What’s the cost of outsourcing IT services?

A Study of Cost & Talent

IT Department Structure

Cost often drives the outsourcing of key IT applications and services, but analysis shouldn’t stop there when looking for managed services.  Factoring in employee acquisition, salaries, employee workloads and the core expertise of your IT department also needs to come into play when making the decision to outsource or keep the IT applications/systems under the management of your in-house staff.

Case Study: IT in a Professional Firm

This case study focuses on the ongoing support needs and costs associated with a small to medium sized service-oriented business.
In this example, a firm employs 4 executives, 4 executive assistants, 2 clerical staff members, 10 account reps, and 55 associates.  They have a single office and have one network administrator as well as a junior level technician that assists the network administrator with daily operations. The network administrator is leaving in one month.  The management committee needs to identify the route the firm will take in the future.   
Over the last decade, the IT needs of the firm have changed dramatically as technology has evolved and the firm’s caseload has grown. 

Current network structure: 
75 Desktops and Laptops
• VoIP Phone System
• Multiple servers providing inter-office support functions as well as hosting the accounting and human resources systems, client databases, email, backups, etc.

Let’s start with a breakdown of the costs that the firm is currently incurring. The salary for the Network Administrator IV is based on the average figures from salary.com


The salary for the PC Technician is based on the average figures from salary.com.

The management committee is evaluating the idea of outsourcing their daily IT operations to a local  IT consulting firm.   As such, they listed the benefits and drawbacks to their existing support structure.

Components and Cost of Outsourced IT

As a general rule, managed IT services are billed on a usage basis – you pay for the services being delivered.

There are primary and optional components of outsourced IT:

1. Infrastructure Maintenance/Management. This includes monitoring, alerting, patching/updating and configuring of server(s), workstation(s), firewall(s) and managing backup and disaster recovery.

2. User Support. This can be on-site or remote, and delivered on an unlimited or time/materials (hourly) basis.  

3.  Strategic Consulting (CIO Services). In some cases, a business will engage a CIO-level consultant to develop a technology roadmap and strategic plan, IT budgeting, business continuity planning and generally help align their technology decisions and budget with the direction of their business.

Average cost for Outsourced IT

The cost of outsourced IT depends wholly on the level of service that you require.  Complete infrastructure care with unlimited support and CIO services for the above example of multiple servers, 75 users, etc. can range from $5000 to $9000/month while simple Infrastructure management and maintenance (with support being billed on a time/materials or hourly basis) may be as low as $1800 to $2500/month.


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