How to Cut IT Staff Costs Without Compromising Performance

How to Cut IT Staff Costs Without Compromising Performance

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The eternal dilemma faced by any growing business is whether to keep every aspect of the operation in-house or to outsource parts of it to independent providers from outside of the company.

Let’s be honest, there are sound arguments for both.  Sub-contracted labour is often considered more expensive then employing your own because there’s a perception that there’s a third party between yourself and the employee also taking a cut.  In reality though, a specialist IT company is likely to be spreading their workforce across different companies – so, they may be helping you cut your network costs, at the same time as providing helpdesk support for another customer, designing a new topography for another – and so on.

There are also sometimes questions of loyalty, familiarity with your company’s operation and first-hand experience which might tend you towards the view that it is better to have your own staff, working directly under your organisational umbrella, than to have strangers forever floating in and out of the office who care little for your business or for its aims and objectives because they’ll be working for a different one tomorrow.

The Case for Outsourcing

So much for the case for keeping things nicely in-house.  But what are the arguments for deploying manpower from outside sources?  Specifically, why is the use of external providers growing so rapidly and what is the appeal of doing things this way in preference to bringing through your own staff?

Firstly, it would be fair to say that different rules apply to different areas of your company’s operation.  Bringing in labourers or entry-level clerical staff is a whole different ball game to engaging consultants or highly paid specialists, and the reasons for doing so may be entirely different.  As of course may be the benefits.

And nowhere is this more the case than in the field of IT.  Many companies are increasingly outsourcing some or all of their IT operations to independent third parties and there are a whole bunch of reasons for this which are to a very great extent industry specific.  We’ll take a closer look at these shortly, but the essential bottom line is that outsourcing allows the client to cherry pick specific talents for limited periods of time without having to invest time and money either in their initial training or in the servicing of their individual employment contracts.

How Outsourcing IT Services Can Benefit Your Company

The first saving that you will make by outsourcing your IT work is in the area of recruitment.  This process in itself can cost you thousands as you seek out the best and most appropriate forums through which to entice the right kind of employees with the right kind of skills to apply for the post or posts that lie vacant.  Once recruited, these new employees need to be trained up. Even if they have existing IT skills these will still need to be tailored to the specific needs and requirements of your own organisation. All the while, until they are ready and in a position to fulfil the particular tasks that you require of them they remain unproductive and a drain on your finances.  At best they are, providing they make the grade (which is not a given), an investment for the future.

Once recruited and trained up, in-house employees are then with you until either they decide to leave or you decide not to keep them any longer.  If the latter there arise questions of severance pay (if they have been with you more than a certain length of time), and there are restrictions upon re-filling their posts within a given period.  As a consequence of this, it is not easy to simply use your in-house employees when you need them and to stand them down when you don’t. Company pensions also have to be paid into, as do employer’s tax contributions, holidays and periods of sickness.  Meantime, if it should occur to you that you need different skill sets from those you have trained into your existing employees, either you will need to take on additional staff or else you will have to retrain the ones you have.

Outsourcing cuts out the need for any of this.  You simply take on temporary, sub-contracted staff with the talents you require for as long as you require.  Job done.

How it Works

The best way to take care of an outsourcing operation is through a Service Level Agreement with a Managed Service Provider, or MSP.  This will enable you to engage only people with the skills you require, for the duration that you need. After explaining your individual expectations and agreeing terms, the MSP will undertake to provide a bespoke service in strict accordance with your brief.

Your MSP then becomes, in effect, your remote IT department.  Usually they will have somebody available to help you 24 hours a day, seven days a week, but you will only pay what was agreed between you at the time when the contract was drawn up and signed.  Their areas of expertise will be precisely those suited to your particular needs. As you are unlikely to be the MSP’s sole customer, you will pay only the proportion of their wages that is justified by your use of their services.

The beauty of such an arrangement is that outsourced labour does not require any of the commitments that you will need to have made to in-house employees.  No payment is made for “idle” periods unless committed to as part of the terms of the contract. When a sub-contracted worker falls sick or goes off on holiday, your MSP will provide you with another.  And the worker’s company pension and tax contributions are settled by their own company, not by yours.

Under the circumstances it is not difficult to understand why so many enterprises are contracting out specialist roles which require specific talents and expertise.  You get the performance without the hassle. When all of this is taken into account the additional cost of agency doesn’t seem so daunting after all.