Does Outsourcing Your IT Save on Costs?

With little time on your hands to review all of your costs, there maybe some quick wins with cost cutting you can implement, with clear returns and savings, starting with your IT.

Changing cost benefits of outsourcing IT

While your internal IT department might lack the appetite for change, business consultants or colleagues will often point to IT outsourcing as a potential solution. But if you’ve always undertaken IT in-house, the world of outsourcing can seem overwhelming and uncertain. For one, does it actually reduce costs?

Within some small- and medium-sized businesses, the motivation for outsourcing IT can be solely related to costs. In short, it’s fuelled by a desire to see a reduction in the continually expanding company IT budget.

Around 15-20 years ago, this was definitely the case – especially for larger businesses with more PCs and better economies of scale. Outsourcing IT meant saving on local hardware hosts, which accounted for a large percentage of the overall IT budget.

While the hardware cost-reduction benefits have essentially evaporated today, these early-adopting larger businesses have passed on some valuable additional learnings to their SME counterparts. Put simply, the outsourcing approach was found to also reduce budgets for research and development, training, sales, operations and admin as a by-product.

That leaves SMEs with one overarching question – does outsourcing your IT reduce overall business costs?

6 ways outsourcing IT reduces costs

With industry forecasts from Gartner suggesting that global business will increase spending on IT by 6% in 2021, it’s never been more timely to consider how outsourcing IT will reduce your overall business costs:

1.    Training

We’ve all been on training courses where the contents simply don’t get used within our day-to-day duties. This is the case for many SME IT managers, which makes it harder to stay up to date and pass that expertise onto their staff. Serving the same role for many different businesses and using their IT knowledge on a regular basis, outsourced IT professionals remain constantly agile and current. That will save you money on training as well as giving you the best expertise at all times.

2.    Effective planning

With so much else to contend with, it’s almost impossible for internal IT teams to stay on top of the latest updates and issues. Whether it’s an OS release or IT compatibility, not being aware of these issues can result in unplanned system downtime. By mitigating these issues through outsourcing, you’ll also sidestep downtime and the costly loss of productivity that comes with it.

3.    Delivery of IT services

Delivery of IT services requires providers to be informed and relevant. With all the different mainstream technologies that are now used within a businesses’ IT infrastructure, keeping up to date to ensure that they are utilised and maintained correctly is becoming more and more challenging for a small internal IT team.

For an outsourced IT provider, keeping informed and relevant is an expected part of the service for all clients. Investments in certifications and research can be offset against the delivery of this service more efficiently. That’s effectively passed onto your business as a saving in research and development.

4.    Segregation of duties

An internally controlled approach to system access rights may have worked sufficiently when the business was smaller and less complex. But as your business grows, it can start to impact negatively on the efficiency levels of employees. Outsourcing will deliver a clear segregation and digital workflow for changes in access rights. In turn, this will provide a clearer definition of an employee’s role, usually accompanied by an increase in focus and efficiency.

5.    Business growth support

More and more potential clients for SMEs are insisting upon certain IT standards within their suppliers’ IT infrastructure, including:

• Data centres to be ISO27001 accredited as a minimum.
• Cyber security measures expected to include any connected devices having EDR (endpoint detection and response).

With limited capacity and possible lack of motivation for change or investment, an in-house IT department might be passive when requests for the above standards land on their desk. That could leave to a loss of clients and a lack of new business.

On the other hand, a credible IT managed service provider will have an enthusiastic and consultative approach, understanding the business’s needs in order to make recommendations for any suitable best in class technology.

6.    Contract amalgamation

The amalgamation of support contracts is always quicker and easier when IT already exists as an outsourced managed service. There’s no need to analyse a large number of different support contract T&Cs and provide risk assessments. Instead, the responsibility to protect and manage this is dealt with as part of an outsourced IT managed service.

The verdict

For some SMEs, outsourcing IT responsibilities could make a huge impact – but the results will different from on organisation to another.

If you want to get an idea of how IT outsourcing could affect your costs, the best place to start is understanding the wider implications of the current IT systems. A free Resilience Audit from Thinc can help you do exactly that, so you’ll be able to make an informed decision about the best course of action for your business.

Alternatively, if you’d like to talk about your managed IT requirements in more depth, get in touch with our expert team.