Hiring In-House vs. Outsourcing IT Needs: Comparing Cost & Efficiency
Every new expense can seem like money flying out the door for small and midsize business owners — even when that expense will actually save them money in the long term. With all the unknowns in the current economy, it’s no wonder that business owners struggle with decisions like whether to grow an internal IT staff or outsource IT. (Being confronted with unfamiliar terms doesn’t help much.)
To help, we’ve created a side-by-side comparison between outsourcing and hiring and managing an in-house IT team. Spoiler alert: Outsourcing is the clear winner — most companies save money and improve their IT support. But don’t take our word for it. Explore the factors for yourself and see if your business would come out ahead by outsourcing your IT needs.
Let’s start by getting the jargon out of the way.
What Is a Managed Service Provider (MSP)?
A managed service provider (MSP) is a company that delivers IT services to another business. Those services include regular support and ongoing, active administration of the client’s network, infrastructure and security—whether the MSP technicians are on site, remote or in combination. The services provided and pricing structure vary between MSPs.
Comparing Hiring of In-House vs Outsourced IT Services
To have a qualified, expert in-house IT team, you first need to hire. From posting jobs, to screening resumes, to interviewing candidates and negotiating terms, it’s no wonder that hiring is a dreaded part of business leadership. During this process, things either aren’t getting done, or another member of your team is wearing two hats and risking burnout. When your new hire leaves (most do within 5 years according to the bureau of labor and statistics), you have to start all over again.
Finding a managed service provider will take some time and effort. But, if you choose the right partner, they’ll help you every step of the way and not only stay with your business for years, but also help you scale and grow.
Comparing Expertise of In-House vs Outsourced IT Services
Consider this: How equipped do you feel in evaluating the knowledge and experience of an IT candidate? That’s one of the main challenges small to midsize businesses face when hiring for an in-house IT team. Even if you pick the perfect candidate(s), you’ll be limited in number.
Average IT Needs of Companies
|Employees||Junior Tech||Senior Tech|
|21 – 50||0||1|
|51 – 200||1 – 2||1 – 2|
Managed service providers (MSPs) give you the expertise of a large, experienced IT team without the expense. You’ll have access to higher level techs and the collective knowledge of a larger team that stays up to date on new threats and technologies regularly as they service other businesses similar to yours.
Comparing Coverage of In-House vs Outsourced IT Services
Let’s say you hire in house and your IT team is on-site during business hours. Who covers in the evenings or late at night or on weekends and holidays? If a virus hits your office and your techs get sick, what happens to your support? Not to mention coverage for vacations and just plain old work-life balance issues. In-house tech positions can be high stress and no internal tech can be “always on duty” and last for long.
By outsourcing to an MSP, you will have support 24/7/365. You reduce the risk of support gaps with full coverage and a tech team fresh enough to tackle your issues anytime they arise (with no burnout).
Comparing Costs of In-House vs Outsourced IT Services
Staffing an in-house IT team costs more than just salaries, but let’s start there. In Seattle, wages for IT techs has risen consistently year over year and are expected to continue rising. Junior techs will likely be too inexperienced for large projects or to manage budgets, while experienced and senior techs are expensive and very competitive to hire.
Average Salary for In-House IT in Seattle
|Experience||Base Pay||w/Benefits||Monthly $|
Then there are the hidden costs, like training time, unexpected downtime from coverage gaps and more. Even if you ignore the hidden costs, small companies save significantly by switching to an MSP. Take these two examples:
Monthly Costs For IT Services in Seattle
|Company Size||In-House IT||Quality Outsourced MSP|
|20 Users||$5,000 -$6,000||$2,500 – $3,500|
|40 Users||$8,000 – $11,000||$5,000 – $7,000|
|100 Users||$17,000 – $19,000||$12,500 – $17,500|
For companies in the 100 users and up range, outsourcing IT services can still be a huge cost-saver with one small tweak. Larger companies often choose a co-managed support plan, where the MSP supports and supplements an in-house IT team with advanced tools and specialized expertise.
Pros of In-House vs Outsourced IT Services
In-house IT services have two major pros:
- They are physically in the office during business hours (aside from sick/vacation time)
- They only work on your environment and know it extremely well
The pros of outsourcing your IT services to a quality managed service provider include:
- Better value for your money
- A diverse range of expertise and experience
- Full coverage 24/7/365 with no burnout
- Best-in-class tools and processes
- Automatic scaling as your employees (user count) changes — this is true for growth as well as periods of contraction
- Incentives to be as efficient as possible
That last pro deserves a bit more attention. MSPs are paid by the user per month, no matter if they put out one fire or 200 in that month. So it is in an MSP’s best interest to prevent fires in the first place. That means proactively ensuring that the technology your business relies on is humming along without issues or interruptions.
We did warn you that outsourcing was the clear winner! Not convinced? Book an appointment to run your numbers with our team.
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