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According to a recent Computer Economics study, small companies lead others when it comes to outsourcing their information technology (IT). The reason? — Cost savings. The average cost savings for companies who decide to outsource IT are as high as 40 percent!
While outsourcing IT services and support can have many benefits including cost savings, there are a few questions you need to ask:
Essentially, the biggest question here is whether outsourcing IT is the right choice for you; understanding the benefits of outsourcing might convince you that it is.
The Benefits of Outsourcing IT
When outsourcing IT you have the expertise of a team of professionals rather than just one or two in-house IT employees. If you outsource, you won’t have to spend the time recruiting, hiring, training or managing an IT employee. IT companies pay for their employees to be trained and certified in many proficiencies. Plus your outsourced IT provider can be an extension of your IT department if you already have one, or act as your entire offsite IT department.
Outsourcing your IT to a company that will continually monitor and maintain your IT system is less expensive than hiring even one IT employee. An in-house IT technician will cost you more than $70K a year, typically more than you’d pay for outsourced personnel. You won’t have the expense of recruiting, hiring, and costly benefits that you would with an in-house employee. Plus an outsourced IT company can provide you with access to services and equipment at a much lower price than you could find on your own.
An outsourced IT company will provide 24/7/365 coverage, so unlike an in-house IT employee, illnesses, vacations, family issues and holidays won’t disrupt the management of your system. Plus, according to a report in IT Management, many companies choose to outsource IT for access to resources that would otherwise be unavailable, such as hardware, infrastructure access, IT capabilities and other benefits. Businesses without the extra office space, employee availability, or language differences are able to better serve their clients around the world.
An IT provider can offer the flexibility of scaling up if your company gets a new project, or scale down if you lose some business. You won’t be saddled with extra IT employees you don’t need or get caught short if you need to quickly expand your business services and IT infrastructure.
Outsourcing to an IT provider allows you the ability to focus on your core business rather than IT worries. You also have the flexibility of choosing basic support services, such as help-desk services, and add more advanced operations later, such as security management. According to Computer Economics, the most commonly outsourced IT operations include data center and disaster recovery. Additional services provided by IT outsourcing companies include virus protection, data backup, purchase consulting, technology infrastructure assessments, and email marketing management.
When an organization tries to handle IT services in-house, they typically have a much longer research, development, and implementation time. All of these not only increase costs but can also slow down your business processes and productivity.
Your outsourced IT provider can continually and remotely monitor and backup your IT system, with the new hybrid and private clouds you can have a system that is protected and accessible from anywhere 24/7/365 and is totally encrypted and secure. This ensures your staff is always productive, even during a power outage or any disastrous situation, preventing work downtimes. When you consider this, your outsourced IT company pays for itself if you’re dealing with IT downtimes or crashes.
Many business owners and their directors don’t even know what an IT employee does, so how can you effectively supervise what they are or aren’t doing? With an outsourced company you have a contract to back the service they provide, and your costs will be predictable.
Deciding On An IT Provider
Prior to requesting any price quotes or contacting IT providers, you should make a list of all the services you’ll require. For businesses with minimal experience with IT, start with the basic IT needs such as a server, data storage, software, maintenance, technical support for employees, and plans for expansion.
The largest factor to consider when making outsourcing decisions is the cost. Outsourced IT services are guaranteed, and defined in your contract. If your IT provider doesn’t deliver the services that you’re paying for, you could be eligible for refunds or penalty costs.
What Should Your Outsourcing Contract Include?
You should receive a contract from your IT consulting company that outlines the services and specific costs to be performed. A separate form of agreement, a Service Level Agreement (SLA), outlines the specific details of the contract; for example, “the help desk will be available between 6 am and 9 pm daily.” The outsourcing contract itself should outline the more general details, such as:
Governance software allows your business to evaluate work as it’s completed. This is a valuable tool for both parties, and the service contract should definitely allow you to use governance software. The contract should also include provisions regarding the actions you can take if your IT provider doesn’t meet the requirements specified in the contract.
The contract should outline what you’re purchasing and include a “benchmarking” provision, which allows for a third-party opinion if you expect that ongoing costs associated with your project have dropped. (Prices for IT services can decrease as your technology improves.) In most instances, you’ll be paying a fixed monthly fee for ongoing services.
Termination of the contract should be covered in the contract, and it should address ownership rights, data and information transfers, as well as other common issues associated with terminating an ongoing service agreement.
Remember that your outsourced IT provider isn’t going to fix all of your IT problems overnight. If your business already has trouble managing technology due to inefficient communication, poor system construction, or lack of scalability, it’s likely that your IT outsourcing provider will have to spend a bit of extra time on these problems. But in the long-term you’ll be glad you outsourced IT!