If you’re looking into managed IT services, congratulations! It means your business is growing and that you’re trying to be proactive, rather than reactive when it comes to managing your IT services.
Up until now, your one “techy” employee lent you a hand whenever there was an issue with the $700 printer that refused to print or scan anything or, that computer which kept crashing. Then you realized instead of doing her main job, she’d become your go-to IT support.
So, you have to make a decision and hire a dedicated IT support professional or two, to administrate the overwhelming daily need for IT services. You are also faced with even more complex IT problems. How can you protect and safely secure the vast amounts of data being generated by your business? Disaster recovery, data backup, cloud services and efficiency are emerging realities for your company, and you’re just not sure if your current in-house IT staff has the depth of knowledge or the time to implement and maintain these new services.
Which is Better: Outsourcing or In-house Hires?
You’re at a crossroad. Do you hire additional and more experienced IT staff, or should you outsource? Although the answer depends on the structure of your company and your financial capacity, the overwhelming consensus among IT professionals and business executives is yes — you should outsource.
CompTIA interviewed 224 small and medium sized businesses (SMBs) for their 4th Annual Trend in Managed Services report and inquired the reason why SMBs chose to go the managed IT services route. 56% of those SMBs said they chose a managed IT services firm to “improve the reliability and efficiency of their IT operations.”
This opinion stands true regardless of your company size. If you think about it, this makes sense. Just look at some other aspects of your business that are probably being outsourced. Legal, marketing, and payroll are just some of the functions that a lot of companies today are choosing to off-load. In other words, the parts of their business which side-tracks them from providing core services to their clients.
The Limited Benefits of In-house Hires
No doubt the biggest benefit of an in-house IT guy is quick access to him or her, especially if they are part of your onsite staff. Most employers and employees prefer a face-to-face interaction that holds their subordinates and coworkers accountable for their actions. Your in-house IT guy or team will build up specialized knowledge of your company’s particular IT service needs, which will make him or her more efficient at what they do, and create less frustration among other employees. Nevertheless, the list of benefits may just end here.
Benefit One: The Cost of Outsourcing Managed IT Services Is Ultimately Lower than the Cost of In-house Hires
To establish and train an in-house managed IT services team is not only expensive, it also takes a lot of time.
Costs of In-house IT Hires
Aside from the usual expenses like payroll and benefits, you have to consider that ongoing IT training and regular exams can be costly, sometimes as high as $5K-$10K per employee. The world of technology is constantly changing, and to keep up, your staff has to constantly work on maintaining current and new certifications.
And that’s just the beginning.
Consider that today’s US unemployment level in IT is 2.5-percent, one of the lowest among all industries. This means that qualified IT professionals are hard to come by and can be very expensive.
The average salary of a medium level IT technician is $70K with bonuses ranging in the $2K area, plus health benefits of $11K.
Not to mention, the average nationwide salary of an IT Director in the U.S. today is $150K. This number does not include the average bonus of $15K and an additional $24K in health benefits.
These numbers do not include hidden costs such as overtime, sick days, vacation, and emergencies. Especially overtime, which can become extremely expensive when you have an employee on after-hours pager-duty or working through the night due to an unexpected system shutdown.
Cost of Outsourcing Managed IT Services
So, how is outsourcing cheaper?
Nowadays, most outsourced managed service providers charge their clients on a per-user per-month basis, with average costs ranging from $75-$150 per user, depending on the time and quality of service purchased. Special projects such as company moves and transitions to the cloud, are extra.
A good managed service provider will allow vertical movement in the pricing and amount of service provided to accommodate their clients’ growth or waning.
As a general rule, such pricing structure is always more cost-effective than in-house employees. And what exactly do you get for this price? Depending on the service plan level you choose, you get a wide assortment of services, including 24-hour remote support, monthly or weekly onsite visits, certified IT technicians and most important, a large bank of expertise.
Benefit Two: The Collective Experience of an Entire Firm is at Your Disposal
In my experience, even the most accomplished and skillful IT engineer will lack experience in some areas. One or two IT employees will never beat the pull of knowledge you will find at an established IT company.
To demonstrate this, our company was recently approached by a prospect (now a client) who was looking to augment their existing IT guy. They felt that as experienced and hard-working as this employee was, he just didn’t have enough time or knowledge to continue to upgrade and maintain their growing IT infrastructure. Their servers were crashing, they were fending off numerous virus outbreaks, and the email upgrade project they thought was a great idea, was now more of a liability than an improvement.
Through a wide pool of experts here at NIC, our team was able to brainstorm and present the client with an innovative and reliable solution to their problem. And, the best part? It only cost the client 75% of what he was paying to his one in-house IT guy.
This company is now a client and continues to increase their level of service due to their growth. We have become their trusted authority on all things technology and our partnership has blossomed.
Benefit Three: Instant, Round the Clock IT Support
This brings me to my next point: 24/7 support. This is probably one of the most common reasons why we see our clients switch from in-house to outside IT support.
An established managed service provider has a wide variety of employees, most of them techs, working different shifts and providing numerous levels of expertise to their clients. By nature, IT support is a 24-hour shop that never stops or takes a break.
IT company owners and execs know this fact and accept it as part of their key to success. They design their business models and hire employees based on this fact. This means, that they have created a work schedule where there will always be a tech and a backup available to respond to clients around the clock.
This translates to no downtime for the client. No vacations, sick days, or jury duty to worry about. No last minute family emergencies or resignations that leave the company trapped in their own IT maze.
This can never be true for in-house employees. Life happens, and it happens to your employees.
Common “Life-Happens” Scenarios that can Wreak Havoc on Your IT Operations
Our second largest inflow of clients are those who’ve fallen victim to the uncertainties of life.
Perhaps, you’re faced with one of these situations:
- Your IT guy is on vacation and the servers have crashed. He gave you an emergency plan, but it’s hard to get a hold of the vendors and you’re not sure you know what they’re talking about.
- Your three-person IT services team just lost one of the guys, and they can’t keep up with the inflow of support requests. Balls are being dropped left and right and it’s affecting your business.
- You don’t think your IT director is keeping up with the ever-changing technology and is making bad decisions. His costly investments into the wrong products are yielding little results.
These are just some of the common complaints we hear from prospects looking for more reliable solutions.
Benefit Four: Proactive and Reliable
IT reliability and proactivity will always be important factors.
Is your IT staff complacent and only reacts when there is a problem? How do you fairly reward or punish your employees when things fall through the cracks and everyone is behind schedule? Are they overwhelmed and understaffed, or are you just not sure about the processes and how to evaluate them?
When you outsource, the answer is NOT YOUR PROBLEM!
It’s much easier to fire your vendors then employees (especially in California) when their performance is not up to par and your vendors know that. Most of your vendors, including IT, will always try hard to deliver above and beyond your expectations to maintain your business. A good managed service provider will always be proactive and efficient, because competition is high. This usually results in a more innovative and cost-effective IT infrastructure for your business.
Although I can go on about this subject, I think my opinion here is clear. It is up to you to decide which direction is right for your company. And it may be that you can afford to build you own knowledgeable team that will work around the clock. And maybe it is what is necessary for your company’s culture. But for the majority of businesses out there, the costs and time invested are just not realistic.
Here is a quick overview of the benefits we’ve discussed for each option:
- Quick access to the IT guy
- Specialized knowledge about your company and its managed IT services needs
- More direct control over your IT team
- Employee cost including salary, benefits, training, and etc. is on average three to four times more expensive than an outsourced company
- Gap in coverage when an employee is sick, on vacation, or personal leave
- Smaller bank of expertise; narrowed specialization
- Usually more reactive than proactive
- Slower response times
- Learning curve about your company and its managed IT services needs
- No say in the individual personnel
- Significantly lower monthly costs compared to in house
- No HR issues
- A wide variety of services for one price
- Frees up time to concentrate on your core business
- A wide pool of knowledge and expertise
- 24/7 support: no sick days, vacations, resignations
- Accountability and penalties for not completing work on-time
- Proactive solutions
If you’re still unsure whether outsourcing your IT operations is the right direction for your company, why not contact us today? We are happy to meet with you and give you our honest, un-biased, recommendation tailored to your specific business structure.