The Real Cost of an In-House IT Department

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The Real Cost of an In-House IT Department

Read Time: 6 minutes February 16, 2022

Technology is an essential component in the successful running of a small business, but it can be expensive. When it comes to managing your IT, choosing between an in-house IT team and outsourcing to a Managed IT Support Provider can be a tough decision to make, especially if you’re operating with limited resources. Many SMB leaders believe that outsourcing is beyond their means, and assume that hiring an internal specialist or team is the more financially viable option. 

However, running and maintaining in-house IT support comes with a multitude of hidden costs, and can often amount to much more than outsourcing. This blog post breaks down the financial realities of in-house IT departments, and the potential cost savings you stand to gain by opting for remote IT support.

What are the Costs of an In-House IT Department?

To reach an accurate estimate of the cost of in-house IT for your business, it’s important to consider everything from employee salaries and benefits, to essential tools and potential downtime.

People Costs

The cost of hiring each new IT support employee could be more than you think. Depending on the level of expertise, the base salary for IT support staff could be anything between $60,000 – $150,000+ per IT hire. This amount doesn’t include stock options and benefits, which could easily add a further 20%.

Additional costs for in-house employees include supplies, equipment, office space, and IT allocation, as well as the investment involved in recruiting and onboarding new team members. Below are some stats and figures to keep in mind:

  • Hiring an internal role can take up to 2 months
  • It takes up to 8 months for a new employee to reach full productivity 
  • IT has one of the highest turnover rates, at 18% globally
  • Turnover costs you between 100% – 300% of the employee’s salary

Downtime Costs

25% of small businesses say it costs them about $20,000 to $40,000 per hour of IT downtime. Downtime leads to business disruptions, decreased employee productivity, and significant challenges in revenue generation. That doesn’t include the risk of losing crucial data, failed backups, or security breaches that can happen during downtime. If a critical employee is sick or on vacation during a system outage, how much will it cost your business?

Cost of Tools Required for In-House IT

Apart from the recruitment and employment costs of having an in-house IT team, a business also has to meet the cost of IT hardware and software. At the very least, an internal IT team will typically require:

  • Ticketing software
  • SaaS management software
  • Remote assistance software, such as Bomgar or TeamViewer
  • A CMDB, if that’s not in the ticket system already
  • Network and server monitoring tools 
  • MDM software

Without the appropriate technology stack, your internal team won’t be productive. Yet, these tools don’t come cheap.

Once your technology stack is in place, you risk facing additional device management costs. MDM software is critical to the tracking and security of all devices used in your business.

Generally, MDM costs your business an average of $16,000+ upfront, and an additional 100 or more hours of training for admins. If you choose to run your systems without MDM, you risk facing unmanaged costs of about $5,000 for every device, each year. Not having MDM also means that your business can’t obtain specific security certifications.

Cost Benefits of Outsourcing IT  

Outsourcing IT support to a managed service provider is a common alternative for companies who want to take a proactive approach to cybersecurity, system monitoring, and risk management, without building out a team in-house. Service providers have reliable response timeframes and provide transparent service level agreements. The financial benefits of outsourcing IT include:

Infrastructure Expenses

When you outsource your IT support function to an IT solution like Electric, you are in a position to downgrade the amount of infrastructure you need on site. You can choose to migrate to your MSP’s data centers and IT storage closets, which saves costs in hardware, energy, and space. At the same time, you’ll save money on licensing, training, consulting, and monitoring.

Expert-Level Support

Depending on the MSP you partner with, outsourcing can give you access to large teams of IT specialists and engineers. Pair that with professional project managers, network operators, solutions specialists, customer success managers, and partner networks, you could be looking at an enterprise-level team at your fingertips. 

Having access to this team of experts means that you can solve your IT problems as soon as they arise, helping you get back on track in a matter of minutes. Outsourcing to an IT team that has a variety of skill sets will equip you with far more knowledge than one or two in-house staff.

Scalability

Outsourcing IT support enables you to scale your business up or down without complications. As your business grows, so does the IT support structure. To replicate this benefit internally, businesses would typically need to hire another new IT manager for every increase of 50 employees. 

Your business also becomes more flexible, especially in the early years when you experience significant growth and inevitable change. As a small business owner, you must get what you pay for, which means you’ll get the latest technology, proactive support, and improved security when you outsource.

Availability Gaps

When working with an in-house team, you’re constrained to their availability. This means that their sick days, vacation days, or other availability gaps could leave your business vulnerable. Outsourcing reduces this risk. Providers often offer flexible support hours that accommodate your business needs worldwide.  You’re empowered to have one comprehensive and consistent IT support option for your employees, that you can count on when you need it. 

Device Management

Outsourced IT support services usually include the installation and proactive management of MDM software across your IT infrastructure. By working with an IT solution like Electric, you will have access to professionals in MDM who can align the policies they deploy with cutting-edge security protocols or your specific business needs. While some providers may charge you for MDM software, others absorb the cost. This allows your organization to implement business critical actions including security, patching, imaging, and upgrading, without needing technical expertise, while simultaneously giving you visibility into your device inventory and compliance. 

Partnering with Electric for Outsourced IT Support

Building an in-house IT support team can be expensive and time-consuming. Apart from reducing the hidden costs of employment, outsourcing helps your business scale effectively. It also controls costly downtime associated with an internal team that lacks total capacity. Outsourcing with Electric has many benefits for your business. Contact us today to schedule a consultation and learn how our team can help you.

AUTHOR

Jessica Farrelly

Jessica is a content writer with more than 8 years of experience covering SaaS and the tech industry. She has worked with both B2B and B2C publications across North America, Europe, and APAC and currently writes about IT Solutions or Electric.

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