For most industries IT is crucial for operation. Despite this, the level of work involved typically does not justify a full-time expert, making outsourcing a very attractive option. The question is how much should IT outsourcing cost? From what we have been seeing, as people who have worked in this field for decades, far less than most SMEs pay.
The standard model of IT support billing is based on workstations, servers, and managed additional devices. Extra lines in your invoices may show up in the form of subscriptions for software like Microsoft, and Domain Names which a lot of IT companies will bundle acting as an intermediary (generally adding some percentage for their management). If you are looking for these rates in Australia, roughly its:
- $99 to $250 per user / $25 to $100 per workstation
- $75 to $400 per server.
- $15 to $50 per additional network device.
This approach acts in a similar way to insurance where the support companies are making a solid margin relying on most clients who rarely engage with them whilst they are barely making anything on groups who engage constantly with persistent problems. The difference between this industry and insurance is how much coverage you already have outside of these support agreements, and how comparatively cheap it can be to outsource for individual jobs.
Most software these days is not bought outright but instead rented with ongoing licensing fees. This model necessitates the original provider ensures their products are kept compatible with the day’s practice and that bugs are addressed, if not fixed, quickly. Furthermore, today’s security and recovery standards have meant that most products have a range of automatic sorting and recovery processes in place. For instance, it now standard practice for duplicates of your cloud files to be stored across multiple sites and hard drives to protect against potential disasters or failures. Where a fire in your own server may have been a disaster a decade ago, these days you may not notice any drop in quality provided by the online services.
This does not mean outsourced IT support is unneeded. Setting up systems can be difficult and often should be done by someone with experience. There are updates and changes to operating systems whose patches and notes are often incredibly technical, and it can help to have someone there confirm there is no issue with them. Also, you may have personal databases that need some level of management and checking, or you are not comfortable trusting the third-party software providers to be the only holder of your records. Each of these situations does require someone with experience but again it often takes a lot less time to cover these needs then you might assume.
Initial setups and major updates can be very time consuming but once systems are in place automatic triggers to warn if things go wrong combined with internal onboarding guides and quarterly, semi-annual, or even annual disaster reviews will often cover you. We have clients who despite their sizes need 15 hours at most in support in a year because of their automation and practices. With your standard IT person costing between $150 – $300 AUD that equates to between $2,250 – $4,500 a year, far less than what you will see on most annual support contracts.
The downside to this method is in the inconsistency in cashflow. When things are going smoothly you will have little to no IT cost outside your periods of review. This is different to standard support where the prices are set unless special circumstances like security breeches or onsite visits result in extra charges. The question is whether you think this smoothness in cashflow justifies the increased cost. You also must ask yourself is your company one of those groups that for whatever reason truly requires a lot of low level support. Give it a think the next time your contract renewal is due.