology and software, and much more. So why are some businesses hesitant to take advantage of IT outsourcing?

Are these concerns holding you back?

  • Reluctance to give up control. Some agents say it’s difficult to give up control to an outsourced provider. However, IT outsourcing empowers your insurance agency to focus on the business of the firm while leaving data security, compliance, and other tech concerns to experienced professionals.
  • Concerns about security issues. Security as a service offers an affordable alternative to hiring a cybersecurity expert and provides significant advantages over traditional in-house IT resources.
  • A desire to avoid a long-term IT outsourcing contract. Look for a managed service provider that offers a pay as you go per month/year subscription.

The Final Word on IT Outsourcing

The ultimate effect of IT outsourcing on the small to mid-size agency is that is has driven a lot of technological innovation into a very traditional industry. It allows agencies to focus more efficiently on core business functions while allowing technology experts to focus on the nuts and bolts of data security, compliance, and cloud or on-premise access.

TOSS C3 is an IT outsourcing solution for your business. We offer secure on-premise and cloud solutions to help insurance agencies take advantage of the latest technologies to grow their business.

Contact us to request a quote.


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