Lowering Cost in a Technical Landscape

It’s not an easy time to run a business. Despite one of the most innovative tech environments we’ve seen, leaders need to grapple with rising IT costs, a more competitive job market, and a shifting global landscape. It’s almost enough to make you want to give up–almost.

Because despite these challenges, the right tools and resources can help you to navigate the current working world. In fact, some organizations have found ways to lower IT costs altogether, while also enhancing data security and providing robust support for employees. Here’s what those business leaders know.

The Current IT Landscape

If you’re reading this, you’re probably working in the current IT landscape (and don’t need us to describe it to you). That being said, there are some macro-level issues that are worth putting into context. Today’s businesses face several pressing issues:

• Record low unemployment means there is more difficulty in hiring skilled IT talent.

• Rising labor costs due to increased competition. This drives up salaries across the board.

• Changing generational workforce demands. Many employees have higher expectations around things like work-life balance, leading to increased turnover.

• Rapid technological changes and constant updates necessitate ongoing training or hiring of specialized skills.

• Increased cybersecurity threats mean organizations need to be more diligent about shielding themselves and protecting employees and data.

• Smaller businesses in particular (those with fewer than 50 employees) tend to have trouble affording large, skilled IT teams. Of course, they face the same risks as larger organizations.

On the other hand, technology has changed dramatically in ways that make it possible to efficiently manage what was once just a shift to a lower labor market like India or the Philippines. And unless you are in a technology field, you need to focus on running operations and growing your business. As the landscape grows more complex, it requires more specific skill sets. That means businesses could be hiring different people at different times for different capabilities.

Or, they could save a lot of headaches (and time) and simply outsource IT.

The Solution: Outsourcing IT

To better control and potentially lower IT costs while maintaining high service levels and data protection, many organizations are turning to outsourcing. This strategy, once considered a luxury for large corporations, is now accessible to smaller businesses (even those with 500 employees or fewer) and can save them approximately 15-28% annually on IT spending.

According to a study cited in Forbes, 85% of companies that achieve real, sustained value use capability-sourcing broadly and strategically for everything from developing world-class talent to bringing new products to market faster and enabling business model innovation. In fact, these companies stated that the benefits of outsourcing specific functions like IT go far beyond cost-cutting.

Why Outsource IT?

The Forbes research shared that the successful companies using outsourcing were seeing a return of at least 25% on their investments. So, dropping additional funds to your bottom line is a pretty big benefit. That being said, outsourcing IT can offer even more.

• Access to Talent - In tight labor markets, finding qualified professionals becomes challenging. Outsourcing allows businesses to tap into a broader talent pool without the burden of hiring. This is especially true where remote work has become more common and geography does not limit hiring as it once did.

• Cost Efficiency - Companies can avoid overpaying for talent or settling for less-qualified individuals. Outsourcing means IT capabilities are much more of an investment than a cost center.

• Employee Retention - Smaller companies may struggle to provide clear career paths for IT staff, leading to high turnover. Outsourcing alleviates this concern. Plus, the full-time employees that you do have will not be overworked and frustrated. They’ll have access to more tech support which likely makes elements of their jobs easier.

• 24/7 Support - Unlike internal teams limited by bandwidth and expertise, outsourcing provides continuous support, ensuring operations run smoothly. Business leaders won’t have to worry so much about the work-life balance of their team; they know they’re paying for accessibility.

  
  

Other Organizational Savings

When you find the right partner, you’ll see benefits across your organization. The potential for cost savings through outsourcing goes beyond just technology expenses. Consider these other areas:

• Hiring and Turnover Costs - Hiring can cost up to 35% of an employee's first-year salary. Outsourcing eliminates this need and the associated costs.

• Technology Licensing Costs - A qualified outsourcing partner can provide insights into application usage and help scale back unnecessary licenses.

• Efficient Hardware Procurement - Outsourcing partners can leverage economies of scale, acquiring hardware at better prices for multiple clients.

• Reduced Employee Downtime - With a dedicated team available, businesses experience less downtime compared to relying on a small internal team.

• Training Costs - Outsourcing shifts the responsibility of staff training to the partner, ensuring that technical staff stays updated on the latest developments without burdening your internal resources.

  • 
    

Key Considerations When Choosing an Outsourcing Partner

Outsourced IT essentially utilizes a shared service model, which can provide significant value for businesses. As mentioned, outsourcing is great for lowering costs, but the advantage doesn’t stop there. You also want to maintain high levels of service and data protection. So, when choosing an outsourcing partner, consider the following:

• Domestic Support - Ensure the partner has a cultural fit with your organization and that communication is effective and clear. You want your team to be able to collaborate with this one when necessary.

• Comprehensive Team - A primary team that understands your business needs, backed by additional resources, guarantees reliable service. You should have access to some central contacts that work closely with you, supported by others in a 24/7 model.

• Knowledge Bank - A well-managed partner operates a knowledge bank and security council, addressing technology threats and solutions that may not be visible to an internal team. In other words, they should know the overall IT landscape in a way that you don’t have time to.

In a climate of rising costs and increasing demands, outsourcing IT services can be a strategic move for businesses looking to lower expenses while enhancing security and employee support. By choosing the right outsourcing partner, your organization can navigate the complexities of technology management more efficiently and effectively, ultimately driving growth and innovation–and isn’t that what we’re all here for?

Sagin is a professional services firm focused in the areas of management consulting, IT managed services and organizational development.  We take a Human Approach to Technology! Unlock the difference we can bring to your organization.  We care and we are there!  +1.312.281.0290  info@saginllc.com