Outsourced Managed Service Provider (MSP) vs. IT Manager

The Power of Outsourced Managed Service Provider (MSPs) for Small Businesses vs. The IT Manager: A Comprehensive Analysis

In today's rapidly evolving digital landscape, small businesses face the daunting challenge of maintaining efficient and secure IT infrastructure to support their operations. With a workforce of 5-100 users, these businesses require seamless technology solutions to remain competitive. The debate between hiring an Outsourced Managed Service Provider (MSP) vs. IT Manager hired on staff has become more relevant than ever. In this article, we delve into the reasons why opting for an outsourced MSP can be a game-changer for small businesses, particularly in comparison to hiring an individual IT manager.

There also is the financial aspect of managing IT services. It's crucial to compare the costs of an Outsourced Managed Service Provider (MSP) vs. IT Manager hired on staff.

The cost of hiring an internal IT manager varies significantly by market, experience, and responsibilities. In addition to salary, employers must account for payroll taxes, benefits, recruiting, training, paid time off, and the cost of maintaining additional technical expertise when one person cannot cover every IT discipline.

Now, let's delve into the expenses associated with outsourcing these services to an MSP. Take, for example, a business of 40 users. For a comprehensive suite of IT services for a business this size, there are many services needed. These include Microsoft 365 subscriptions, backup and disaster recovery solutions, IDS/IPS protection, security management, security awareness training, router and network management, desktop and server support, remote access solutions, and more, examples of the costs are broken down as follows:

1. Microsoft 365 Subscriptions:

   With a base subscription level average cost of $12.50 per user per month for 40 users. The annual expense would be $6,000.

2. Backup and Disaster Recovery Solutions:

   Assuming a mid-range cost of $200 per month for BCDR, the annual expense would be $2,400.

3. IDS/IPS Protection:

   A monthly cost ranging from $500 to $1,000 would result in an annual expense of $6,000 to $12,000.

4. Security Awareness Training:

   Calculating an average cost of $12.50 per user per month for an SAT subscription, the annual expense would be $6,000.

5. Router and Network Management:

   With an estimated monthly cost of $150, the annual expense would be $1,800.

6. Desktop and Server Support:

   Assume that the monthly cost for simply monitoring desktops and servers would be $300. The annual expense would be $3,600.

7. Remote Access Solutions:

   Calculating an average monthly cost for a simple remote access solution is $150; the annual expense would be $1,800.

Comparing an internal IT hire with an MSP requires looking beyond salary versus monthly fees. An MSP may include help desk support, IT administration, cybersecurity management, monitoring, strategic planning, documentation, vendor coordination, and access to multiple technical specialists. An internal employee may provide greater day-to-day familiarity with the organization but can require additional tools, vendors, consultants, and coverage to deliver the same breadth of capability.

For current pricing examples and a clearer breakdown of what managed IT services may include, see our Managed IT Pricing for Manufacturers guide.

In conclusion, the cost analysis reveals that the financial advantages of outsourcing IT services to a Managed Service Provider extend beyond just the monetary aspect. The MSP model offers a comprehensive suite of services, optimal performance, and enhanced security while presenting a more streamlined and budget-friendly solution than hiring an individual IT manager.

Potential Pitfalls of Hiring an IT Manager

Hiring an IT manager might seem like a practical solution. Still, it may only sometimes meet the expectations of a small business. An IT manager's expertise is limited to their skill set, which might not encompass the vast array of services required by the business. Moreover, the manager's availability can be a concern. They could fall ill, take vacations, or face other unforeseen circumstances. This leaves the business vulnerable to downtime in case of IT emergencies.

Consistency and Optimized Uptime with MSPs

MSPs offer a key advantage through consistent service availability. Depending on the provider and service agreement, MSPs can offer extended or around-the-clock monitoring and support coverage that may be difficult for a single internal IT employee to provide.

This availability ensures that IT issues are promptly addressed, minimizing downtime and the associated costs. An MSP's primary focus is maintaining optimal performance, security, and reliability, which directly translates to enhanced business productivity.

Broad Spectrum of Skillsets

One of the most significant advantages of outsourcing to an MSP is gaining access to a diverse pool of skilled professionals. An MSP covers a comprehensive range of skillsets, including IT strategy, planning, budgeting, cloud computing, mobile technology, desktop and server management, network administration, and cybersecurity. This breadth of expertise ensures that the business's technology needs are not just met but go further to align with the business's growth objectives strategically.

One of the ways an MSP can provide that higher-level planning is through a vCIO relationship. Our Manufacturing vCIO Guide explains how strategic technology planning, budgeting, roadmaps, and risk prioritization work in practice.

Stability and Knowledge Retention

The transient nature of individual IT managers is a point of concern for small businesses. These managers might actively seek new employment opportunities, leading to turnover. When they leave, they take with them the accumulated knowledge about the business's operations, procedures, and technology setups. This knowledge loss can be disruptive and costly. In contrast, an MSP offers stability and consistent service delivery, less dependent on the tenure of any one individual.

Insulation from the Cycle of Hiring and Training

One of the most significant headaches for small businesses is the constant cycle of hiring and training IT staff. An MSP alleviates this burden by providing a steadfast single point of contact for all IT-related functions. The MSP's team remains constant, ensuring that the business doesn't suffer from disruptions caused by personnel changes. This insulation from the hiring and training cycle translates to better resource allocation, cost savings, and consistent IT performance.

Conclusion

In the realm of modern business, technology is a cornerstone of success. For small businesses, the choice between hiring an in-house IT manager and outsourcing to an MSP is pivotal. While an IT manager may offer a convenient solution, their limitations in skillsets, availability, and retention potential can hinder the business's progress. On the other hand, MSPs bring forth a holistic approach. MSP's encompass diverse expertise, unwavering availability, knowledge retention, and a stable partnership that negates the cycle of hiring and training. As small businesses continually navigate the digital landscape, the power of outsourced Managed Service Providers stands as a strategic choice for consistent growth and success.

While the benefits of hiring an MSP typically outweigh those of hiring internally – especially for small or midsized companies — we won't claim that in-house staff doesn't have benefits either. For example, an internal IT team who profoundly understands those systems is an obvious advantage in organizations with complex technology or proprietary systems.

If you're comparing an outsourced MSP with internal IT—or evaluating different providers—our MSP Evaluation Checklist for Manufacturers can help you compare response times, cybersecurity, strategic planning, documentation, pricing transparency, and accountability.

These companies often seek a "co-managed" IT solution in which an MSP uses tools, strategies, and processes to augment the in-house team. This blended approach combines the specialized knowledge of the internal team with the comprehensive services and expertise provided by the MSP, creating a synergy that caters to the business's specific needs. The co-managed model ensures that the business can leverage its internal strengths.

At the same time the business benefits from the MSP's consistent support, scalability, and strategic guidance. It's essential to recognize that the IT landscape is diverse. The most effective solution depends on the unique requirements of each organization.

If you need help in choosing an Outsourced IT Provider, contact us today. Here's further information on choosing an Outsourced IT Provider.