IT outsourcing for retail and e-commerce: pros and cons

The main reasons for using IT outsourcing by e-commerce enterprises are reducing financial costs and increasing efficiency. It includes the delegation of some operations in online sales and retail to third parties. IT teams create digital solutions for businesses, making them much more competitive. In this article, we analyze the pros and cons of outsourcing for entities in the trade industry.

E-commerce and retail tasks that can be outsourced

The services of IT specialists are necessary for owners of online stores, retailers, and administrators of trading platforms. Collaborating with external teams to create a commercial website can be faster and more accurate than training employees. Digital technologies are introduced into the e-commerce space, requiring the implementation of IT products to automate and popularize the brand on the market.
Examples of services that entrepreneurs can outsource to IT:
Development of e-commerce platforms: design, writing source code, or product launch. Attractive visuals and convenient navigation make the brand much more interesting for users.
Customer support: PBX and telephony service. The brand receives callbacks by integrating the system into the software.
Website Promotion: Search Engine Optimization (SEO) and Search Engine Marketing (SEM) services. The company appears in the search results more often and increases the number of visitors to the site.
Creation of mobile and web applications: PIM program, B2B portals, and ad platforms. The enterprise automates work with new corporate solutions.
Maintenance and creating virtual assistants: chatbots for 24/7 support, online consultants. A brand can outsource product downloads and page optimization.
Implementation and development of loyalty programs: a system of personal accounts, working with segments, and connecting customers. The company expands its user base and notifies them about promotions and discounts.

8 advantages of IT outsourcing for the trading business

1. Saving money and time

An external outsourcing team performs part of the work intended for the employees of the e-commerce company. Due to this, they have more time for solving more critical problems in the industry. Trading platform owners do not need to assign a dedicated team or hire employees to develop a digital product. There is no obligation to legally formalize additional employees and provide them with wages. Brand employees will devote more time to researching customer coverage and increasing company influence. As a result, both productivity and sales increase significantly.

2. Independence from the contractor's geolocation

The main advantage of IT companies is the ability to work from anywhere in the world. An e-commerce brand can use the services on the terms of offshoring or nearshoring, choosing the most suitable option for its geographic location. Interaction requires remote communication programs and a common language to understand the project's specifics.

3. Large number of IT specialists

Online store owners can choose from various developers and IT talents with the technical skills necessary for e-commerce or retail. According to Statista forecasts, total employment in the ICT sector worldwide will reach 62 million in 2023, up from 53.2 million in 2019. Software developer/engineer, user support specialist, and systems analyst are key positions in the IT industry.

4. Flexible recruitment process

Online businesses can find an external IT company or individual developer on web resources based on feedback from e-commerce entities. Generally, a nondisclosure agreement (NDA) and a service agreement are sufficient. Enterprises start to cooperate with IT specialists after drawing up the terms of reference and discussing the project's timing and cost. Subjects of e-commerce do not incur unnecessary expenses associated with employment and can outsource one-time tasks.

5. Increase in profits

Switching to outsourcing services implies minimal costs for project implementation. Brands do not have to pay and wait longer than a specified deadline. The development and implementation of PIM, B2B portals, or CRM allow you to increase customer satisfaction and automate the work of enterprises in online sales. Also, external teams provide maintenance of commercial websites for a specified period.

6. Quick start of projects

Finding employees, adaptation, and training takes much more time than outsourcing tasks to candidates or agencies. If a brand wants to complete a project in a short time, choosing an external team is much more effective. A clear technical task, goal setting, and accurate calculation of money and time costs allow you to launch the project with no delay.

7. Specialized equipment

One of the success components for any online store is the website, design, SEO promotion, and software for interacting with customers. IT infrastructure should be implemented by specialists with the appropriate skills, experience, and equipment. For example, they must be proficient in programming languages such as C, Java, Python, C++, JavaScript, PHP, and others.

8. Multichannel Customer Support

Consumers use various ways to connect with a brand. These include email, phone, online chat, and social networks. Outsourcing of such processes helps enterprises and retailers be always in touch and answer customer questions promptly. Order processing can also be outsourced to freelancers. They quickly provide feedback on products and promotions, answer questions, and collect customer feedback data.

5 disadvantages of IT outsourcing for e-commerce business

1. Confidentiality Risk

Transferring research, development, and manufacturing to offshoring or nearshoring companies may cause data security problems. It may include violation of the GDPR requirements or theft of product ideas and business marketing strategies. Typically, an external team accesses payments on websites and a database of personal customer information. When delegating tasks to an e-commerce outsourcing partner, you must ensure that it is reliable.

2. High cost of professional services

The salary of developers is one of the highest, so it is unlikely to find a reliable and cheap option. Companies worldwide offer IT products for e-commerce and retail, so you need to choose specialists according to many criteria. The use of modern technologies and trendy IT solutions makes the cost of work higher.

3. Limited project management

External companies work following their schedule, so they cannot devote all their time to a single customer daily. Other clients and projects also require attention, so it is necessary to set dates for reporting progress. You can control the execution of tasks remotely using fixed days for communication and making edits to your e-commerce IT product.

4. Different time zones

Online store owners can cooperate with third-party companies from Poland, the USA, Switzerland, and other countries. Usually, offshoring services are cheaper: when partners are far away, you cannot meet them in person. If the time difference is more than 5 hours, urgent messages about product updates or industry changes may be read later than necessary. In this case, it is worth planning the work schedule and making appointments for calls. In e-commerce, time nuances can have a positive effect, such as external staff for 24/7 support.

5. Misunderstanding between partners

Developers from other countries may not understand the needs of buyers and their motivation due to the peculiarities of the mentality. It does not affect coding, but it causes controversy when setting goals for the final project. Also, communication in foreign languages can become a problem being mistranslated. As a result, essential information about products or customers may be perceived differently, affecting IT solutions.

IT outsourcing in trade: the right to exist

Delegation of operations to IT outsourcing is needed for small businesses. Building an e-commerce platform from scratch is a one-off project, so hiring a freelance team working with similar tasks is much easier. Third-party developers have the technical expertise, specialized skills, and equipment to implement a specific IT product quickly. Learning the pros and cons of IT outsourcing will help you understand the priority areas for your brand when outsourcing projects to freelance teams.

If a retail or e-commerce enterprise has been in the market for a long time and has diverse employees, the task can be entrusted to an internal team. They understand the specifics of the industry product much better and do not need to be tested for "level of trust". The only issue is the internal team's adaptability to changes as well as their technical skills in IT. The product launch may be delayed indefinitely, and the result may be unprofitable. IT outsourcing should be selected after analyzing the opportunities and market position of the business entity.

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