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In-house vs outsourcing IT: How do the costs measure up?

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When considering the pros and cons of outsourcing your company’s IT provision as opposed to keeping it in-house, the first thing that probably comes to mind is how much either option will cost you. Believe it or not, outsourcing could help you save £60,000 or more annually compared to hiring your own IT personnel.

Of course, you’ll most likely also be aware of some of the other factors, including how having dedicated, on-site IT support personnel affects your company’s operations compared to receiving remote support from an external provider. So, how do the costs of these two options compare, and what else should you keep in mind?

Don’t underestimate the importance of this decision…

Whether you’ve just arrived at the point where you need more in-depth IT support and you’re making this decision for the first time, or you’ve already got your IT setup established and want to analyse its effectiveness, it’s worth reviewing all the relevant aspects in detail before making a carefully-considered decision. After all, a potentially long-term commitment to something that can be so vital to your company’s performance shouldn’t be taken lightly, as it can affect your success across the board – and long into the future.

In this article, we aim to give you a head-start in making this decision by providing an overview of how these two options measure up in terms of cost as well as numerous other important factors. You might be happy with what you have at the moment, but is it really what’s best for your business?

How much does it cost to outsource IT?

We’ve put together a table of approximate costs for outsourcing vs in-house IT, so you can see for yourself how much you’re likely to save:

These figures are based on a number of assumptions, namely:
• Your IT requirements will increase in line with the number of employees you have. We’ve assumed that companies with fewer than 30 employees will only need an IT manager – above that you might then add a system administrator, and when you reach 100 employees you’ll need an IT manager and two system administrators. Once you get over 200 employees, you’ll need an IT Director, two 3rd line support staff (these are generally onsite specialists), one 2nd line (specialised support staff who can be on or offsite) and one 1st line (helpdesk) staff member.
• To employ in-house, you’ll be paying out the following amounts annually for the above staff members:
◦ IT Director: £75,000
◦ IT manager: £45,000
◦ 3rd line: £37,000
◦ 2nd line: £27,000
◦ 1st line or System administrator: £20,000
• The cost of outsourcing IT will start much lower but rise quite quickly for a smaller but growing company, then stabilise from the point when you get to around 50 employees until you reach 100+; so although outsourcing will always save you money, the savings won’t necessarily go up in a linear fashion as your company grows.
• Note that the figures provided don’t cover consultancy costs for either option.

Obviously these figures will vary depending on where you’re based, the nature of your business and your own individual needs, but hopefully they will act as a useful guide when making any decisions about whether to outsource your IT support provision.

It’s not just about money. So what else should you consider?

As well as the cost savings, there are other advantages of outsourcing IT. The most important of these is flexibility – you might like the comfort of always having someone around during business hours, but what if that person goes sick, leaves the company or decides to take their holiday at what turns out to be a crucial time? Or how would you cope with an out-of-hours emergency? When you outsource, you will often receive support for longer hours as standard, and many companies, like Priority One, offer optional 24/7 packages.

You may also find that your in-house IT Manager can’t offer such a broad range of support as an outsourced one because they have limited experience and little exposure to new technological developments and IT systems beyond those used by your company. Depending on their background, they may also be unable to provide strategic business advice with relation to your IT systems, or problem-solve issues that are beyond their understanding. An outsourced firm will benefit from having access to the knowledge base and various specialisms found within their entire company.

The fact that outsourced service providers are likely to have teams of staff working for you also means that if something goes wrong or your main contact becomes ill, someone will have access to the necessary information to keep your systems and services running smoothly – if your in-house IT manager becomes ill they may take vital knowledge with them, which can prevent anyone else from fixing any difficulties that arise. We see lots of businesses suffering from this avoidable issue, simply because they’re afraid of the disruption it may cause to their business if they change things around.

Are you being your own worst enemy?

Perhaps you’re reading this and thinking to yourself that you have a system set up and it’s working perfectly well, thank you very much! And well it might – but does that really mean that you can’t do better if you change things around a bit?

Obviously ringing the changes can initially result in extra work and hassle, and you might meet with resistance from your staff, especially in the early stages. The ‘if it ain’t broke, don’t fix it’ mentality certainly makes sense up to a point, but the further you go down a road that (whether or not you realise it at the time) isn’t the best route for you, the harder it is to turn around once you realise that you were going in the wrong direction.

This doesn’t necessarily mean that you need to start outsourcing your IT support, or that you must change things around immediately just for the sake of it. However, it’s certainly a good idea to make a commitment to occasionally reviewing how you do things and to be brave enough to take the leap if – at any point – you find that there’s a better option for you. In fact, it may be extremely detrimental to your business if you don’t.

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Debbie Abbott

With a background in Media, Debbie manages our digital marketing initiatives and provides valuable blog content for those of us a little less-technical.

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