IT Outsourcing: Is it Really Better than Hiring In-House?

IT Outsourcing: Is it Really Better than Hiring In-House?

IT outsourcing has become an increasingly popular way to get the greatest “bang for your buck” when it comes to your IT initiatives. That said, many small businesses prefer to maintain their in-house teams versus outsourcing their IT department.

Which is better?

Being an MSP (managed service provider) you may expect us to say that outsourcing is the obvious choice. Instead, we’ll be the first to tell you that you have to determine the best fit for your business based on your unique needs.

That’s exactly why we created this guide.

Below, we list out the clear pros and cons of maintaining an in-house IT team or outsourcing your IT, and explain what you can expect from doing a little bit of both.

We want you to be able to make the best decision for your business, so read on and to discover what will fit your company based on your unique requirements.

Pros of In-House IT

1. Full-Time Dedication

One thing that IT sourcing lacks is the ability to be onsite full time. That doesn’t necessarily detract from their ability to do their jobs, but in-house IT staff are able to work on a single problem over the course of several days or weeks, if need be. These in-house IT teams typically work at a slow and steady pace until they’ve resolved the issue.

This rate of progress means that dedicated IT teams are able evaluate and document their processes, allowing for further optimization of your in-house IT strategy. That said, the vast majority of in-house IT professionals work as a reactive responder to problems rather than as a part of a proactive IT strategy. That means that they rarely get the opportunity to conduct such optimizations.

2. Tangible Presence

If your small business is like most, you’ll find that there are those members of your team that prefer to have someone they can see face to face every time they need to interact with IT.

While IT outsourcing (MAPs) provides regular in-person interaction on a regular basis, they simply can’t be onsite 40-50 hours a week like some of your employees might like them to. Granted, those employees may be those with the shortest patience or technical competency and they may need to be better trained on your tech in the first place.

3. Emergency Response

Your in-house IT personnel is always on the scene for immediate emergency response. That means that they can drop everything to respond to your problem to the best of their abilities.

To be fair, many outsourced IT teams provide exceptional emergency response and often offer 24/7 support to their clients. That said, just as many that provide IT outsourcing are simply not as responsive in true emergency situations. If you find yourself partnered with one of these providers, for example, you may find your Friday emergency needs to wait “until they have availability on Monday.”

To be fair, this is certainly a “you get what you pay for” scenario. Many MSPs provide exceptional emergency response. However, when you sign up with a bare bones provider or a bare bone package, you may have to pay extra for after hours responses (or you may not get them at all).

Cons of In-House IT

1. Limited Bandwidth and Specialization

Most small businesses don’t have (or don’t prioritize) the resources to hire a full IT team to support their every need. Many small businesses have a constant flow of pressing issues that can often overwhelm these smaller teams. That can mean lagging response times, issues bring missed or overlooked, and inevitably a stressful work environment for your IT team.

Furthermore, the average inhouse IT guy is an expert generalist, allowing him to keep your IT initiatives running smoothly enough. However, they’re rarely specialists that can truly implement a sophisticated IT strategy and work to continually optimize it.

2. Dependency

Most small business IT teams are made up of one or a few individuals that everything falls back on. Especially in cases where your business only has a single IT person, you’re highly dependant on that person for establishing and maintaining your entire IT strategy.

They have the ability to take shortcuts, customize systems to their preferences, which can leave you in a difficult position if they ever decide to leave the company. A common trend amongst inhouse IT teams is a lack of documentation and a resistance to document any of their systems and procedures, leaving the roadmap to your IT initiatives stored in their heads.

Furthermore, in cases where your IT personnel are sick or take leave, your IT issues can pile up and cause productivity issues throughout your company.

3. Unobstructed Access

While you may thoroughly trust each of your employees, internal attacks are very real and happen more often than most small businesses realize. In the case that your IT personnel become disgruntled or is terminated, they have full access to your most sensitive information and pose a very real threat.

4. Cost

The final con of hiring an in-house IT team is cost. Where in-house teams can provide a lot of benefits if they operate efficiently and are continually streamlining their performance, most in-house teams operate at their own speed and don’t represent the best return for your IT investment.

Full-time personnel require a significant investment in terms of salary, but hiring in-house also means that you miss out on one of the most important benefits of IT outsourcing. An MSP is continually upgrading your technology as a part of your partnership, whereas hiring an in-house team means needing to buy, maintain, and upgrade your tech as it becomes obsolete.

Now that we’ve covered the pros and cons of hiring in-house, let’s take a look at the benefits and disadvantages of IT outsourcing.

Pros of IT Outsourcing

1. Cost

We’ll start this list where the last one left off. One of the most immediately appealing benefits of IT outsourcing is the cost savings small businesses receive, both in the short and long terms.

First of all, the uptime and proactive maintenance an MSP delivers provide considerable savings. Considering that massive cost any downtime has on your business, the flat fee an MSP charges is a significantly better use of your IT budget. The MSP has a vested interest in keeping you secure and UP because they pay the bill if you have problems, which is the big difference between a true MSP and a break-fix IT provider.

Furthermore, IT outsourcing eliminates the HR costs of hiring and maintaining your own employees, plus the salaries required to implement and maintain the less-than-efficient technology stacks that many in-house IT teams utilize.

2. Always Cutting Edge

As we mentioned in above, your MSP keeps your technology up to date without you needing to worry about the full investment of upgrading hardware or software. Instead, it’s already accounted for in your monthly service agreement, and therefore in your monthly IT budget. That means never having to delay necessary technology updates based on budgetary limitations.

3. Focus on Your Core Competencies

One of the lesser understood benefits of IT outsourcing is the ability to be a customer to your managed service provider. What that means is never having to worry about managing your IT initiatives again. Everything is handled for you, allowing you to focus on the core areas of your business that allow you to provide the ultimate value to your customers.

You didn't get into business because you’re IT experts. Taking advantage of an MSP allows you to focus on what you know and lets you outsource your IT. Rather than trying to be a jack of all trades, you can focus on your true skills.

4. Pooled Skills and Experience

When you outsource IT to an MSP, you tap into a network of exceptionally skilled IT professionals. Furthermore, because MSPs are always working with other clients, they’re exposed to new problems and better ways to optimize performance than most in-house teams. Rather than depending on the knowledge or one or two in-house employees, you get the collective expertise of a large team that is typically better prepared to handle anything that you throw at them than the average one-man show.

5. Flexibility and Scalability

IT outsourcing gives you the ability to pay for exactly what you need and only what you need. For example, if your single in-house employee was overworked (let’s say he was at 125% of his capacity), you would have to hire another employee to cover that additional 25%.

Outsourced IT relationships deliver what you need, when you need it, and can be scaled to fit your requirements as your business grows. Furthermore, if you experience the seasonality that most businesses do, you can scale up your IT services for that period of higher need and scale them back down when the need decreases.

6. Support and Security

We mentioned that support was a strength of having an in-house team. In fact, it’s also a strength of IT outsourcing. You see, a quality MSP will provide you with sophisticated remote monitoring 24 hours a day, 365 days a year. That means always being aware of any issues and preventing any downtime, even when your in-house staff would be at home for the weekend.

Furthermore, a quality MSP will be available to respond to emergencies immediately when they do occur, which will be rare. Why? Because good MSPs can provide SIEM (Security Incident Event Management) and log management, security and penetration testing, login analysis and internal vulnerability reporting, advanced threat protection, and more. They’re always using cutting-edge industry best practices to keep your business safe.

7. Resources

As a small business, you may not have the resources to employ all of the cutting-edge technologies of your larger competitors. However, with IT outsourcing you can take full advantage of all of the latest and greatest technology at a fraction of the upfront investment that would normally be required. That means you’re able to obtain the same competitive edge (or greater) and level the playing field.

Cons of IT Outsourcing

1. Not All IT Outsourcing Is Equal

When it comes down to it, the biggest issue many small businesses have with MSPs is that (like any business) it can be difficult to find a good one. The right vendor can make all the difference. You’ll want to find an MSP that blends with your company culture while providing a level of service that revolutionizes your IT initiatives.

2. Control Issues

Another problem that some businesses encounter is that they feel as if they’re losing total control over their IT initiatives by outsourcing with an MSP. No matter how capable your MSP, you should always have an IT-proficient member of your team responsible for managing the relationship. That way they can give you regular status updates and communicate the results of the various optimizations being implemented back to the MSP.

3. Support

How can we have support listed as both a pro and a con of IT outsourcing, you ask? Well, unfortunately some vendors are not as responsive as others. Yes, a quality MSP will have a plan of action to respond immediately to your IT emergencies, but others leave room for error. When selecting an IT provider, inquire as to how they respond to your emergencies to help determine the level at which they operate.

Take the SLAs (service level agreements) an MSP provides its customers. If your SLA states that the MSO will provide a minimum 48 hour response time and the they resolve your issue in 47 hours, will be happy? Doubtful. You want an MSP that understands critical issues for your company and acts accordingly.

4. Relationships

Because your MSP isn’t onsite 40 or more hours per week, they won't be able to develop quite the same relationships with the rest of your team as an in-house professional would. You may actually consider that a good thing, you may not.

Quality MSP professionals do their best to provide the highest level of customer service and learn your network inside and out, but they’ll never have the same level of contact as an in-house team.

5. Contracts

Another problem some small businesses face is getting locked into contracts with underperforming vendors because they rushed the selection process. That’s why it’s vital that you work hard to vet your prospective MSPs and determine that they have the capabilities to deliver what they promise. (More on this in the next section.)

Hybrid IT

If you’re not quite sure whether and in-house IT team or IT outsourcing is better for your business, we have a third option for you.

Many small businesses prefer to maintain their small in-house IT team, but partner with an MSP to streamline their operations. The in-house person or team provides the aforementioned benefits of having your IT professionals onsite, while the MSP presents their wide range of benefits as well.

What you end up with is often the best of both worlds.

For example, your in-house personnel could provide immediate help to the rest of your employees during the workweek or focus on more value added tasks such as optimizing the performance and value you receive from your ERP. In the background, the MSP would supply the technology and perform remote monitoring while checking in with your IT team regularly to continue optimizing performance.

Even if you determined that your business would be better served by an in-house IT department, building an expert team is difficult and time-consuming. An MSP can help you bridge the gap, or even simply provide the technology and regular updates to keep costs at bay.

The various combinations and possibilities are virtually endless, but exploring the right option for your business could deliver the perfect blend of the benefits listed above while completely streamlining your IT initiatives.

Best Practices for IT Outsourcing

Whether you fully embrace IT outsourcing or implement a hybrid approach, here are 4 best practices that will help you implement your new IT services most effectively.

1. Define Clear Goals

Before hiring an outsourced IT (managed services) provider, be sure to establish clear goals for what you need to accomplish from the relationship. If you’re unclear on how to evaluate your need and establish those goals, your prospective IT partner should be able to help you do so as a part of their consultative process.

2. Demand Experience

IT outsourcing means putting your trust in the capabilities of another company. Not all MSPs are created equal, so be sure that whoever you’re considering has a track record that proves they know what they’re doing.

That means the ability to help you execute your IT initiatives at a level higher than you were able to do on your own through effective project management, planning, and regular progress updates. It also means having plenty of trusted references and client testimonials to back them up.

3. Involve Key Stakeholders

IT affects your entire company, so be sure to involve stakeholders from each department to make sure their needs can be met by any prospective MSP. Outsourcing your IT initiatives means shaking things up for all of your employees, but make sure that it’s for the better. A stakeholder from each department will be able to voice whether or not the planned switch will deliver a positive or negative impact to their team.

4. Quality and Value vs. Price

As we’ve mentioned multiple times in this article, IT outsourcing means different things to different vendors and not all MSPs are created equal. Be sure to evaluate the quality of service you’ll be receiving and the ultimate value that service will have on your business, instead of strictly the price.

Some vendors overcharge, others underdeliver. Look for an MSP that gives you more for your money, even if that fee is slightly higher than some of their bare-bones service competitors.

Next Steps

If you’re ready to determine exactly what IT outsourcing can do for your company, we’re here to help. Schedule a conversation with one of our IT experts were we can help you evaluate your business’s unique IT need and determine a plan to deliver a highly sophisticated IT strategy.