What Is The Cost of Outsourced IT Services?
By Corey Shields on Jul 9, 2019

What Is The Cost of Outsourced IT Services?

Every business wants to save money wherever it can. For some, outsourcing IT services can have a huge benefit on the bottom line. For others, it offers strategic expertise they would not otherwise have access to.

What is Outsourced IT?

Outsourced IT is the practice of outsourcing some or all of your business technology needs to a third party, typically to an IT service provider or Managed Service Provider (MSP.)

The types of service packages you can get vary greatly, from ad hoc hourly support when you need it, to monthly recurring service contracts that provide everything from soup to nuts when it comes to IT support.

There are literally thousands of MSPs across the U.S. of varying sizes and service offerings, so its important to pick the provider who you feel can be a true partner to your organization.

 

Outsourced IT vs Co-Managed IT

 

OutsourcedIT Cost InfographicThere are 2 basic models of outsourced IT which need to be considered before looking at pricing.

  • Fully Outsourced IT - No on-site IT employees. Troubleshooting, security monitoring, backups, updates and more are provided by the MSP. Servers may be stored and managed by the MSP at an off-site data center. The MSP should be considered your strategic technology partner.

  • Co-Managed IT – The organization has an existing IT staff but is looking for assistance. This could include off loading routine work such as updates, back ups, security monitoring and even help desk to free up internal resources. Or the opposite, where basic staff is in place to run the day-to-day, but needs specialized talent not available in-house.

In general, small to mid sized organizations tend to choose the fully outsourced method. In addition to dramatically lowering costs, they benefit from access to technology experts who are in the trenches day after day with similar organizations, and are in the best position to give guidance.

Larger operations may shift to a co-managed IT environment in order to bolster an overworked team, provide specific services that don't make sense to invest in, or specialty services such as managed cyber security or perhaps the time and talent of a Virtual CIO (vCIO.)

 

Let’s take a deeper look at various options for providing IT support to your business.


Option 1: Keep Your IT Team In-House

In-house IT employees may seem like the best option to keep your business running, with someone always available in the office to keep everyone’s printers running and passwords up to date.

But, this method often comes at a serious cost, depending on where your business is located.

The average desktop technician generally commands an average salary around $50,000 per year. The primary role of this entry-level IT employee is to update and maintain hardware and software while handling small troubleshooting issues.

IT managers are paid $80-130,000 per year to take responsibility for IT systems and ensure that they are aligned with the business strategy. These employees handle high-level tasks and ensure that the organization’s IT infrastructure is prepared for future growth and industry standards.

The problem with most organizations is that they can only afford one IT manager to take care of all levels of IT operations in the office.

If you’re tasking your IT managers with desktop technician level troubleshooting on a day-to-day basis, you’re not getting the greatest benefit from your IT investment.

If you're tasking your lone technician with more responsibility they can handle, you're likely in for some unpleasant surprises.

Pros: IT staff visible and easily accessed (at least during office hours) and are intimately familiar with the IT network layout and existing applications.

Cons: High overhead costs. Usually understaffed for the number of employees. Higher level technicians are unable to concentrate on business strategy and are bogged down by day-to-day troubleshooting. If there is a sole IT manager, sick days and holidays are a problem.


Option 2: Outsource Your Entire IT Department

When some people see the words “outsourced IT,” “remote help desk,” or “cloud computing” they get nervous.

After all, isn’t it always best to have the IT guy stand behind you at your desk to fix that computer glitch?

The answer, for almost all basic IT issues, is a resounding NO.

With the help of remote assistance software, most common problems such as a broken printer, slow computer, or forgotten password can be easily taken care of in minutes by your MSP.

These types of  issues don’t require anyone on-site, and can actually save time and money by having remote technicians take over immediately. You can pick up the phone and be connected with a help desk technician no matter where in the world you are at any time, and for any reason!

Occasionally you will want or need on-site support. This can easily be arranged through your MSP, whether you need weekly support, an occasional visit for a special project, or when there is an issue that simply can't be fixed remotely.

The number one reason businesses move to outsourced IT is the need for greater technical expertise, as technology continues to become more complex and change at a faster rate.

It's almost impossible to get the breadth of expertise you need to stay competitive, and it’s not cost effective to build and manage it yourself. That's where Managed IT Services can really change the game, letting you take advantage of economies of scale that only an MSP can offer.

Pros: Access to expertise. 24x7 support. No sick days or holidays! Faster resolution times than overworked in-house IT teams. More cost-effective especially for small-to-mid sized businesses. 

Cons: You need to choose an MSP who offers superior communication processes. Limited or patchy communication leads to frustration and ultimately overall dissatisfaction with the service. 

 

Option 3: Co-Managed IT

Having an internal IT manager and an outsourced IT service provider brings the best of both worlds to your business, and most larger organizations have begun to realize this.

Freeing up your IT team can enable them to refocus on creating strategies that empower your employees to be more productive, and assure systems are aligned with company goals.

IT leaders should be exploring ways that mobile apps, collaboration technologies, and cloud computing can be leveraged to drive greater productivity and profitability, but this is difficult to do when your team is bogged down with routine maintenance.

Asking experienced professionals to do remedial tasks doesn’t contribute to job satisfaction. This also leads to overall office frustration, because your employees can’t work around broken technology while they wait on the office IT guy to come around!

The combination of having experienced IT managers to guide your organization into a stable IT environment for the future, while also having dozens of help desk technicians available all day, every day leads to a productive and successful IT department for any size business.

Pros: Best of both worlds. Outsource the tasks you don't want to do in-house, and still maintain control and direction over your environment. Or, take advantage of expertise you don't have to help you with strategic initiatives.

Cons: Can be too costly for smaller organizations to maintain in-house resources as well as pay for outsourced IT assistance.

 

Video: How Can Managed IT Services Benefit You?

How Can Managed IT Services Benefit YOU

 

What Does the Average In-House IT Team Cost?

At a minimum, your organization of 10+ employees will require one “Tier 1” help desk technician to handle day-to-day troubleshooting, and one IT manager to handle larger administrative issues and projects.

If we average out salaries, this would be $150,000 per year, including PTO, insurance, and other overhead costs for a team of two to fully operate and maintain an SMB's IT infrastructure.

Of course, the number goes up as you continue to grow your business. Two people simply won’t be able to keep up with an office of 40 employees. Another Tier 1 help desk technician will be needed, and all overhead will go up.

These averages also don’t include necessary continued training expenses for the IT employees, internal hardware replacement expenses, and emergency funds for any immediate IT needs.

 

What Does the Average Outsourced IT Service Provider Cost?

This number becomes a bit trickier to estimate, because every business has very different needs. In general, most organizations start with a basic service package of help desk, remote monitoring, updates, procurement, server management, etc.

Others may have more complex needs, including managed cyber security, cloud hosting requirements, and dozens of other technical needs.

The average Ntiva client pays between $70-$100 per user per month, depending on the service package chosen for the organization. In an average 40-person organization with no on-site servers, this would cost around $48,000 per year.

There may be additional one-time charges for emergency on-site visits or strategic planning sessions, but the savings compared to overstretched IT team of two are massive.

Moving forward, the only additional cost of future growth in the company would be the $70-$100 per user, plus of course any new projects that need to be implemented as the years go by.

 

How to Budget for an Outsourced IT Service Provider

Budgeting for IT costs with a reputable MSP shouldn't be difficult. Ntiva offers a per-user fee (we don't charge per device, as most users have multiple devices) so you’ll know exactly what your monthly bill will be.

However, there are some shady tricks to watch out for when dealing with an IT service provider.

  • Hourly block fees – Some low-cost MSPs may attempt to simply charge a minimum number of hours per month. You may believe you’re paying less by only purchasing 40 hours per month of service, but the provider will go out of their way to charge extravagant fees once you go over the pre-purchased hours.
  • Flat fees – Flat fees seem great. $1,000 per month for unlimited support sounds fantastic, until you realized that your initial $1,000 doesn’t cover on-site support, delivery fees, or hardware setup fees. Flat fee providers will nickel and dime you for all they can.
  • Any fee structure that isn’t “PER USER/PER MONTH” – Generally speaking, all reputable IT service providers will charge your business in a per user/per month format. Paying one price per user gives you the peace of mind knowing that anything that user needs is taken care of, including drive space, technical support, and security monitoring. This is the safest way to avoid overpaying and surprise fees.

 

With a per-user setup, and detailed monthly breakdown of your account, you’ll know exactly what you’re paying for, and be able to plan accordingly for future growth and expansion.

A respectable IT service provider will work with your organization’s vision and current IT infrastructure to provide the best possible service at the best possible “per-user” price. There are many IT consulting companies in Washington DC, so be sure to do due diligence when comparing providers.

If you’re a larger organization, the combination of an in-house IT manager with an MSP may be just the ticket to propel your business to greater heights. 

If you’re interested in learning more about what an MSP can offer your business, click on the image below to request a consultation with one of our solution consultants!

 

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