Think Outsourcing IT is Expensive? Think Again.

Murphy’s law is ruthless when it comes to IT problems.

If you’ve been in business a while, you know tech problems usually strike at the most inconvenient times, and yet, when things are working fine it’s easy to forget the pain IT failures cause. And that pain is expensive.

Not only are you faced with hours or days of downtime, you also have to pay a qualified technician top dollar to fix the problem. When small businesses reach a breaking point with tech, they often talk to a managed IT service provider about outsourcing the work and are surprised by the costs. We will compare these costs with the alternatives, but first, let’s be clear about what Managed IT really is.

Outsourcing IT to the Experts

Managed IT is a service that fulfills some or all of your organization’s IT needs. A managed service provider can supplement your in-house IT support or take on all the work, including security, server support, network maintenance, project management, help desk services, data backup, cloud migrations and other facets of your technical infrastructure.

Most providers create estimates based on the size of the organization and the types of services needed, so it’s hard to generalize what your costs might be. For our purposes here, let’s say your company has one or two locations and 10-20 employees (an average small-to-mid sized company in Vermont) with computers, servers, printers, copiers, scanners, and a phone system.

Each of these items will need service at one time or another, and your business will have to decide whether to plan in advance for these challenges or wait for the storm to come.

Alternative #1: Break and Fix

This is the most common approach taken by small businesses. People wait for things to break and then call a technician to get it fixed, which is a bad plan for a number of reasons.

Service without a contract is expensive – Calling for repairs without a service contract will mean paying $200 or more an hour. Depending on your problem, this expense adds up quickly.

No tracking, no follow up, no accountability – When you call for a repair, that’s exactly what you get. Nothing more. They won’t check in later to see how things are working out, or make suggestions about new protections you can put in place. As soon as they walk out the door, you are on your own again.

Timely repairs – IT companies always take care of clients with service plans first. Everything else comes later. You may have to wait several hours or days to get your issue resolved if you don’t already have a relationship with a provider.

So what is the cost of taking the break-fix approach? Let’s come up with an example: If your company has two problems in a month – one that’s easy to fix (2 hours), the other not so easy (12 hours) – plus, you have a new employee that needs user accounts set up and other services (2-4 hours). When all this IT work is tallied up, at $200 an hour, you could spend $3200 – 3600 in a single month, a significant expense for most SMBs.

But that is just the out of pocket cost. What about lost productivity and time spent chasing down a solutions provider? When most businesses tally up the costs in terms of wasted time, money, and productivity, they usually see the value in a more productive approach.

Alternative #2: Hiring an IT Technician

Hiring someone in-house is often a step in the right direction, depending on the employee’s skills. Oftentimes this person is a tech-savvy employee who shifted into an IT role, trying to learn as he or she goes.

The greatest benefit of insourcing, of course, is having a dedicated staff member whose only job is taking care of your company. But having a technician in-house doesn’t guarantee he or she can handle every situation that comes up. IT encompasses a vast array of responsibilities, and it is not possible to find one person who has the expertise to handle all aspects of the job. No matter how knowledgeable your technician is, you will have to outsource some services.

Most of our managed service work comes from companies that already have IT personnel, but they lack the experience, knowledge and time to manage certain projects.

The cost of hiring an entry-level technician will put you in the ballpark of $40,000 – $50,000 annually. A more experienced engineer will cost around $80,000. Add in the cost of hiring, benefits, and health insurance, as well as IT services you have to outsource, and your investment could exceed $100,000 a year.

The Solution: Using Managed IT

With managed IT, you won’t just have a single person working for you. You will have a team of experts with industry-grade tools and a keen understanding of the latest threats facing businesses.

Managed service providers not only provide 24/7 support, they also monitor your equipment, seeking out problems before they cause a disruption. These companies offer proactive services to all branches of your organization, keeping everything up to date and running smoothly, and they can save money as well by consulting you about third-party tools you are wasting money on now.

Managed IT is a flat monthly rate, a predictable expense with no unforeseen costs. The average plan runs between $1500 to $3,000 a month, depending on the services needed and the size of the company. Compared with the other two options, it’s an investment worth looking into.

The greatest advantage of managed IT is knowing your every need is taken care of. Services are scaled according to your needs, growing and adapting as the business evolves. Break-fix services are now falling by the wayside, replaced by proactive strategies that cover all aspects of an organization’s technical infrastructure. This is the future of IT. It’s time to make a plan for the present and future health of your business.

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