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benefits of it outsourcing
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The Benefits and Real Cost of Outsourced IT Projects and Services

Manav Patel,

As the complexity of IT systems grows, keeping an in-house team can be both challenging and costly. So companies are increasingly turning to outsourced IT support to remain competitive at affordable costs.

This is where outsourcing emerges as a distinct option, offering a large number of advantages that can help businesses streamline their operations, reduce costs, and focus on their core competencies.

According to a survey, the global outsourcing market is expected to reach $904.948 billion by 2027, reflecting the growing demand for these services.

However, it’s significant to understand the true costs and benefits of IT outsourcing before making a rash jump. Towards the end of this article, you will have a clearer picture of what outsourced IT entails, enabling informed decisions in line with your organization’s goals and budget. 

So whether you’re a startup looking to scale quickly or an established business seeking to improve your IT infrastructure, the positives of outsourcing will surely fuel the growth. So, let’s dive into the cost and benefits of IT outsourcing services. 

What is Outsourced IT Support?

An outsourced IT support is a service model where a company designates some or all of its information technology functions to a third-party provider, typically known as a Managed Service Provider (MSP) or IT Services Provider.

This approach permits businesses to access specialized expertise, advanced technology, and far-reaching support without the need to maintain an in-house IT department. These providers offer a wide range of services to meet unique business requirements. 

The services include:

  • Ad hoc: Hourly rate support for resolving explicit issues as they emerge, often referred to as “break-fix” support. 
  • Monthly fee-based contract: It includes services like software development, cybersecurity, network monitoring, cloud solutions, and guidance from a virtual Chief Information Officer (vCIO).

PRO TIP: With numerous MSPs available, it’s essential for businesses to carefully assess and select a provider that meets their technical needs as well as lines up with their goals, values, and company culture.

Thus, a carefully chosen IT service provider has the potential to become a valuable partner, contributing to the growth and success of the organization through the delivery of reliable, scalable, and innovative technology solutions. 

Real Costs of Outsourcing IT Projects and Services

The real costs of outsourcing IT projects and services extend beyond the financial aspect, encompassing various factors that businesses must consider before engaging in outsourcing arrangements.

The real IT outsourcing costs associated:

  • Vendor selection costs include carefully reviewing proposals, conducting interviews, and negotiating contracts.
  • Transition costs include migrating IT infrastructure to a new provider, such as fees associated with data transfer, system integration, and user training.  
  • Hidden costs are additional charges for things like after-hours support, emergency services, or specialized software licenses.

Additionally, other costs associated with outsourcing IT services, such as management fees and vendor lock-in expenses, can arise. To manage these costs effectively, consider using a transparent pricing model offered by your outsourcing IT partner.

Here’s what the pricing model of outsourcing IT services looks like:

Per-device fixed fee: This model offers a flat rate for each device you use in the company, for example, a laptop, desktop, or server. As the number of devices fluctuates, so does your cost. 
Per-user flat rate: This model charges a fixed fee per user using your IT infrastructure. It can be beneficial for businesses with predictable growth plans and tight budgets.  
Monitoring only: This model offers network monitoring and notification services, protecting against cyber threats. It’s perfect for smaller businesses with limited budgets and high cybersecurity needs.
Ad-hoc fees: This model offers IT support and services on an “as-needed” basis, with costs fluctuating based on requirements. It is best for businesses with minimum  IT dependence that only require occasional technical support. 

Hence, choosing the right pricing model depends upon your needs and budget, including factors like business size, growth plans, and expected IT support needs.

Besides the pricing model, it’s significant to consider other costs like one-time setup fees, recurring maintenance costs, and additional expenses. This ensures an informed decision-making that lines up with your business goals.

When calculating the total cost of an outsourced IT solution, you need to consider types of outsourcing costs such as:

types of outsourcing cost
  1. One-time costs: Expenses incurred just a single time, normally at the beginning of an  IT project or service. It includes setup fees, initial hardware or software purchases, and implementation costs. They are non-repetitive and are not incurred on a regular basis.
  1. Recurring costs: Expenses that repeat at regular intervals over a predetermined period.  It includes month-to-month or yearly charges for services like subscriptions, maintenance contracts, and ongoing support. Recurring costs are predictable and occur regularly throughout the duration of the project or service.
  1. Additional costs: Unexpected or variable expenses that may arise during the course of a project or service. It can include unexpected upgrades, change requests, penalties for exceeding usage limits, or any other unplanned expenses that are not covered by the underlying financial plan.

Read Also: How Can You Optimize IT Outsourcing Costs Without Compromising Quality?


Now let’s explore the Benefits of IT Outsourcing:

What are the Benefits of Outsourcing IT Projects and Services?

Outsourcing IT projects and services offer numerous advantages that can significantly benefit your business. Here are some key Benefits of IT Outsourcing to consider:

what are the benefits of outsourcing

1. Enhanced focus

Imagine your internal team is freed from the burden of troubleshooting technical glitches and managing software updates. Outsourcing IT allows you to concentrate on core business activities such as sales, marketing, and product development. 

This intense focus leads to increased productivity and possibly higher revenue generation. Moreover, the dedicated internal team can focus on essential IT strategies that directly align with your business goals.

2. Access to expertise

Building an in-house IT team with a diverse range of skills can be costly and time-consuming. The reason why outsourcing is good is it provides instant access to a pool of experienced experts with specialized knowledge in different IT domains, such as cybersecurity, cross-platform app development, and cloud computing.

These specialists can handle complex technical challenges efficiently, offering immediate solutions, strategic guidance, and best practices to keep your systems running smoothly. Consequently, your internal IT resources (if any) can focus on more elevated projects and innovations.

3. Quick support

Downtime caused by IT issues can majorly impact productivity. Outsourcing ensures timely remote assistance from skilled IT professionals. Whether facing an organizational blackout or product breakdown, quick intervention minimizes downtime and maintains smooth business operations. 

Also, many outsourced IT providers offer 24/7 support, guaranteeing your business coverage even beyond regular working hours. This feature is especially important for businesses operating globally or relying on continuous, 24/7 operations. 

4. Improved security

Cybersecurity threats are constantly increasing, and remaining on top of things requires specialized expertise. One of the major benefits of IT outsourcing is it partners you with security-conscious providers who understand compliance standards. They implement effective security measures, including firewalls and data encryption, to protect your sensitive data and limit the risk of cyberattacks.  

These providers also stay up-to-date on the latest security threats and weaknesses, proactively patching your systems to prevent potential breaches. Similarly, they can conduct regular security audits and penetration testing to recognize and address any weaknesses in your IT infrastructure before they can be exploited by attackers. 

5. Increased productivity

Technical hiccups can fundamentally disrupt employee work processes. IT outsourcing guarantees proactive issue resolution by dedicated experts. This means less disturbances, minimized downtime, and a more focused workforce.  Employees can then concentrate on their core tasks. 

Moreover, a well-maintained IT infrastructure limits disappointment and establishes a smoother work environment for your employees. This means higher employee morale and possibly lower turnover rates, and ultimately, a happier and more productive workforce.

6. Latest technology

Staying up-to-date with rapid advancements in technology can be a challenge. Outsourcing IT partners with service providers who are continually improving and adopting the most recent technologies. This ensures your business benefits from the advantages of advanced technology without the burden of hefty investments in new infrastructure or staff training.

Moreover, they can offer continuous support and training to your employees, guaranteeing they can use these new advancements effectively. This proactive approach keeps your business at the forefront of technological advancements and allows you to stay ahead of the competition.

7. Reduced costs

Building and maintaining an in-house IT team accompanies a range of fixed expenses, including salaries, benefits, and office space. Thus, outsourcing IT projects and services can offer a more cost-effective solution. You typically pay a transparent monthly fee based on your specific service needs, potentially leading to significant cost savings.  

Additionally, some outsourced IT service providers offer flexible service packages, allowing you to scale your IT support team up or down as per the business requirement, maximizing your return on investment (ROI). This helps to eliminate the risk of overstaffing your IT department during slower periods.

Therefore, outsourcing IT projects and services not only offers immediate benefits but also contributes to long-term productivity and cost-effectiveness

Frequently Asked Questions

1. What is the average cost of outsourced IT support services?

The average cost of outsourced IT support services can vary based on factors like the scope of services, the level of expertise required, and the service provider’s location. However, rough estimates suggest that small to medium-sized organizations might pay in the range of $20 to $150 per hour for basic IT support, while more specialized services or complete packages can range from $2,000 to $5,000 per month.

2. What types of IT services are appropriate for outsourcing?

Here is a list of IT services that are most suitable for outsourcing:

types of it services for outsourcing

3. What is the average cost of maintaining an in-house IT team?

For a small-to-medium-sized organization (20 to 30 employees), an in-house IT team usually consists of a help desk expert and an IT manager, costing around $150,000 to $200,000 yearly in salaries. Additional expenses such as paid time off, insurance, and IT infrastructure overheads are excluded. As the business grows, more hires might be required, leading to inflated costs. 

4. What is the difference between Outsourced IT vs. Co-managed IT?

FeaturesOutsourced IT ServicesCo-managed IT Services
Control and ResponsibilityVendor manages most aspects, limited control by the organizationThe internal IT team and vendor work together for shared control
ExpertiseThey have access to  a wider range of specialized expertiseUtilizes  existing internal expertise with additional vendor support
Cost structureOutsourced IT services typically a fixed monthly feeThe prices for co-managed IT services may vary based on usage and resource allocation
TransparencyLimited visibility into internal workings of the vendorClearer visibility into IT operations through collaboration
Technology integrationOutsourced vendor manages integration with existing systemsRequires joint effort from internal IT and vendor for seamless integration
Implementation timeThe implementation time is faster due to minimal internal involvementThe implementation is slower as it requires collaboration between internal and external teams
Security and ComplianceThe IT service provider is responsible for security measuresShared responsibility for security protocols and compliance adherence

Final Thought

Conclusively, outsourcing IT projects and services offers a convincing value proposition for businesses of all sizes. By using the expertise of external providers, you can get close enough to a more extensive scope of abilities, streamlined operations, and decreased costs. This frees your internal team to focus on core business activities that drive growth.  

However, the decision to outsource shouldn’t be taken lightly.  Carefully assess your business needs and pick a reputable provider that aligns with your objectives and culture. Kody Technolab is one of the trusted IT outsourcing partners of businesses from diverse industries. Connect to our experts to know how our domain expertise can help your business grow exponentially.


Manav Patel

Manav Patel is the founder of Kody Technolab. His visionary ideas and passion for technology have backed Kody Technolab's success. He nurtures the team with his knowledge and skills.

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