The financial impact of outsourcing your IT services

Often, for those in companies that have always operated in a very traditional way, outsourcing IT services has never even been a topic for discussion. This isn’t because of the decision makers are against the idea as such, but instead, outsourcing can be something that many people fail to understand the benefits of. It’s easy to get caught up in the idea of outsourcing being too complicated and difficult to arrange. However, there are many benefits to outsourcing that can be worth the (sometimes) complicated initial transition period. One of the biggest benefits of outsourcing is the financial impact it can have on your company.

Saving money by outsourcing isn’t as simple as looking at the cost of outsourcing work and comparing it to the salaries of your current workers, it’s much more complex than this. This could be why some companies believe that outsourcing won’t financially benefit them. This article breaks down the complexities of outsourcing costs in comparison to those associated with an in-house IT team to give you a better understanding of how outsourcing IT support can potentially save you thousands of pounds in costs usually associated with recruitment and in-house teams.

Salaries vs outsourcing costs

Often, the amount you’ll spend on salaries will be less than the outsourcing services alone. This isn’t always the case, however, sometimes you’ll need to look deeper into the costs associated with employees to find the true financial benefits of outsourcing. This means you must identify and compare the hidden costs with those that you’d spend on outsourcing your IT services.

Recruitment

Recruiting top talent for your company is often very expensive. You may spend a substantial amount each year just on advertising new positions or using recruitment consultants and agents. you must break down how much you spend on recruitment related activities. You may even have representatives from your company working at recruitment fairs for several days each year to attract talent to apply. There will likely be costs associated with this, for example, travel and accommodation, not to mention the impact of having employees taken away from their usual roles, which may mean paying overtime or other cover costs such as employing temporary agency staff. These examples highlight how complicated and expensive recruitment can get.

Costs associated with retention

Keeping your employees at your company can be something that many businesses struggle with. Ensuring that your workforce is happy and fulfilled in their roles can come with many costs. For example, staff bonding days or other team-building activities, staff parties or food delivered to the office regularly. Many of these costs are additional costs of having an in-house team that is often not considered.

Employee benefits

In addition to the costs associated with retention listed above, employee benefits or perks can also be considered a type of retention cost. Things like paying for private insurances, subsidised leisure memberships, parking costs or paying for external discount schemes can all add up. Often, the amount you spend on salaries each year is just a small portion of the cost associated with employing your IT team in-house.

Sick leave, maternity, and holiday pay

Sick leave, maternity pay and holiday pay can cost businesses thousands each year. Not only do you need to pay the employee that is taking the leave, but you also need to cover their absence. Giving employees leave is a legal requirement, but it is also a cost that is associated with having employees that aren’t a worry for those that outsource their IT support.

Breaks

Regular breaks are also another legal requirement that employers must ensure they facilitate. When employees take breaks, however, their temporary absence does cost money. When a portion of your workforce is on a break, your output is affected. This can, in turn, cost money, as this time needs to either be made up elsewhere or the business has to take this as a hit on their output, potentially losing money as a result.

Management

Management is a huge part of running a successful company, but it also costs a fair amount of money. Managers often have higher salaries and can cost more to recruit than less senior workers. When you choose to outsource your IT support, the company that you outsource with will already have high-quality managers in place to manage the workload that you assign to them.

Productivity

Ensuring that your workforce is productive can be a concern for most businesses. Poor productivity can have an impact on company profits as a result of poor performance and output. When you outsource your IT support, you don’t need to consider productivity and instead assign the workload that you need completing. It is the responsibility of the company that you outsource with to take steps to improve productivity in their own company, which won’t affect yours.

Summary

These are just some of the costs that may be associated with having an in-house IT support team. It is easy to see that the hidden costs relating to an employed workforce add up quickly and often can be difficult to identify. Outsourcing can be a financially beneficial decision for many companies that would otherwise employ an in-house workforce to cover their IT support operations. Outsourcing also takes away a lot of other complications related to having staff, meaning that you can focus on other areas of your business such as growth and company profits.