As businesses reach profitability, invariably they continue to look for ways to reduce their expenses and overhead. Reducing overhead costs is one of the most effective ways to safeguard a business during any type of downturn. Overhead expenses are derived from expenses that must be paid regardless of whether the business is profitable or in a loss position. There are many ways in which a business can reduce their overhead expenses, according to IT Industry Veteran James Martinos. One of the more common ways to do that is by outsourcing their Information Technology. The benefits are many and here are a few areas Jim suggests you consider when exploring your options:
Reducing and Controlling Your IT Costs
It’s commonly understood that the more successful companies find ways to control their operating costs. Internal IT resources have their advantages, but also bring with them increased operating costs such as the payroll taxes and benefits that the business is liable for. These include the employer’s half of Federal and State taxes, Social Security, Medicare, Health Insurance, etc.
Those companies that use, what we like to classify as, body-shop providers will tell you that outsourcing your IT staff converts those fixed costs into variable costs and allows you to budget more effectively. While they’re partially right, they say that you only pay for what you use, when you need it. However, what they neglect to tell you is that their variable offering costs you more over the long run because they’re not incentivized and motivated properly to eliminate problems. They ultimately end up just charging you by the hour to fix whatever issues surface without any proactive, preventative solutions to mitigate the issue in the long term.
Instead, you might consider an IT Outsourcing provider that offers fix-priced Outsourcing services with Service Level Agreements (SLA’s). With Managed Service Providers (MSPs), businesses benefit from having an SLA that stipulates that if the MSP doesn’t resolve or complete the work expected of them or within a certain time window, a business’s required payment is reduced by a predetermined percentage. This alone incentivizes your IT team to solve root issues rather than giving band aid approaches that allow the body-shop IT team to continually profit on the same recurring problems.
An additional cost that businesses fail to recall is the time and resources invested into the onboarding and training of employees. While it can take an employee anywhere from 2-12 weeks to sufficiently complete occupational training, the time and investment in that training becomes a large overhead expense without much of a promised return. This is especially true when looking deeper into the experience and qualifications of an IT team. The benefit in using an outsourced Managed Service Provider is that businesses don’t have to invest in the onboarding and training. More often than not, the MSP has already vetted and completed that training for said IT team. Additionally, you often find that with an MSP, your IT team is more well versed in a variety of systems and approaches than your Internal IT team often is. This leads to faster resolved issues and longer stretches of time between problems that arise. Having a wider breadth of knowledge often serves a business to a greater capacity than keeping an Internal IT team would.
Reducing Labor Costs
One of the most well-known struggles of running a business is often walking the fine line of having enough staff to enhance sales while not hiring employees that you don’t really need. Hiring and training an IT staff is very costly while temporary employees don’t always live up to your requirements. Labor costs alone account anywhere from 10-60% depending upon which industry your business is in. Outsourcing your IT team lets you focus on your core business and your non-technical, internal resources to focus where you need them the most – let’s be honest, IT is not your focus or your business. So, it’s safe to say that it also shouldn’t be putting a dent in your payroll expenses each month. If your payroll is beyond 30% of your gross revenue, your business would benefit from leveraging an Outsourced Managed Service Provider.
Finding Trained, Experienced, Qualified Experts
Since technology is not your core business, how do you assure an employee is qualified? What certifications matter for your business and industry? How do you know which ones are most critical? Certifications like Microsoft Certified Systems Engineer (MCSE) are critical, but so is experience and industry expertise. Professional IT Outsourcing companies invest in their employees just like you do, ensuring that they’re highly trained both in the technology as well as the industry they are serving. Doing this ensures that you have the right team for the job and project every single time. Your business is important and so it’s important to not take a gamble on the quality of your IT team.
Increase Efficiency and Competitiveness
Let’s be honest, most companies that have their in-house IT resources manage all internal IT services and are often more focused on the tactical activities to keep the network up and running and the infrastructure performing at a level that doesn’t impact the day-to-day revenue generating activities. In turn, there’s no time for them to find more efficient or competitive ways of running the infrastructure that turns the department from a cost-center to a profit-center for the company. Great IT Outsourcer’s perform this kind of function for many reasons, but if you think about it, it creates more value for them and their services. Another reason is, if your IT is more efficient like the old phone dial-tone service, such that you don’t even think about it, then their cost is lower which increases their profits and client satisfaction.
Implement New Technology Capabilities Quickly
High Performing Outsourced IT service companies will have the necessary resources to start new projects quickly. After all, this is their core business. Handling the same project in-house might involve weeks or months to hire the right people, train them, and then provide the support they need. For most implementations, quality IT companies will bring years of experience on the frontend, which will eliminate false starts and thereby saving time and money.
Security Audit, Compliance and Control
Is your firewall up to date? Do you have a DMZ installed? Do you even know what a DMZ is? Do you audit your Workstations and Servers? Do you allow BYOD to the office? Has your company implemented PCI security standards and work to maintain those standards? In today’s eCommerce world, businesses have more ways than ever to grow by taking many forms of payments such as Credit and Debit Cards, Gift Certificates, E-Checks, Wire Transfers to name a few, but with these forms of transacting also comes the need for due diligence and proper security audit and control. By outsourcing a qualified Managed Services company who is familiar with PCI Compliance standards, you can rest assured that your company is minimizing the risks associated with maintaining client data, credit card numbers, sensitive competitive information and more.
DirectPointe® Managed Services
As 2020 comes to a close and the rollercoaster of the pandemic continues to ebb and flow, we see, now more than ever, the need to tighten up business expenses and to find ways to be more profitable. With Outsourced Managed Service Providers like DirectPointe®, businesses are able to reduce their IT spend by up to 35%. With cross-industry IT service abilities, DirectPointe® carries high client satisfaction rates and retention. With an eye to detail and service with extensive experience and expertise, let DirectPointe® show you how you can become more profitable with the cost savings of Managed Services. Learn More.