The Cost of IT Outsourcing

By: Dustin Bonn
August 12, 2022

IT outsourcing isn’t new, but modern managed IT providers have evolved significantly from their late 1980s and 1990s ancestors. Back then, a technician had to be on-site to address issues. Savvy third-party IT providers would lump multiple service tickets into the same day to reduce cost. Therefore, end-users would often wait several days before their issue could be resolved. Back then, IT outsourcing didn’t always boost productivity; it sometimes drained it.  

Outsourced IT, also known as managed IT, had some inevitable drawbacks in an era where the only way to fix a piece of technology involved positioning yourself right in front of it. Nowadays, however, the very drawbacks once associated with IT outsourcing are some of its best strengths.

ARE IT OUTSOURCING SERVICES MORE EXPENSIVE THAN AN IN-HOUSE TEAM?

This might be counterintuitive, but because IT requires specific knowledge and expensive infrastructure, outsourcing can often save organizations over 40%. One might think that moving these services in-house would provide more savings over time. However, IT expenses include much more than IT salaries. While large ticket items are tracked, many smaller costs — like cables, software updates, and other random expenses — aren’t always tracked; over time, they can run up quite a bill.  

And then there are more hidden costs, like the cost of any IT disruption. According to Gartner, IT downtime costs on average $5,600 a minute, and 90% of organizations report that just one hour of downtime costs them over $100,000. Even if your organization has a fully staffed IT department, or one skilled technician is able to hold down the fort, what happens if key team members are on vacation, or someone gets sick, or there’s an after-hours emergency? With managed IT, you can get 24/7 monitoring and support. That’s almost impossible to accomplish with an in-house team.

OTHER WAYS AN IT OUTSOURCING COMPANY CAN HELP YOU SAVE MONEY

An excellent managed IT company can do far more than keep your existing IT infrastructure and tools up and running and responding quickly to end-users. They can recommend new and better tools to boost productivity and save you the hassle of having to identify the availability of new tools, do the research, and do the comparison shopping yourself.

And I would be remiss if I didn’t mention this: IT recruiting is a major challenge for companies large and small, and it’s likely to remain that way for quite some time. These highly skilled professionals are in great demand, and constantly seeking out new talent is expensive. These days, the average cost to recruit and onboard a new employee is $4,000.

Obviously, it’s best to keep turnover low to minimize costs associated with recruiting, interviewing, onboarding, and additional training. However, you may not be able to; if the position you’re hiring for requires a unique skill set, they will also be attractive to many other companies. Competition for IT talent remains high, so if you find yourself repeatedly having to re-hire the same position, that hiring cost can really add up.

THE COST OF NOT OUTSOURCING YOUR IT SERVICES

Even if significant savings and a boost in productivity and responsiveness aren’t tempting, there is one major reason why many organizations are now considering managed IT, and that’s cybersecurity. It’s most companies’ biggest concern, and it’s the biggest source of stress for IT departments. As the average global cost of a data breach has reached over $4 million, and cyberattacks have increased by 400% since the pandemic, it’s understandable that IT professionals and business leaders have a tremendous amount of anxiety related to maintaining their organization’s cybersecurity posture.

With managed IT, small and midsized businesses with limited budgets can access the enterprise-scale tools and expertise that they need. And that’s important, because they’re more likely to find themselves targeted by cybercriminals than larger organizations are.

That said, even large businesses with fully staffed IT departments often benefit from co-managed IT, where they keep their internal department, but allow a third-party provider to take over certain duties. Those duties frequently include help desk support and cybersecurity, but many providers offer quite a bit of flexibility and versatility in the services they offer. Alleviating the burden of cybersecurity can reduce stress and burnout, which can reduce turnover.

WHAT ARE THE MOST COMMON MANAGED IT PRICING MODELS?

BREAK/FIX SERVICE

Like the name suggests, in a break/fix model, when something breaks, your provider is there to fix it. That’s it. You may use their services less, but you’ll probably pay a lot more when you need them. And sometimes they can do only so much. Because these providers aren’t tasked with helping you be proactive and reducing your risk, they won’t be able to help you recover your data if, for example, you didn’t already invest in a cloud backup solution. They also won’t help you be able to strategize for future growth.

This model is often seen as a budget-friendly choice, but organizations that use this model should have a good understanding of their risks and cybersecurity vulnerabilities and have the ability to maintain most of their systems on their own.

A LA CARTE OR PER DEVICE

Would you like your provider to maintain only certain devices or systems? Then this price model may speak your language. Unfortunately, like with break/fix, if something goes wrong outside of what’s already covered in your plan, additional service calls could be much more expensive.

PER USER

This model is far more comprehensive, and will include long-term planning. As technology is growing more and more interconnected, a per-user model gives you one provider to call should anything happen to any device, tool, or system in your organization. While this model may be more expensive, at least on paper, there won’t be unpleasant surprises or hidden costs. And should the worst happen, you’ve got expert help on demand.

At Marco, we use a per-user model for this very reason — in the end, it provides a much more predictable, positive experience for our clients, and they are able to derive greater benefit from our partnership.

NEED HELP DESK OUTSOURCING, OR ASSISTANCE ON A PROJECT?

Many providers will offer help desk services or assistance with a specific project, like a cloud migration. Marco’s co-managed solution, UnifyIT, includes a customized ticketing platform that can be added on to any other co-managed service. This platform provides a seamless experience for office staff. An internal IT department can choose which tickets to handle in-house, and which to pass to our support desk.

Our project-based solution is an ideal choice for companies that want to take a big leap forward in their IT capabilities without adding staff. One of our most popular offerings in this category includes in-depth IT and cybersecurity assessments. Both assessments are designed to reveal what your organization is already doing well, and where short-term and long-term technology investments should be made.

A cybersecurity assessment can illustrate your current vulnerabilities and can make sure your organization is in line with current best practices, as outlined by the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF). Because cybersecurity threats are constantly evolving, if you haven’t had a cybersecurity checkup in the past few years, it’s time. It’s better to find out exactly where you’re vulnerable before a hacker does, and in this instance, an ounce of prevention is definitely worth more than a pound of cure.

Learn more about a Cybersecurity Assessment Get Started Today

Topics: Managed IT Services