Making the decision to hire or outsource is a complicated one which has major ramifications for a business. More so, the right decision today is unlikely to be the right decision forever – as your business grows and evolves, your requirements change. The following factors are key to deciding whether in-house or outsourcing IT is the right course of action:
1. Is IT integral to your core value proposition?
If technology is not the core focus of your business, outsourcing your IT operations to a managed service provider will allow you to concentrate your efforts on developing your capabilities and growing your business.
2. Do you have time and resources to recruit, train and manage IT staff?
Hiring staff members is an essential step in building an in-house IT team but it requires both time and the know-how to assess the strengths of the IT candidates. Smaller businesses often lack the necessary in-house IT skills to assess IT candidates. This makes it more likely the successful candidate will have insufficient knowledge and experience. The old adage “you don’t know what you don’t know” is very true for junior engineers who are far more likely to believe that their skillset covers a much larger proportion of a technology or service. Outsourcing to an IT services provider eliminates these concerns. The managed service provider will take full responsibility for finding, training, and managing IT professionals, ensuring that their skills are constantly updated to keep track with technological change.
3. What are the costs of hiring in-house vs. outsourcing IT?
In addition to salary costs, you need to consider other expenses associated with in-house IT teams, including:
- Benefits
- Perks such as bonuses
- Taxes
- Pensions
- Equipment (computers, desks, software, etc)
- Office space
- Management time
- Training
- Recruitment
Furthermore, few businesses factor in holidays, overtime or weekend cover when comparing costs between outsourcing IT vs. hiring. In general, the true cost of in-house IT staff is often double the basic salary cost. Outsourcing is typically the most cost-effective option.
"Today’s disruptive outsourcing environment is filled with opportunities to enhance innovation and market competitiveness for forward-thinking organizations."
- Deloitte's 2020 Global Outsourcing Survey
Typical successful IT models for different sizes of business
When a company reaches 500+ users it is common for it to look at building an internal IT department because the volume, complexity and bespoke nature of the work warrants full-time IT staff. However, even larger organisations struggle finding all the necessary skills so will often outsource specific service components or projects. In other words, for the majority of businesses the decision tends to be around what should they outsource as opposed to when.
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