When – and When Not – To Outsource Data Center Operations

We run through the risks and challenges of data center outsourcing to provide guidance on when an outsourced approach doesn't make sense.

Christopher Tozzi, Technology Analyst

September 29, 2023

5 Min Read
When – and When Not – To Outsource Data Center Operations

If you're struggling to assemble a team of technicians capable of managing your data center, data center outsourcing, or DCO, may seem like an obvious solution. By shifting some or all of the responsibility for data center management to an outside firm, DCO helps businesses take advantage of data centers even if they lack the capacity to operate them fully on their own.

But that doesn't mean outsourcing is always the best way to address data center staffing shortages or other challenges. Outsourcing may be fast and easy, but it has its downsides, too.

This article walks through the risks and challenges of data center outsourcing to provide guidance on when an outsourced approach doesn't make sense.

What is Data Center Outsourcing?

Data center outsourcing is the use of a third-party provider to handle some or all aspects of data center management. Typically, if you choose to outsource data center operations, you sign a contract for a fixed term with an external firm, which will take responsibility for whichever operations you agree to delegate to it.

In some cases, a data center outsourcing provider can handle all aspects of operations, from managing the physical data center facility, to deploying and maintaining servers, to backing up infrastructure and beyond. In other situations, you might choose to delegate only specific tasks – such as hardware management – to an outsourcing provider.

Related:As Data Center Nearshoring Heats Up, Where Will Your Data Lie?

The main benefits of data center outsourcing are that it provides a simple and easy means of meeting data center staffing requirements. Outsourcing eliminates the need to recruit and maintain your own team of data center technicians – a task that can prove especially challenging in today's era of hiring shortages.

The Potential Pitfalls of Data Center Outsourcing

For businesses struggling to handle data center operations on their own, outsourcing some or all of those operations to an external provider can be a smart move. But it's important to be aware of the potential downsides of adopting an outsourced approach.

Higher costs

Although outsourcing can save money, it can also easily end up costing you more in the long run than paying your own, in-house staff to manage a data center. That's especially true if the outsourcing provider you work with hires its staff from a country where labor costs are high.

If you want to get the most bang for your buck, consider relying on in-house staff to handle data center operations that require the most expertise, and are therefore most expensive to outsource. Data center outsourcing tends to be more cost-effective when used for more basic operations (like routine hardware maintenance tasks), as well as those that require 24/7 staffing (in which case paying your own staff to work or be on call during odd hours may be a costly proposition).

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Security concerns

Outsourced data center staff can become malicious insiders just as easily as full-time employees. And unlike full-time employees, your ability to vet and monitor outsourced staff is lower.

For that reason, there's a case to be made that data center outsourcing exposes you to greater security risks. For operations involving highly sensitive infrastructure or data, you might want to avoid outsourcing.

Communication difficulties

No matter how good your outsourcing provider is or which languages their staff speak, your full-time staff will probably never be able to communicate and collaborate with outsourced technicians as effectively as they can with other full-time employees at your company. There are fewer opportunities to interface with outsourced staff and no sense of shared organizational culture.

There are also likely to be more individual technicians cycling in and out of your data center when you outsource management operations, because outsourcing providers may move their own staff between the facilities of various clients.

These challenges can become major downsides to data center outsourcing if you need to work on complex projects. But for routine data center management activities, communication difficulties may not be as big a deal.

Less flexibility

Data center outsourcing firms may only support certain functions, technologies and processes. For that reason, choosing to outsource can restrict your flexibility within your data center. There may be unusual server equipment that your outsourcing provider won't work with, for example, or data center monitoring tools that your staff likes but the outsourcing provider doesn't use.

If you don't have unusual requirements or particular preferences, this may not be a big deal. But it is something to consider if you have data center operations needs that are not standard and may not be supported by data center outsourcing firms.

Less control

Along similar lines, outsourcing data center operations leaves you with less control over how everything in your data center is configured and managed. Although outsourcing providers may agree contractually to do some things in certain ways, the extent to which you can control every aspect of operations is limited. As a result, you may struggle to align data center operations with your organization's governance rules, for example, or to ensure that configurations and processes remain consistent when you move from in-house staff to outsourcing.

Here again, this challenge may or may not be a serious issue, depending on your organization's needs and preferences.


It's hard to argue that data center outsourcing doesn't simplify management operations. But it comes with a number of tradeoffs, ranging from potentially higher costs and security risks, to communication difficulties, to reduced flexibility and control over what happens in your data center. Before deciding that outsourcing is the right way to run your data center, carefully weigh the downsides against the benefits.

About the Author(s)

Christopher Tozzi

Technology Analyst, Fixate.IO

Christopher Tozzi is a technology analyst with subject matter expertise in cloud computing, application development, open source software, virtualization, containers and more. He also lectures at a major university in the Albany, New York, area. His book, “For Fun and Profit: A History of the Free and Open Source Software Revolution,” was published by MIT Press.

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