How Can Outsourced IT Services Save Your Business Money?

TSP • @myTSPnet


It takes money to run a business, but if your overhead is too high, you won’t be in business very long. Any business should try to keep overhead costs below 35%, but if your business has a low profit margin, your overhead should be closer to 10% if you want to thrive. Choosing IT outsourcing services can help lower your overhead.

"Overhead" refers to the business expenses supporting your business’s day-to-day operations. These aren’t the expenses that generate any direct revenue for the company, but rather are the indirect costs that don’t change in spite of your profit levels. You can use outsourcing services to help lower some of your costs and turn a bigger profit.

Few businesses will last and be successful without the use of IT. The internet and technology helps you take payments, keep in touch with suppliers, release advertising or marketing campaigns and more. In the modern commercial world there is little you can do to connect with consumers, partners and vendors without the use of IT.

Unfortunately, operating an efficient, highly skilled IT department can take a big chunk out of your budget. Companies sometimes think that reducing the services or the level of IT involvement will help keep their overhead costs down, but this kind of trade can leave you operating inefficiently. It also sacrifices the security and privacy of any data your company has.

Handing over specialized services to a team dedicated to nothing but a particular skill is a move toward efficiency, data accuracy and positive company morale. By choosing to outsource your IT services, you allow your team to dedicate their skills and talents to what they do best while getting professional support.

IT services are complex and diverse. Small businesses or those organizations struggling to contain their overhead often have a hard time hiring all the necessary people to make their IT department function effectively. Outsourcing solves the money dilemma by opening the door to skilled professionals for a negotiated contract rate.

In addition to gaining expert insight and assistance for your IT needs, outsourcing also saves your company money in several ways.

  1. Control Your IT Costs
    It’s common for businesses to watch their IT budget increase year after year. The average IT budget compared to revenue is just under 4% across all industries, though companies working in finance and securities have an average closer to 8%. For many, IT services are fixed costs, especially when done in house.

    Outsourcing IT services can do one of two things for your budget. Either it will change a fixed cost into a variable cost where you only pay for what you need when you need it, or it can give you a lower fixed cost by allowing you to pay one price for services from industry experts rather than piecing together a team in-house to do the same thing.

  2. Reduce Your Labor Costs
    You can change the uncertainty of overhead coming from an in-house IT department by using IT outsourcing services. Recruiting, hiring and onboarding skilled IT staff is expensive and time-consuming. You also encounter fluctuating labor costs with overtime or inefficiency. Outsourcing to a team of skilled professionals gives you more control over labor. You can either pay as needed for services or get a contract for a monthly rate on specific services.

  3. Avoid Expensive Upgrades
    When you manage your IT services in house, you must constantly deal with things like software licensing, upgrades and workforce solutions. In addition to the cost of maintaining or purchasing IT components, your team has to spend time researching all the options and doing training and getting familiar with new technology.

    IT service companies do all the work and stay in the know with industry trends, software, and other equipment. You can take advantage of their skills and proficiencies to avoid costs related to downtime, unexpected purchases and maintenance fixes.

  4. Reduce Training and Certification Costs
    Hiring employees who know the IT industry is difficult when you aren’t sure of the qualifications or training your employees will need. Rather than incurring expenses from certification course reimbursement or training classes, outsourced IT services to certified and qualified IT professionals give you quality results without the overhead investment.

  5. Avoid Liability Expenses
    IT outsourcing services help address compliance and security concerns. Cyber-related issues are an expensive and dangerous liability. An in-house IT team may not have the experience or resources needed to keep a firewall up to date, audit different servers or workstations and implement security standards.

Without a focus on these issues, you could face thousands upwards to millions of dollars in unexpected expenses dealing with security breaches, cyberattacks and non-compliance consequences. Outsourcing to a team familiar with the threats and compliance regulations and capable of implementing defenses and minimizing risks lowers your liability expenses.

There are lots of options when looking at an IT partner, but not every company is the right fit for your operations. Follow these steps for choosing the right partner:

  1. Establish a clear reason for why you want and need to outsource your IT needs.
  2. Select which services want to outsource and what you expect to gain from making this change.
  3. Carefully evaluate the outsourcing models and cooperation types to define what kind of involvement you want to maintain.
  4. Research your options with local vs. online companies and weigh out the pros and cons.

Have a list of questions to ask your potential partner about compliance, security, pricing models and more to ensure your choice will actually lower your overhead.

Every business can make cuts to save money, but by investing in outsourced IT services, one change can have a remarkable impact on all areas of the company’s overhead. Give your company a competitive advantage and financial boost by using TSP for IT outsourcing services. Contact us to find out how we can help.

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