The pros and cons of outside IT experts— what you need to look out for and what you should expect.
Businesses are struggling to meet the complex demands of digitisation. The number of specialists or IT experts required to manage website design, SEO, social media engagement and online marketing, has ballooned. So too has the importance of expertise in cybersecurity, disaster recovery and network maintenance. Cloud computing, changes to the data centre, and the ubiquity/utility of data analytics has made keeping on top of your business’ IT demands a full-time job.
Changing your IT infrastructure is a whole other challenge. There are research and procurement difficulties. Integrating new network capabilities or migrating core business applications must be accomplished while carrying on business as usual.
Although outside IT experts remain a minority within IT budgets, their use is growing. Their use grew as a percentage of the total average IT budget by nearly 20% between 2015 and 2017 — now sitting at 11.9%*. Large businesses have experienced the highest growth. But, the expansion was seen across all sectors and sizes.
Every business understands the need for specialisation. With IT, the question under debate is the necessity to build a comprehensive in-house team versus the advantages of partnering with IT specialists. This article will act as a guide to the basics of why and how you should go about augmenting your in-house IT capabilities with outside IT experts.
In-house IT Teams
They cost more, but they know your business and are always there
The significant advantage of in-house staff is your ability to train them to understand the specific needs of your business and the ability to rely on them whenever they are needed.
Retaining talented staff can also help sharpen your competitive edge. If you have an amazing web designer, freely allowing them to go and build a website for your competition could be counterproductive.
The difficulty with managing all IT needs in-house is cost and the availability of talent. Finding the right outside experts can be hard. But, finding the right people to invest years in is even harder*. You need the resources and time to invest in training. With IT, that training never stops. People need to constantly update their knowledge base to stay abreast of changes.
Then there are the costs of a regular salary, benefits, and tax liabilities. The more skilled your employees are, the more expensive it will be to retain them. Whatever job is causing your IT team a headache may not come up enough to keep someone on staff who truly understands the ins and outs of that specific issue.
Fundamentally, you may not be able to afford the top specialists all of the time. Using outside IT experts can enable you to bring in the right people for only as long as you need them.
What you do get, however, with an in-house team are people who are invested in your company and are already familiar with how everything works. This is particularly valuable if you are operating a bespoke system with few similarities to out-of-the-box solutions. Outside experts will always need time to be brought up to speed with how things run.
Your in-house team may be expensive. However, you will know what they cost you every month. Expenses won’t suddenly expand because of an unforeseen complication — your team is already on salary, the only cost is more time.
In-house teams:
- Know your business
- Are reliable in terms of availability and cost
- May not be as good at specific jobs as outside IT experts
- May cost more to retain in the long-run
Outside IT Experts
A growing solution to complexity and specialisation.
During the late 2000s, with the increase in labour supply following the Great Recession, there was a corporate-wide shift towards bringing tasks in-house. This has changed since 2014. In a biennial survey, Deloitte has detailed the expansion of the specialist and outside expert economy throughout the 2010s*.
This has been partially fueled by the growth of new functions incorporated within this trend — particularly facilities management and legal services. However, IT, Human Resources, Accounting and Procurement remain the dominant functions prone to the use of outside experts. In 2016, 31% of companies saw IT as an area of growth — up from 26% in 2014.
23% of companies stated that cyber risks are impacting their decision to use outside IT experts. Companies gave mixed responses when asked what impact they thought data protection laws would have on future plans. However, of the companies that were changing their systems to meet new requirements, a majority saw outside experts as part of the solution, not the problem.
Security is the fastest growing function when it comes to the use of outside expertise. A close second was disaster recovery and network operations. Application development, however, remains the task where outside IT experts are most often used. It is also one of the areas of greatest general expense for IT departments.
When Does it Make the Most Sense to Bring in Outside IT Experts?
Something you see in common among functions that are increasingly using outside expertise is that they represent areas of vital importance, but require skill specialisations that are not necessarily core to the business.
One of the main things to consider when looking to use an outside expert is the longevity of the project. Long-term application development projects that are core to your business benefit from an in-house team’s ability tweak the technology as you go along.
If you are a start-up with newly secured VC funding and lack the time or money to build out an entire team — using outside experts to develop a portion of that process provides you with an affordable and quick option to get your business started.
Bringing in outside experts is a good move for any company simply looking to undertake a technical but short-term project that will require significantly less attention once developed — such as upgrading a web app or expanding a data centre. The motivation to bring in experts is often to free up the staff you do have to focus on your own core competencies.
Basically, if you are looking to augment your IT resources to meet a short-term increase in demand, there is little reason to hire a new person whose role will become redundant in a few months.
The Need For Outside Experts When Buying IT
Procurement of IT products is another area where bringing in outside help is advisable. You may know more than anyone about your business. You may also know what outcome you need to be delivered. But, do you know enough about the various technical products on the market to get the best value for money when making that purchase?
Depending on the IT expertise of your business, it is advisable to bring on outside support when evaluating the specifics of making that long-term purchase. In some cases, leaving the administration of that entire system to an outside partner may be the move you need to make to focus on the core business drivers of your company.
Look to bring in experts when:
- Embarking on specific, technical and short-term projects
- You don’t have the time or resources to build a dedicated team
- Undertaking the procurement of new products
- Your business does not have an IT function
Costs vs. Quality: The Benefits of Long-Term Partnerships with Outside IT
There isn’t always a trade off — particularly for disaster recovery
Outside experts are generally exceptionally skilled and focused on a particular area. However, they almost universally command a higher hourly rate than permanent employees. The upshot is that you only need to pay them for the duration of the project. You will also save money on equipment and software costs.
Using IT experts, however, does not solely refer to bringing in highly competent troubleshooting specialists or app developers for the duration of a project.
The IT functions that generate the most cost savings through the use of permanent outside experts are help desks, desktop support, disaster recovery and data centre operations*. All of these operate on an economy of scale that can allow for decreased costs to individual businesses through cost-sharing.
IT security, disaster recovery, database administration and application maintenance are all areas identified as having the greatest potential to improve service quality through the use of outside experts.
The use of outside experts for security and disaster recovery has been specifically fueled by quality control. This evolving cyber-threat landscape and new legislation have peaked corporate interest in this area.
Disaster recovery, particularly, sits at an intersection between gaining the best product for the cheapest price when using an outside firm.
Areas particularly suitable for long-term outside partnership solutions:
- Data centres, help desks, desktop support and disaster recovery can all reap cost savings through the use of outside IT experts.
- Cybersecurity, disaster recovery, database administration and application maintenance are all areas that many companies can obtain better results through using outside IT experts.
- Disaster recovery sits in a Goldilocks Zone of better quality at a lower price when using outside experts.
Does Size Matter When Looking to Bring in Outside IT Experts?
Mid-sized companies are often the most pressed to make big decisions about IT. Start-ups rarely have the resources to fully develop every department*. Big businesses, although they generally engage with outside IT, almost always have so much continuous work that it makes sense to invest in an in-house team regardless.
Ideally, one wants to hit a middle ground on all fronts. No matter how small your company is, it is generally un-advisable to operate completely blind when it comes to IT. Having at least one skilled IT generalist that understands your company can improve your ability to liaison with outside IT experts. Then, finding an outside team that you can work with regularly and feels in-house can offer you the best of everything — flexibility of cost, access to particular specialists and a degree of familiarity with your business within a trusted relationship.
Summary: Bring in Outside IT Experts, But Do So Selectively and With The Right People
Using outside IT experts has become a critical asset for businesses tackling the complex challenges of an ever-expanding IT frontier. In-house teams have intimate knowledge of your business. But, bringing in outside IT experts can provide you with the exact skills you need when you need them. Doing so can also reduce costs in particular areas when engaging in long-term partnerships for help desks, disaster recovery, cybersecurity, etc. However, it is critical to make the right choices when looking for partners.
46% of those surveyed by Deloitte in 2016 said that their main complaint about outside service providers was a reactive rather than proactive approach. 33% claim outside IT firms lack innovation. Particularly for IT issues, it is critical to get Service Level Agreements (SLAs) that reflect the needs of your business.
Disaster recovery sits in the Goldilocks Zone of price savings and quality improvement when working with outside experts — however, that is only true if you make sure that the outside experts you choose are actually guaranteeing a quality outcome. Cybersecurity is another area where you can improve outcomes through long-term outside partnerships. But, it is again vital to know exactly what you are buying.
Purchasing decisions for IT products can be improved through bringing in outside support. Businesses that have historically operated without a major IT function, or are looking to bring on an entirely new area of technology (such as cloud infrastructure or flash arrays) can particularly benefit from outside knowledge. A large part of doing your due diligence is bringing in people who know the technology market to assess your requirements
Finding a company that will work with you, get to know your processes and provide a solution that fits your needs is key. Simply, make sure the SLAs reflect what they say they are selling.
Sources:
* IT Outsourcing Statistics 2017/2018: Outsourcing Trends and Cost/Service Experiences for 10 Key IT Functions
* In-house vs. outsourced IT: what makes the most business sense?
* Deloitte’s 2016 Global Outsourcing Survey
* IT OUTSOURCING PERCENTAGE HIGHEST IN FIVE YEARS
* The Pros And Cons Of In-House And Outsourced Tech Teams
