Outsourced vs in-house IT: Which is better?

Here is the age-old debate of many organisations, will an outsourced IT provider or an in-house team be best? And as you look all over the internet, there will be compelling arguments for both albeit likely to be biased.

However, the genuine answer to this debate will depend on your business, its needs, size, industry, and budgetary requirements. There is no simple answer. You are likely to have remained with the IT set-up that you have had for a while.

But is this right for your business in the coming years? Let us look at the pros and cons of both outsourced and in-house IT.

Outsourcing IT

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We should start by clearly outlining what we mean by outsourced IT. Gartner defines it as using external service providers to deliver IT-enabled processes, application services and infrastructure solutions for business outcomes. Outsourcing can be delivered in various forms, from simple software installation and management, all the way through to managing your complete IT infrastructure.

As with any supplier, you should not just opt for the most local, or the cheapest. Careful consideration is required as you will need a provider that can deliver you the most value to your business. From industry expertise to the average time it takes them to resolve an issue. Additionally, your IT provider should be working alongside your business strategy to help the business achieve its goals.

The Pros of Outsourced IT Providers

As with almost all things in life, there are positives and negatives when choosing how to run your IT. Here are the pros of outsourced IT:

Allows you to focus on your core business

You can get back to managing the core functions of your business that deliver products or services to your customers. And you will no longer have the dreaded IT headache worrying about whether your business can offer its products or services. You should be able to work productively leaving IT to the experts.

Access to a great talent pool

The nature of an IT provider is that they will have a team consisting of people with different specialisms and interests, as they need to be able to solve a wide range of problems across an array of clients. Whereas, an in-house team comprising of a couple of people will have limited knowledge and experience of more complicated issues. This is predominantly due to not having exposure to such a wide variety of systems and solutions.

Reduction in personnel size and the associated management

As there would be no IT department, there would be a reduction in the office space and equipment required, less pressure on the management of personnel, no concerns around the holiday and sick leave cover, and a reduction in costs related with ongoing IT training.

Cost efficiencies

With an outsourced IT provider, you will have access to a larger service desk. To have the equivalent in-house, will require your business to recruit for a couple of full-time salaried IT employees. Not only that, but your IT provider will charge your services for a defined period and therefore you have an agreed set monthly cost if there are no additional projects to be included.

The Cons of Outsourced IT Providers

And now onto the negatives of outsourced IT:

Quality

There are so many IT providers out there to choose from, and it is easy to compare each of them based on price. As on the surface of it, it looks like each provider is providing you with the same level of service. Until that is, you investigate the detail. Many IT providers will offer a backup service, but the backup service could be anywhere from a 7-day backup to a 30-day backup. You might be required by law to have a 30-day backup, and you are not receiving that level of service. You must meticulously evaluate your IT provider before selecting them.

Management issues

Once your IT provider is set-up working with your business, you may find it tough to step back from the day-to-day running and management of IT. You may feel that you still need to have control over the everyday IT problems. But you should let the IT provider manage those. Your involvement will become more prevalent in the large IT projects where the IT provider needs to consult with you and the broader business management team.

Poor communication

Often, there are issues with communication between the IT provider and your business, and vice-versa. From describing business goals and problems to the IT provider efficiently, or the IT provider clearly explaining the reasons behind an issue, and what the resolution will entail. It can lead to the breakdown of a relationship between the two parties and ends with them working against each other.

Contracting can be expensive

Often, there are issues with communication between the IT provider and your business, and vice-versa. From describing business goals and problems to the IT provider efficiently, or the IT provider clearly explaining the reasons behind an issue, and what the resolution will entail. It can lead to the breakdown of a relationship between the two parties and ends with them working against each other.

In-House IT Departments

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In-house is the opposite of an outsourced IT provider. You have an in-house team, who manage all your IT requirements from software to infrastructure. The size and expertise of your in-house team will be dependent on the business needs.

Just as you would with selecting an IT provider, you need to be able to recruit the right people that will compliment your business culture, but also want to work towards achieving your business goals. While it can be hard to recruit for such positions, do not hire anyone because you need someone to fill the role.

Pros of an In-House IT Team

Let’s move onto the benefits of an in-house IT team:

Control

You have a level of control over an in-house IT that you do not have with an external provider. For some company owners, it is vital that they can control the teamwork internally, but also the ability to control the processes that are in place. Ultimately, it’s their company and can feel more comfortable with a hands-on approach.

A deeper understanding of the company

An internal IT department will have a better understanding of the company and what it wants to achieve, the internal process, and current projects. It means there is less time needed to explain these as you would need to with an outsourced IT provider. The IT department can crack on with their projects with little hand-holding involved.

Dedicated on-site help

The nature of an in-house team means, your business has an on-site or direct contact who are likely to be immediately available to deal with any issues. These can range from simple password resets, the configuration of computers and laptop,s to setting up a new server or completing upgrades when necessary. Additionally, some employees will find more comfort in someone they know dealing with such issues.

Talent development

You are responsible for the personal development and training of your employees. This allows you to shape the skillset of your IT department to suit your overall business requirements. The employees are happy as they can develop their skills, and your business will benefit from having a dedicated skillset for your needs.

Cons of an In-House IT Team

And now onto the negatives of having an internal IT department:

Expensive

An internal IT department can quickly become expensive. You are likely to need more than one salaried employee to cover sickness and holidays. Additionally, you will need to cover the cost for additional hardware, software, and equipment they need to complete their job to the best of their ability. Plus, the cost of ongoing training on top on all of that. It soon adds up to be more costly than you initially thought.

Recruitment

Recruiting an individual who is a good fit and has the right skill set is challenging. You need to take your time and do not feel under pressure to hire the first person who might be okay. As later down the line, it may harm your business, an unhappy employee, and an unhappy employer.

Narrower technical knowledge

As IT departments are smaller than an IT provider, the level of knowledge and experience will be narrower. An unknown complex issue will take more time to research and fix the issue. An IT provider with several more employees has a sounding board, where someone might have experienced such as issue previously. Continuous training is essential for an internal IT department.

Absence challenges

Unless you work in a large organisation, you likely have between 1 – 3 employees working in the IT department. And like every other employee they are entitled to holiday leave, and occasionally may be absent due to sickness. There will be concerns around the speed of resolving IT issues, but also the impact this may have on projects. It may impact the overall productivity of your business.

What about combining an outsourced IT provider with an in-house IT department?

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For so many businesses out there, they use a combination of an outsourced IT provider with an in-house IT department, to reap the benefits. It eliminates several of the cons of both an outsourced IT provider and an in-house IT department:

  • Absences and sickness isn’t an issue as it can be covered,
  • There is access to knowledge and experience of the company and IT issues on both sides,
  • Employees still have a dedicated point of contact on-site if they require,
  • Your management team may feel more confident to step away from the day-to-day IT activities.

The management of your IT is ultimately based on business needs, size, industry, and budgetary requirements. These should be considered alongside the pros and cons listed above. Don’t just make snap decisions. Take the time to carefully consider what will be the best fit for your business.

Are you interested in an outsourced IT provider? Please get in touch here or call us on 0345 504 8989.

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