- Lower Opportunity Cost – Outsourcing IT frees up senior executives’ time and resources to pursue strategic and value added activities that can substantially add to the firm’s bottom line and its cash flows. Now rather than chasing IT issues, managing IT resources, and handling frequent employee turnovers, executives focus on value creation through better customer service and revenue increase. Keeping IT in-house may result in some cash savings, but it always comes at a substantial opportunity cost to the firm.
- Implementation of Best Practices – In-house resources seldom have any incentive to implement best practices for risk mitigation. They are either concerned with job security or finding the next best opportunity, and neither case bodes well for having best practices in place, especially in the areas of business continuity and cybersecurity. Managed Services companies know their long-term relationship with a client depends on minimizing such risks through constantly learning and applying industry best practices.
- Team Approach – Many small firms think they can save “money” by hiring one IT resource. However, what they don’t realize is that one person, no matter how good, cannot replace the value that a team brings, a team that consists of tier-1, tier-2, tier-3, network engineers, server specialists, etc. Additionally, by hiring just one resource, firms put all their eggs in one basket. What will happen when the lone resource gets hit by the proverbial bus or walks out the door?
- Elasticity – As with the team approach, a managed services firm provides its clients with the ability to scale its operations in either direction. The managed services footprint can grow or shrink with the business. While it’s true, that a firm can always hire another IT resource if it expands its business, but doing it seamlessly without all the HR headache is always preferable. Additionally, dealing with the need for fractional resources (imagine a firm scaling up from 1 to 1.25 FTE or scaling down from 1 to 0.6 FTE) becomes even more difficult with in-house resources, but not with a managed services provider.
- Professional Indemnity – Professional IT Services firms carry, in addition to Workman’s Comp, at least $1 million in General Liability and E&O (errors and omissions) coverage, thereby, indemnifying their clients of any serious loss to their business as a result of IT Services firm’s negligence. This is never possible with an employee, who will at most be fired from his/her job, but the firm will be left to deal with all the losses.
Click here to download our white paper on IT Outsourcing