How much does IT outsourcing cost?

How much does IT outsourcing cost?

Even business owners who normally do not scrimp on IT spending may find themselves looking for more cost-efficient technology solutions nowadays. As the US economy contracts, organizations may decide to downsize IT budgets, while others may still want to increase spending on critical tech expenses but in a way that doesn’t break the bank.

Regardless, when planning your business’s IT budget for 2021, consider an undeniably cost-efficient option: outsourced IT support from a managed IT services provider (MSP).

What is IT outsourcing?

Outsourced IT, as opposed to in-house IT, entails getting the help of third-party technology professionals. These professionals — typically a team of IT engineers, technicians, consultants, and cybersecurity experts — are deeply knowledgeable in a wide range of technology and have years of experience.

Some MSPs may offer industry-specific expertise, whether it be in manufacturing, financial services, or legal industries. An MSP like Solution Partner, for instance, is an IT provider that offers a host of technology services specializing in healthcare IT. We focus on HIPAA compliance, serving local small- and medium-sized businesses in Phoenix, Scottsdale, and Tempe.

However, not all MSPs are similarly structured. Businesses that are concerned about how much outsourcing IT costs might want to consider looking into two MSP models.

  • Co-managed IT – This model is for companies that have an in-house IT staff for day-to-day IT tasks such as setting up computers and troubleshooting technical issues but need help with complex tasks like application development, website maintenance, or 24/7 technical support.Co-managed IT allows you to augment your IT staff; your outsourced IT partner handles routine maintenance and out-of-hours issues, while the company IT department handles everyday troubleshooting problems.

    This model also allows the strengths of your internal staff and your MSP to complement each other. The internal staff under your company’s management is typically more responsive and physically available, while an MSP offers external support for IT issues beyond your staff’s area of expertise.

  • Fully outsourced IT – This model is for businesses that have no IT staff. An MSP performs all technology tasks, big or small — from providing help desk support to database management to monitoring your computers for security threats.

Fully outsourcing your IT to an MSP provides round-the-clock support for all technical issues for a monthly subscription-based fee. That means minimal to no surprise expenses resulting from unexpected computer, server, and storage problems. And despite not being under your company’s management, MSPs act as a business partner who can create a technology roadmap for your company.

It typically costs less to outsource only some IT functions, but note that in a co-managed setup, you’re paying for both an outsourced IT provider and an internal IT staff. Also, consider that the average cost of hiring an IT manager is $88,000 per year, which may be way beyond what most small businesses are willing to, or can, pay.

For large corporations, it makes sense to adopt a co-managed IT setup, while for smaller businesses, outsourcing IT is more practical. That’s because it’s more expensive to have a full-time staff and to build an internal IT team — it entails costs for things like continuous training and certifications on top of payroll and benefits.

Outsourced IT support costs: Things to consider

There are many factors to consider when calculating the costs of outsourced IT support especially since there’s no one-size-fits-all solution for different organizations.

The cost of an MSP can go anywhere between $100 and $200 per user a month. But MSPs’ pricing models differ, with many offering flat, all-inclusive fees, which varies on the level and complexity of services provided and the product tiers they offer. In calculating IT outsourcing costs, consider the following factors:

  • Per hour rate – On average, technical support prices range between $75 - $95.00 per hour, depending on job complexity.
  • Pay-as-you-go rate – The amount you pay for pay-as-you-go technicians, or technicians you hire whenever something breaks, can vary wildly. Experienced technicians in a break-fix company who have serviced different clients can take a varying range of times to fix similar problems. This is attributed to factors such as a technician's level of expertise and their familiarity with a particular client's systems.
  • Travel expenses – Could be anywhere from $15 to $30, depending on location. This is why it’s important to choose a local MSP, or one that’s near your place of business and offers reliable, always-available remote support.
  • Per-user fee structure – Paying on a per-user basis ensures that, regardless of the problem a user encounters, you pay only a fixed amount for that user and avoid overspending every month.
  • Opportunity costs in DIY IT support – Fixing your own IT issues is free, but if people without IT expertise are fixing technical issues that keep recurring, productivity suffers and you still end up incurring high costs in the long run.

Note that these are average figures, which may be higher or lower than what your local MSP actually offers.

What to look for in an MSP to enjoy IT outsourcing cost savings

When it comes to outsourced IT costs (like with most services), you get what you pay for. MSPs that charge unusually low fees may offer limited service coverage. On the other hand, those that advertise higher fees may be more stable, have more expertise, and offer a service package that covers all your needs. But it doesn’t always follow that the more expensive an MSP, the better the overall quality of services they provide.

Key to measuring whether an MSP offers great value is if they’re able to consistently deliver good results based on the service level agreement (SLA), a contract that defines the service standard that an MSP is obligated to meet.

It’s also worth looking into a provider’s operational maturity level (OML), which determines an MSP’s capability to serve a business. An MSP with a low OML may not have adequate resources and knowledge to maintain your IT infrastructure’s stability, fail to fix issues immediately, and may resort to break-fix methods. By contrast, an MSP with a high OML is a mature provider that can create an IT strategy that will serve your business’s every technology need.

Regardless of the amount that you’re willing to spend on IT, you should discuss strategies with an IT partner that can help you reduce IT spending. Solution Partner’s team of IT consultants, with years of experience serving small- to mid-sized businesses in Phoenix, Scottsdale, and Tempe, will find ways to decrease your IT costs while giving you reliable, proactive tech support. Discuss IT pricing information with us by leaving us a message or calling us at 623-584-6993.

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