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SMEs embrace hybrid outsourcing

Survey: The Institute of Directors has found that most small firms see technology as critical to their future success
Written by Richard Thurston, Contributor

Many small and medium-sized businesses are bringing parts of their IT back in-house, following widespread dissatisfaction over the outsourced approach, according to research published by the Institute of Directors (IoD) this week.

The IoD found that a "hybrid" approach is now preferred, with a helpdesk retained at the local office and remaining tech functions outsourced to a service provider.

"What is new is this hybrid solution," said the IoD's senior policy adviser for e-business Jim Norton.

When asked why hybrid outsourcing was catching on, Norton said, "It's probably user dissatisfaction. They [users] are often tired of speaking to a call centre in India, and want some local help."

According to member research by the IoD, over a quarter of SMEs (27 percent) now operate a hybrid IT department, up sharply from just one percent two years ago.

IT is fast becoming essential for the growth of those businesses, the IoD said.

Eighty-five percent of SMEs told the Institute that technology was "critical" in enabling the growth of their company.

And Norton added, "The use of ICT is much more centre-stage to these businesses than two years ago."

When asked why they invested, nearly half of respondents said it was because technology boosted workers' productivity. Twelve percent said they invested in IT because of pressure from their competitors — a figure which has quadrupled since 2004.

Asked about their biggest concern, firms said they were most worried about business continuity, data security, the fight against spam and data storage issues.

But despite concern over business continuity, over a quarter of SMEs said they had no continuity plan in place.

"We call it a triumph of hope over experience," said Norton. "At least they have recognised there is an issue."

Other key points from the IoD's work include:

  • The adoption of wireless is rocketing, with 77 percent of SMEs using Wi-Fi or cellular networks to gain remote access to data
  • The most common use of wireless is for sending and receiving emails, with 42 percent using BlackBerry-based applications
  • IT purchasers in SMEs are not specialist IT staff, and instead are usually company directors or chief executives
  • IT budgets range widely from just 0.5 percent to 3.5 percent of total revenue, with larger companies spending a lower percentage on IT

The IoD interviewed 500 SMEs across a range of sectors.

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