The True Cost of IT Support When Outsourced

Outsourced IT is a solution designed to help you manage your computer technology needs, such as tech support, troubleshooting, help desk services, system administration requests, and installation and configuration of hardware software, systems, and networks.

The idea of having a third party manage your IT functions is appealing. You could save money by eliminating or reducing the requirement for an in-house IT department.

However, before making a commitment, do your research, especially on the expenses of outsourcing. To learn more about how much outsourced IT services actually cost, read on.

Cost of Outsourced IT Support Services vs. In-house IT

You can expect to pay somewhere between $50,000 – $80,000 for outsourced IT support. The range is very broad, and not all services may be useful at first sight.

Conversely, the price of in-house IT with two support staff ranges from $150,000 – $200,000. That doesn’t even include other overhead expenses such as insurance, PTO, and infrastructure required to maintain an IT department. Like outsourcing, this price is not set in stone and may vary depending on what you need. 

Here’s a deeper dive into what goes into these costs. 

What Makes Up the Cost of In-house IT Support Services

In-house IT teams might appear to be the best strategy to keep your operations running because someone will always be available to update everyone’s devices and passwords. However, this method comes with high costs, depending on what you need and where you’re located.

Here are the common things you need when you house your own  IT support.

• Desktop technician: On average, a desktop technician earns about $50,000 annually. The main task of this technician is to maintain computer infrastructure while also solving or troubleshooting problems.

• IT Managers: IT managers command roughly $80,000 – $150,000 per year on average, depending on their experience and ability to manage primary business IT networks. A senior IT manager oversees high-level activities, making sure your company’s IT infrastructure can accommodate industry standards and future growth.

• Infrastructure: The average cost for basic IT infrastructure is around $25,000. That includes server, hardware, software upgrades, and maintenance. 

The common problem for companies is that they can only afford to have one IT manager overseeing all tech operations within the company. 

If you ask your senior manager to perform desktop-level activities, then you are not getting a good ROI on your money. But if you saddle your only junior IT guy with responsibilities way above his pay grade, then you could be in for unpleasant surprises.

The bare minimum for companies with 30 or more employees is a premium help desk solution to manage daily troubleshooting and at least a single IT manager to oversee higher-level administrative tasks. 

The price will inevitably go up as your business continues to grow. A two-member IT team will not be able to keep up with the growing demands of, say, a business with 85 employees. It might need another help desk technician, but this means more expenses.

Learn more about back-office outsourcing services

What the Cost of Outsourced IT Support Services Covers 

Calculating the cost of outsourced IT services can be quite tricky because each business requires different things. Generally, most companies start with a basic plan which includes the following services:

• Remote monitoring
• Help desk
• Server management
• Procurement
• Basic cybersecurity measures
• Software updates.

Other businesses might require more complicated support with more advanced capabilities. For more complex systems, they need the following:

• Cloud-hosting
• Dedicated support agents
• Round-the-clock support

The average Unity Communications client pays around $9 – $25 per hour per head, depending on the service plan and the complexity of the account. This would cost around $50,000 annually. There might be added one-time fees for strategic planning sessions, but the savings are significant in comparison to the overstretched IT department of two.

Take note that these are only estimates. Plenty of other factors should be considered when choosing the outsourcing model that is right for you.

How Does Outsourced IT Pricing Work?

The cost of outsourced IT support services will depend on your provider, your location, and other factors. However, some fundamental concepts give you a better understanding of how pricing works.

Time Block Fees

With time block fees, you pay a specific amount in exchange for a certain amount of consumable service time per month. 

Many low-cost outsourced IT support services will bill you a specific amount for a minimum number of hours—say 40 hours–per month. You might think you are saving more money by going about it this way, but the vendor will often try to charge you extravagant fees after you consume all the pre-purchased hours.

Flat Fees

Flat fees include a standard rate per month for unlimited IT support. This could be a good option since you know exactly how much you are paying each month. 

The only issue with flat fees is that some outsourced IT services try to nickel-and-dime you as much as they can. Later, you discover that the plan you agreed to does not cover rushed response, hardware setup, delivery fees, on-site support, etc.

Per-User Fees

Many IT support packages are based on how many users the provider monitors. It is quite easy to calculate the number of users. Nowadays, anyone in your organization with a PC, laptop, or any mobile device that will potentially require IT support can be counted as a user.  This likely includes almost every person on your staff.

Per Device Fees

Although the per-user pricing model is the most common, per device is also possible. 

Your outsourced IT support can also charge you based on the number of devices your business has instead of how many people use the technology. In this case, you can include all the devices that you need to be covered on the plan, including laptops, PCs, and mobile devices.

Per Hour Fees

With a per-hour setup, you only need to pay for the time you avail yourself of the provider’s IT support services. This way, you are in control of how many hours you need their services, and you receive a detailed breakdown of your charges. Since you can account for how much you are paying, you can plan accordingly for your future goals and needs.

The per-hour method also provides you with the flexibility to scale up or down depending on your needs. Need extra support during peak seasons or the holidays? You can easily do that with the per-hour setup.

A robust outsourced IT support service will work in alignment with your company’s vision and strategies to give you the competitive advantage to stand out against competitors.

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Cost of IT Outsourcing and Value of Services

The cost of outsourced IT support services is linked with the vendor’s operational maturity level (OML). The service’s cost is a reflection of the provider’s business function.

Most likely, a vendor offering outsourced IT support services at a lower cost delivers low-level solutions to its clients. A cheaper outsourced IT provider often doesn’t have the necessary back-end processes to guarantee operational stability and longevity.

Reports found that more expensive outsourced IT support services generally show higher growth rates. However, the quality and overall value of an outsourced IT support company do not solely rely on its price offering. Rather, it is based on the vendor’s confidence in its service.

How to Budget for Outsourced IT Support Services

Outsourced IT support services are divided into service levels, so budgeting should be quite easy. Providers use different names for the various levels but outsourced IT support services generally have three tiers.

Entry-Level IT Support

Inexpensive at first but has high variable expenses.

Entry-level IT support is the most basic management plan. Providers offer this plan at the cheapest recurring cost, usually around $18,000 per year.

Basic IT services include system monitoring and notification. The kind of support you receive at this level is similar to assigning a security team to keep an eye on your networks. The provider will only monitor what’s happening within your server and notify you if something is off, but they won’t take the initiative to rectify the issue.

This type of outsourced IT support service has certain benefits, but the benefits are limited, and costs can easily mount up if you need more help. Companies without in-house IT teams are vulnerable to high variable costs. If you need the provider to do more than just monitor and inform, you will have to pay extra fees, which vary based on the problem.

You might be able to negotiate a consumable block of time. With this, you can have the technician work on the problem until you have consumed the agreed block of time. You might even be able to purchase a certain number of hours at a discounted price. 

The downside, of course, is that you will need to determine which problems are worth consuming the block or if you can wait for another time when you have more hours to spare.

The services included in entry-level IT support are:

• Evaluate and test network systems
• Identify problems and guide users through repair steps
• Improve system performance
• Troubleshoots common issues

Mid-range IT Support 

Ideal Solution for the majority of companies.

The average price for mid-range IT support is $30 000 per year. As is true with many products and services, the cheapest option tends to be more costly in the long run. Outsourced IT support services are the same.

A mid-range plan may be more expensive initially, but over time, it can save you more money because your provider helps you solve complex problems and prevent new ones.

Mid-range IT services are more than mere monitoring and notification solutions. With this type of support, you can hire a team of dedicated IT specialists who will fix the problem when they arise on your behalf. Your outsourced IT team will not only keep an eye on your networks but also take steps to solve the issue without bothering you.

Mid-range IT support allows you to hire a team who can nip the bud of a problem right away. The services for mid-range IT involve all services in entry-level support as well as:

• Disaster recovery
• IT planning
• IT Strategy
• System Backups
• Round-the-clock support
• IT design

High-end IT Support 

Only applicable in certain circumstances.

High-end IT services are usually priced at around $50,000 per year. Not all businesses need high-end IT support. Most of the time, it only applies to those requiring full-hosted or cloud systems. 

If you need an outsourced IT support partner to provide care for most of your computer arsenal, you will need to account for the cost it takes to do so. However, you receive the entire scope of services, including system utilization, support services, and even those offered in the mid-range IT plans—all these in exchange for the increased cost.

Companies can expect the following services for high-end IT support:

• Training end-users on software programs and hardware functions
• Cloud servers
• Backup services
• Database management
• VoIP service

Basic Approach to IT Outsourcing

Outsourced IT support services consist of two broad categories: partially managed and fully managed IT services.

Partially Managed IT Support

Some companies have two or more employees managing IT systems. Depending on your specific needs, you might require a team of in-house IT experts. Or you might just be more comfortable having a full-time in-person team to manage certain IT tasks even if it’s not a requirement.

Either way, outsourced IT support services provide an option for companies with existing IT departments. With partially managed IT services, you can pick what the provider will manage and when. Partial third-party IT support ranges from routine assistance such as security and backup administration to the management of more complex tasks—potentially exceeding the skill of an internal IT team.

Fully Managed IT Support

For many small and mid-sized companies, the most efficient and economical option is to delegate all IT functions. Rather than trying to identify which service should be kept in-house, what kind of staff you need, or how many, you can ask an IT support outsourced provider for their advice and insight regarding the services you need to keep operations running smoothly any time of the day, every day of the year.

A reliable third-party IT support provider is able to collaborate with you and your team to deliver top-of-the-line service that in-house tech departments struggle to compete with.

Benefits of Outsourcing

There are plenty of reasons why investing in outsourced IT support services is worthwhile. The most common benefits of delegating IT management to an external provider are here.

• Focus on Core Business. When IT support is outsourced, you can give attention to more pressing business matters. There’s no need to be preoccupied with network maintenance. An IT service provider can do that for you while you manage your business.

• Control IT Costs: Outsourcing converts fixed costs of IT support into variable expenses, which allows you to budget effectively. In other words, IT outsourcing enables you to only pay for the services you use when you need them. 

• Increase Efficiency and Productivity: Companies that try to manage all tech support services internally have a higher implementation, research, and development time.  These are passed on to your clients. Outsourcing allows you to eliminate low-value tasks and delegate them to the outside provider.

• Access to Professional Help. Outsourced IT support gives you access to seasoned IT experts who are prepared to answer your technical questions and provide the right solution when you need it.
• Real-time IT Support. With a third-party IT service, you get real-time remote assistance anytime. So you don’t experience any delays or have to wait in a queue to get help.
• Lower Security Risks. IT support recognizes compliance protocols and rules. The goal is to defend you against hackers rapidly. Note that 60% of businesses fail within six months following a major security breach. Outsourcing IT services prevents such a problem.
• Better Employee Performance. Experience less tech-related downtime and fewer mistakes. An IT service provider can help you monitor potential issues and solve them right away before the problem gets worse. This leads to improved overall performance.
• Keep Technology Arsenal Up to Date. In the world of tech and computing, conditions can change very quickly. An IT support outsourced provider will ensure that you remain on top of the ever-changing developments in technology.
• Decreased Operational Costs. Working with an IT support provider can save you money. Downtime can cost over $300k per hour, and a third-party IT support team can help prevent this situation.  
• Quickly Deploy New Projects: A qualified BPO provider will have the necessary resources to start new projects immediately. Managing the same project internally might take weeks or even months to employ the right staff, onboard them, and give them the help they need. For many outsourced implementations, the provider is bringing years of experience, saving you time and money.

• Level the Playing Field: Many small businesses cannot afford to match the internal IT services large enterprises have. By outsourcing, small businesses can act bigger than their size since it gives them access to similar expertise and resources that large companies have. 

• Maintain Competitive Advantage. More than half of SMEs believe they are at a disadvantage in comparison to major enterprises, but this isn’t always the case. SMEs can receive high-level services without the same resources as large enterprises and at a reduced cost with third-party IT help.

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The Bottom Line

A reputable outsourced IT support service provider will be upfront about the total cost of your solution, including what the fees cover. The breakdown of the cost will be listed in your contract so you can confirm what you agree to before signing. Clarity is paramount both for you and your IT company because they can provide a reason for their actions based on your agreement.

Needless to say, technology tends to be frustrating and confusing when anything starts going wrong. The purpose of outsourced IT support services is to help you keep frustration and confusion at bay by delegating the management of your tech systems.

If you’d like to know exactly how much managed IT support will cost, we invite you to contact us. We’d like to give your business a quote based on your needs.