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BFS Capital Blog

Should You Consider IT Outsourcing for Your Business?

September 22, 2016

“The IT guy is out.”

Those are the five words everyone dreads hearing when the computer system goes down. But inevitably, the person who knows all the secrets to your company’s tech systems will be sick, on vacation, or will be otherwise inaccessible in an emergency at some point. And tinkering with the computer system yourself will only make matters worse.

This doomsday scenario might not play out every day in your small business, but it happens. And it is one reason you might want to look into outsourcing some or all of your information technology.

What Does Outsourcing IT Mean?

In the horror story above, outsourcing your IT would mean you had a professional on-call who could handle such a disaster. But it means a lot more than just preventing catastrophe.

“Information Technology” is a pretty broad term, and can mean anything from your customer database to your accounting systems to inventory management.

“It breaks down into four major categories: managed services, cloud services, security services and managed technical services,” explains Matt Gallo, Director of Sales for United Data Technologies, an IT management company specializing in small businesses. “And a company needs to look at their budget first and make sure it strategically aligns with their IT needs.”

For example, if you don’t put information on clouds, or clouds are out of your price range, paying someone to manage them for you is a waste. Similarly, if you’ve already got someone on staff who handles technical issues, outsourcing might not always make sense. But, if you don’t have anyone dedicated to managing your technology, or just one person at a larger firm, looking into outsourcing might make sense.

What to Consider

In examining whether or not to outsource your IT, you must look at four major factors: cost, benefits, flexibility and risk.

Cost – To examine the true costs, you’ll need to make two lists. One that lists out the costs – in employee salaries and benefits of IT employees, or in the time used by employees in different roles who also handle IT – to see what handling it yourself will entail. Then in another table, figure out the price for outsourcing.  It may be cheaper to handle in-house, but there are still other factors to consider.

Additionally, if you’re looking to sign a multi-year outsourcing contract, look at what those costs will be over time, factoring things like employee raises, increased insurance premiums, and the like.

Benefits – Beyond just saving money (if you are), look at what potential benefits of insourcing and outsourcing might give you. Do your IT people help your company in other roles? Perhaps outsourcing would also allow you to provide more in-depth service to your customers.  You can also look at the benefits of individual services, such as only outsourcing 24-hour tech support service, or maintenance. Outsourcing those might free up your IT team to work on developing and improving your tech infrastructure.

Flexibility – Examine how much additional time outsourcing IT will give you and your employees. You don’t necessarily need to monetize that time, but look at the projects you’d rather have people working on, and see if those are big enough goals to warrant the extra expense.

In looking at a different type of “flexibility,” see how much service your company needs now for its information technology, and what you’ll need as your business grows. Find a company that offers flexible contracts so you can expand when and if you need to.

Risk – As with anything, outsourcing your IT carries with it a certain amount of risk. On the one hand, you are entrusting possibly sensitive data to an outside entity. And while most companies who offer IT management services won’t jeopardize your data, there is an inherent loss of control. If your data is the type you absolutely cannot have in the hands of outsiders, this is a risk you need to weigh.

On the other hand, you must also examine the risk of relying on your own IT personnel versus a professional management company. Maybe you have seasoned pros on board who know IT security as well as anyone. But if your people are newer to the field, or might leave the company for a higher-paying job, you’ll need to assess the risk in utilizing them instead of outsiders.

How to Pick an IT Management Company

If you’ve decided to outsource, the next step is figuring out what level of service you need, and who to contract with. Gallo suggests that smaller companies – those with fewer than 30 employees – actually benefit the most from fully outsourcing. While larger firms with more resources to utilize for IT may want to pick and choose.

Once you’ve done that, assess what each management company does, and whether it’s in line with your strategic objectives.

“Understand the difference between support of IT infrastructure and database/software development,” Gallo says. “Most providers won’t support a company on the software development side, and you need to be careful with ones that do. A ‘one stop shop’ may seem nice in the beginning, but you lose the ability to strategically separate later on.”

Ask around to other businesses in your field and with the local chamber of commerce, to see what other people have to say about companies you’re considering. Then interview them like you would an employee to make sure they complement your corporate culture.


Outsourcing, of course, isn’t free. And investing in it, like any investment, takes some serious examination. But if you do decide to entrust your IT to an outside company, it can save a lot of time, and free you up to work on growing your business instead of maintaining it. And, if nothing else, never have to utter the dreaded phrase “The IT guy is out.”