Outsourcing IT: How to tell if you’re paying too much

When it comes to outsourcing your IT, the saying is true – you get what you pay for.

When looking to outsource any service, price comparison ranks high on the list of criteria. However, despite what you may believe, when it comes to outsourced IT services one size does not fit all, and neither does one price. Managed service providers (MSP)s will price their services based on the level and variety of services they are able to provide. And, since not all providers use the same billing model, it’s rarely an apples-to-apple comparison.

Ultimately, when comparing costs, it comes down to the value the IT service provider brings to your organization and the profits it may help you generate.

Here are some guidelines to help you better understand the IT outsourcing market.

What’s the average cost of IT outsourcing services

Even with a variety of pricing models available, the most common method is a flat-rate, all-in billing, with prices ranging between $110 to $165 per user, per month. Remember though, with the “Get what you pay for” adage, a managed service provider (MSP) will likely charge more because they have the better ability to provide your business with the support and resources it needs to work efficiently.


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The cost and value of a Managed service provider (MSP)

An MSP’s cost and value is directly tied to their operational maturity level (OML). Typically, an IT service provider’s cost is a direct reflection of how well the business functions, and it’s likely that a provider advertising a low-cost fee offers low-level services to its clients. A cheaper outsourced IT services provider often lacks the back-end processes necessary to ensure its operation’s stability and longevity. A survey released by Kaseya found managed IT service providers (MSP) with more expensive offerings generally exhibited higher rates of growth. However, the value of the IT company does not rely solely upon its cost, but the provider’s confidence in the services they deliver.

Signs you’re paying too much for IT outsourcing services

Your outsourced IT services provider should work with your business to reduce unexpected IT costs and provide the best service for the monthly fee you’ll be paying. They should be delivering strategic services, including an IT roadmap for your future expenses, and provide internal business reviews to assess the performance of their services and your IT environment. If your MSP isn’t doing either of those things, you’re likely paying too much for too little service. Additionally, if you’re being charged $200 or more per user, per month, you’re likely paying too much. Your IT services provider should maintain consistent fees and deliver consistent results while keeping the level of services promised in the scope of work and the service level agreement (SLA).

How to budget for outsourced IT services

More often than not, businesses and executives claim there’s not enough room in their budget for IT outsourcing. However, employing a full-time, on-site IT person, as well as downtime expenses throughout the year can mean costs add up quickly. Surprisingly, by outsourcing their IT department, businesses can typically reduce internal expenditures and potentially save money.

Business downtime is any amount of time where your employees’ performance is negatively affected by technology. Every time an employee is held up by printer delays, slow load times, or document loss, the business is losing valuable time that could be used for more revenue generating tasks. Downtime is no longer restricted to server crashes or internet downtime.

Additionally, the costs associated with in-house IT staff leave or vacation, and the potential downtime that comes from missing resources can total, or exceed the amount your organization would spend on managed IT services, and the savings justify investing in a managed service provider (MSP).

 

If you’re still unsure what you should be paying for a managed IT service provider we can help. Contact one of Grade A’s technology experts with your questions or concerns and we’ll help you review your current plan and see where your business can optimize their spend.

 

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