While the unique needs and situations of each organization may vary, Managed Service Providers (MSPs) often present a cost-effective alternative to maintaining an internal technology team. To demonstrate the cost-efficiency of MSPs, we've constructed a fictional yet representative IT team for a medium-sized business based in Cleveland, Ohio. In this article, we'll introduce you to the team members and delve into the associated expenses of retaining an internal team versus opting for MSP-managed IT services.
Our fictional business is a dynamic manufacturing enterprise headquartered in Northeast Ohio, complemented by three other strategic locations dispersed across the nation. Operating with a dedicated workforce of 300 employees, this forward-thinking company reports an annual revenue of $40 million. Its cutting-edge infrastructure seamlessly integrates multiple systems, catering to production shifts that necessitate 16 hours of uninterrupted operation six days a week. In this dynamic environment, the company also accommodates a diverse team of hybrid workers, including leaders and representatives who frequently travel. To uphold the integrity of its operations, advanced security controls are rigorously enforced, ensuring protection of sensitive data and assets.
- IT Director: Responsible for overseeing the IT department, setting strategies in alignment with business goals, managing the budget, and ensuring that IT initiatives support the organization's growth and direction.
- Project Manager: Responsible for planning, executing, and overseeing IT projects that to ensure they are completed on time and within budget. These projects encompass a wide spectrum, spanning from digital transformation initiatives and ERP implementations to compliance and regulatory compliance efforts.
- IT Security Specialist: Focus on ensuring the organization's data and systems are secure. They implement security policies, monitor for threats, and respond to security incidents.
- IT Network Administrator: Provide general IT support services and backend work to keep the network up and running, including troubleshooting issues, assisting with software installations, and managing IT assets.
- Help Desk Engineer: Provide front-line support to end-users by addressing their IT-related questions and issues.
- IT Director: Base salary $141,000.
- Project Manager: Base salary $100,000.
- IT Security Specialist: Base salary $82,000.
- IT Network Administrator: Base salary $76,000.
- Help Desk Engineer: Base salary $50,000.
- 20% benefits package: $90,000 annually
Total: $539,000 annually
*Note, all costs are from Indeed.com in October 2023
The fictional IT team costs $547,000 a year. When you hire an MSP, you don't have to worry about expenses like salaries, healthcare, retirement benefits, and PTO for in-house employees. These costs add up significantly and MSPs help you avoid them. An MSP can provide a comparable level of service to an in-house IT team, often resulting in cost savings ranging from 40% to 60%.
Are you currently working with a smaller IT team? If so, uncover the truth about IT staffing – read 'The Biggest IT Staffing Mistake: The Mythical IT Superhero.
What the Internal Team Is Missing
1. Specialized Expertise
MSPs have teams of experts with specialized skills and knowledge in various IT areas, such as cybersecurity, cloud computing, networking, and more. Hiring and retaining such specialized talent in-house is expensive, as it often requires higher salaries, training, and benefits. If you added additional positions such as a Network Administrator, Cloud Specialist, Data Analyst, or IT Procurement Specialist to our fictional IT team it would increase annual costs significantly.
2. Recruitment & Training Costs:
Finding and onboarding skilled IT professionals can be time-consuming and expensive. MSPs relieve you of the burden of recruitment and training, as they already have a skilled workforce in place.
MSPs can scale their services up or down based on your organization's needs. This flexibility allows you to pay for services only when you need them, eliminating the costs associated with maintaining a full-time staff during periods of low demand.
4. Predictable Costs
MSPs offer fixed or predictable monthly pricing models, making it easier to budget for IT services. In contrast, internal teams may require additional budgeting for unforeseen expenses such as employee turnover or hardware upgrades.
5. Expertise & Cost Reduction of Cutting-Edge Technology
Expertise and cost reduction of cutting-edge technology: MSPs often have access to and understanding of the latest technology that will allow businesses to increase efficiency and drive cost savings. They leverage their buying power to provide you with the latest software, hardware, and infrastructure at a lower cost than purchasing and maintaining it internally.
6. Faster Response Times
MSPs provide 24/7 service as well as rapid response to IT issues. This can minimize downtime and productivity losses, which can be costly in terms of lost revenue and customer satisfaction.
7. Risk Mitigation
MSPs can help you manage and mitigate IT risks more effectively, including cybersecurity threats. They invest in security measures, monitoring, and compliance to protect your organization, reducing the potential financial impact of data breaches or other security incidents. Additionally, if you have a small internal IT team there can be huge organizational risk if a key IT team member departs. Learn more about managing the transition if one of your key IT team members leaves.
8. Focus on Core Business
Outsourcing IT functions to an MSP allows your internal team to focus on strategic initiatives and core business activities.
While MSPs can provide significant cost savings, it's essential to carefully evaluate your specific needs, budget constraints, and the quality of service offered by potential providers. That’s why we put together this eBook on the top questions to ask before choosing an IT partner.