To outsource or not outsource IT? For Los Angeles small businesses, that often is the question.
Of course, the answer is not so simple. On one hand, having an in-house specialist (or multiple specialists) offers a certain peace of mind. If there’s a problem with your IT, someone down the hall is available to fix the problem. On the other hand, turning to a managed service provider (MSP) delivers small businesses a level of convenience and a different peace of mind in knowing that they won’t be flying blind with their technology.
An objection to using an outsourced managed services provider might be pricing. The cost can seem unreasonable for small businesses wondering if having someone in-house is a better alternative. Examining the costs of an MSP versus hiring a dedicated IT person is important to determine which truly is the more cost-efficient option. The results may surprise you.
What Should You Spend on IT?
Naturally, a small business’s IT budget depends on plenty of factors, including number of employees, e-commerce capabilities, the nature of the business’s product or service, and so on. There is no magic number or percentage that works for every organization. However, research has shown that small businesses tend to spend a greater percentage of their overall revenue on IT than their midsized and large counterparts. This could suggest that technology impacts small businesses more (and is thus more expensive), and it also could suggest that these organizations are spending too much to secure the IT they require. You must budget enough so that your IT works for you and your customers, but be careful not to spend too much and cut into your bottom line.
Ask Yourself Some Questions
Assessing your IT requirements is imperative to establishing a budget and determining if the pricing of a managed services provider fits your game plan. Some questions to ask yourself include:
- How much computing power do you require to effectively run the business?
- How much do your customers interact with your technology?
- Do you engage in e-commerce to sell your product?
- If your systems suddenly went down, how much business would be lost in the downtime?
- Do many of your employees work remotely?
- How often are your systems targeted by cyberattacks?
- Is anyone currently on staff capable of handling an IT crisis?
Answering these questions can give you a better idea of what you need to spend on IT—and whether a managed service provider is worth the price.
Small businesses in small towns face a challenge: The amount of IT talent in their regions might be limited, so hiring in-house can be difficult. Alternately, IT experts in tech-heavy areas such as San Francisco or Austin can be challenging to hire—you may not have the budget to pay what these specialists can command. Fortunately, Los Angeles doesn’t encounter either scenario, though as a big city, you will still need to provide a decent salary to hire in-house. That said, LA tech talent is strong, and whether you outsource or put someone on payroll, you can find the expertise you seek.
The Showdown: MSPs vs. In-House IT
Here is the MSP/in-house comparison this post has been building up to—and this is where the surprises start rolling in. These comparisons show the cost-effectiveness of managed services provider pricing:
- Technical support: If something goes wrong with your IT, yes, your salaried tech may be able to fix the problem during office hours, but what happens if your computer melts down when your business is on the clock but your IT person isn’t? Or what if your tech is on vacation? The downtime can be costly—but it’s avoidable if an MSP is just a phone call away.
- Technology development: Few individual IT specialists are experts in everything. If you want to expand your technology into an area your salaried tech isn’t proficient, the process will be slow and costly, or you’ll be paying a third party to do the job on top of what you already pay your in-house person. MSPs are experts in multiple disciplines (and constantly updating their skills) so that however you want to expand, your partner will be up to the task.
- Turnover: What happens when your in-house IT person—who holds all the knowledge of your technology workings—moves on to the next stage of his or her career? Not only will you need to hire a replacement, but you also must replace the established IT intelligence specific to your business. With an MSP, you don’t run that risk.
- Total costs: Hiring someone in-house involves more than just a salary. You must also consider health insurance, 401(k), vacation time, overtime, hiring costs, training, development, and so on. These costs add up—and often might be more than working with an MSP.
- Expertise: The person you hire might be an expert in some areas and not as proficient in others. As already stated, any knowledge gaps may lead to hiring a third party anyway, or you can assemble a team of techs and watch your IT budget balloon. An MSP delivers that team, but for a reasonable cost.
Finding the IT Knowledge You Need
Another challenge for small businesses with IT talent is that, not knowing much about technology, they don’t know what to look for when evaluating someone for an in-house position. Hire the wrong person, and costs can skyrocket. The best managed service providers deliver experience without a lot of sweat on your part. This gives you the confidence that your IT will be handled the right way and frees you up to concentrate on what you do best: running and growing a successful business.