There is no shortage of people expecting budgetary magic from CFOs. When new projects, employees, or divisions require resources, the finance team needs to find the money to pay for them. Rather than sleight-of-hand, meticulous audits are used to pinpoint budgetary carryovers and excess expenses. Yet in small to mid-sized businesses, we find that one expense consistently evades cuts despite the fact that it often costs more and performs less effectively than an outsourced provider: the in-house IT staff.
Though an in-house IT department has been the traditional solution, an outsourced IT service provider comes with many cost-saving advantages (and even ways to boost your revenue stream). Here are some of the IT costs that often slip by without notice.
These costs are a packaged deal with most full-time IT staff. Payroll taxes (pension contributions, workers comp., etc.), health plan costs, paid time off, and any other benefits to full-time employees have a price tag. According to the Conference Board of Canada, the average cost of providing employee benefits often reaches $8,330 per full-time staff member, which is only the tip of the iceberg for employee-related expenses.
Though we would never argue against rewarding hard working employees, there is an advantage to limiting full-time employment to those who directly contribute to your core products or services. Outsourced teams offer more subject matter experts at a far lower cost compared to in-house IT people. Moreover, using an outsourced IT partner allows you to trim your personnel budget. And these expenses add up year after year.
Competitive IT skills have a very short shelf-life. Development practices evolve at breakneck speeds. Old IT security strategies crumble as cybercriminals develop new malicious attacks. Cloud best practices drastically change in only a brief window of time. Trying to keep pace with progress requires continuous investment, forcing your in-house IT staff to pick and choose what is a priority.
Outsourced IT service providers are completely different. Where in-house IT is forced to cherry pick IT investments, outsourced partners have the resources and staff to explore the panoramic view of IT best practices. It’s easy to justify comprehensive mastery when technology is your primary offering. Rather than being limited by budgetary triage, businesses stay competitive across platforms through the guidance of a team of comprehensive subject matter experts.
Another hidden cost of your in-house IT staff isn’t realized until people start to leave. Attrition is unavoidable in any role, but when part of your IT staff leaves, they divest you of all the time and money you spent keeping them certified and trained. All the seminar, conference, and certification costs accumulate over time and divert funds that could be better spent elsewhere.
With an outsourced IT service provider, you get the advantage of continuous improvement without the steep bill. Isn’t the cost of training and certification built into the SLA? Yes, but that cost is dispersed across a service provider’s total clients, lowering the overall cost for everyone.
Even when our employees move on, there is no cost to our clients as we find replacements. On the other hand, the departure of in-house IT staff requires companies to find high quality professionals in a scarce market, screen them, and onboard them. The hefty expense associated with those activities is already included when you hire an outsourced IT service provider.
Most companies cannot afford to maintain 24×7 support. The expense of keeping in-house IT staff available across shifts or in an on-call rotation expands budgets by a minimum of two employees per shift.
Additionally, if an employee is called into action to implement an IT disaster recovery plan, you might be easily paying that employee overtime. Even if your employees are salaried, consistently working 50 to 65 hours begins to drain morale and encourage renewed job searches. An outsourced IT service provider does not have those issues. Our contracts can offer 24×7 support to ensure there is never a gap in your IT service.
Your budget for an in-house IT staff includes more than just workforce expenses. Maintaining internal IT requires the use of ticketing management systems and other software tools on the company’s coin. The cost of those licenses adds up.
At the very least, ticketing management systems can cost $100 per employee or even a one-time $7,000 fee, depending on the extent of your usage. Once again, this expense is built into the cost of an outsourced IT service provider and dispersed among many clients, so you get the full benefit at a fraction of the cost.
What is an in-house IT staff costing you? On average, we see companies saving 10% to 15% when they switch from an in-house IT staff to managed IT services. Your industry, your size, your number of internal employees, your technological environment, and numerous other factors all determine the amount being spent on your in-house IT staff. Fortunately, there is a way to find out your exact expenses.
At IMP Solutions, we provide 24×7 IT services that implement the latest strategies using a team of reliable IT advisors. Contact us today and we can begin to determine how much we can save your company by switching from an in-house IT team to our outsourced IT specialists.
This article was written by Kent Ellefsen, IMP Solutions, and originally appeared on the IMP Solutions blog in January 2017.