05.23.2023 Executive Data Bytes – The Pros and Cons of Outsourcing Data Services

Executive Data Bytes

Tech analysis for the busy executive.

Welcome to another edition of Executive Data Bytes! This week, we’ll consider the upsides and downsides associated with outsourcing your organization’s data services.

Focus piece: “The pros and cons of outsourcing data analytics ”

Executive Summary

Organizations may opt to outsource various services, including data-related services, for a variety of reasons, including cost, availability of resources internally, and access to experienced labor. This CIO article discusses the circumstances that may necessitate a firm outsourcing its data services.

Key Takeaways

• The primary reason why firms may choose to outsource their data services ranging from analytics to storage is most likely cost. Because of the great demand and relevance of data-related services within enterprises, the costs are typically expensive. As a result, firms may opt to outsource after analyzing the cost in relation to the value it may offer to the organization.
• Another reason businesses may opt to outsource their data services is to focus on their core skills. Given that not all businesses are technology-centric, and their core competencies may be focused on a different industry, such as financial services or fashion, it may be best for them to outsource this service and focus on what they believe they are good at, thereby improving their core business operations.
• Scalability and flexibility may be gained by outsourcing data services. Companies may choose to outsource their data services as data demands expand over time, allowing them to react swiftly to shifting data volumes and technology improvements, allowing them to be more agile and responsive to rapidly changing market dynamics.

Focus piece: “The pros and cons of big data outsourcing”

Executive Summary

Although there are some benefits to outsourcing your data services, it is vital to take a step back and analyze why you may still prefer to handle your data services internally despite these benefits. This TechTarget article discusses in simple and concise terms the disadvantages of outsourcing your data services.

Key Takeaways

• One disadvantage of outsourcing your data services is that it raises security and privacy concerns. Given that the data generated within your organization contains part or the majority of your intellectual property, outsourcing this data will result in a decrease in confidence in the security of your data and that of your customers. And if a data breach occurs, odds are you will be unaware of it, and if you are, you will have limited expertise on how to resolve it.
• Another disadvantage of outsourcing your data services is locating the correct service provider with sufficient domain expertise in relation to your data. Hiring a service provider who understands the subtleties of this industry, for example, will allow for seamless communication and a good understanding of what is required for your data management. Hiring otherwise may result in your data being in the hands of data professionals who have no idea how to appropriately handle your data, which may lead to unpleasant outcomes down the road.
• The final disadvantage we will discuss is that outsourcing your data leads in a lack of sufficient context for what your data is all about. In general, while delving into data, data scientists and experts strive for a thorough grasp of what the data is all about and how it can be used to solve business challenges inside the company. By outsourcing this service, the corporation creates a knowledge gap, preventing stakeholders from knowing the accurate depiction of their data. Because the whole extent of the data is unknown, this may eventually lead to substandard decisions inside the business.

Focus piece: “The pros and cons of big data outsourcing” 

Executive Summary

After considering the disadvantages of outsourcing, keep in mind that the impact differs for every company. While it may be preferable for certain businesses to work on their data in-house, it is far more beneficial for others to simply outsource their data services to more qualified hands. The post on TechTarget highlights the benefits of outsourcing your data.

Key Takeaways

• A significant benefit of outsourcing your data services from the start is that it allows the entire data infrastructure to be constructed in accordance with best practices, resulting in superior results. Given that these service providers are knowledgeable with the technology required to carry out the essential services, it is frequently simple once the organization and the service provider have a strong grasp of what is required.
• Another advantage of outsourcing data services is the ability to identify bottlenecks early on, as these outsourcing companies, according to Sandhya Balakrishnan, region head of data analytics and engineering at Brillio, "have accumulated necessary war scars to help organizations navigate these investment decisions as well as carefully consider all change management efforts required."
• Finally, outsourcing allows businesses to focus on their core capabilities while keeping up with disruption and effectively scaling their data processes. One advantage of this is the ability to ramp up resources for the project's push and then ramp down after the data concerns are resolved.

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