Are you about to receive—or are you already receiving—bids for your IT services partnerships? Do you want more information about outsourcing IT costs before choosing one?
At Intelligent Technical Solutions (ITS), we’ve spent years fine-tuning our services to provide maximum return on investment (ROI) for our clients. Part of the fine-tuning process is having a thorough understanding of the other outsourcing options, and the costs associated with them.
In this article, we want to share what we know about the pricing for different outsourcing IT service options. We’ll specifically explore:
- The outsourcing options for the public sector
- The cost of each option
- How much you’ll spend on outsourcing IT
By the end of this article, you'll have a clearer understanding of which outsourcing option is the right move for your organization.
What are the IT Outsourcing Options for the Public Sector?
When deciding on a type of outsourcing solution, you have multiple options available for your organization.
Option #1: Managed IT
Managed IT is a service where you outsource your entire IT department to a managed IT service provider (MSP). You remove all the pressure of hiring, training, and managing an entire department. The MSP will oversee everything while involving you in decision-making.
The goal of Managed IT is to lessen the mental load of handling your IT while providing immense value. It also happens to be the most common IT proposal you’ll receive.
Cost of Managed IT
Managed IT costs are highly dependent on unique factors per company, but most Managed IT plans range between $130 and $250/user per month, depending on which company you contact and what services you need.
Option #2: Co-managed IT
Co-managed IT is a service where a third-party IT provider partners with your in-house IT team to support your IT infrastructure.
You are afforded the comfort of having staff on-site and can control how many in-house technicians you need. There’s no pressure to hire more and more people.
Your Co-managed IT service provider will supplement your team members’ skills. They’ll manage the tasks your staff doesn’t specialize in. They could serve as a strategic guide, provide project augmentation assistance, as well as escalation support for difficult service tickets. This can be helpful for an organization that wants to retain their team, and knows they need additional support as they grow.
The goal of Co-managed IT is to help your staff to do what they do best.
This, in turn, saves you time, money, and a whole lot of stress. Allowing IT staff to focus on items that drive value will result in more efficiently serviced customers, a more well-maintained IT infrastructure, and less downtime for your end users.
Cost of Co-managed IT
Co-managed IT costs—like managed IT costs—vary depending on different factors. A monthly bill from a co-managed IT provider costs 20 to 40% less than a Managed IT plan from an MSP.
So, let’s say it costs $130/user per month for the basic plan from a Managed IT provider. You can expect Co-managed IT to cost around $90 to $110/user per month.
You should also factor in the cost of your internal IT staff: their salaries, bonuses, training, and workstation upkeep. There are also scouting and recruitment costs, with the added complexity of part-time versus full-time team members.
By adding the fully burdened costs of maintaining your internal IT to the monthly cost of Co-managed IT, you’ll get the total cost of your IT with Co-managed IT.
Option #3: Direct Outsourcing
Rather than partnering with an MSP or an agency, you can hire people as independent contractors or freelancers. Working with freelancers from around the globe can push down IT costs and removes the need to pay salaried benefits or provide training.
Unfortunately, direct outsourcing is a tricky option for the public sector.
Due to security concerns, in some cases, you’re required to limit data access to US-based staff, severely limiting who you can hire.
You’ll have to consider time zones, communication issues, payment options, and performance concerns. They also can’t always serve as on-site staff if you’re hiring from a different state.
The main goal of direct outsourcing is to push down costs; if you’re prepared to handle the risks associated with lower prices and constantly off-site staff, then direct outsourcing may be a good choice for you.
Cost of Direct IT Outsourcing
Costs vary widely when outsourcing your IT directly to freelancers and independent contractors. You need to consider location, expertise, onboarding, and offboarding expenses.
Depending on your needs and their rates, it can cost between $1,500 and $3,000/month per contractor* hired.
*Averaged from different websites and job postings for remote IT contractors in the US (e.g., Indeed, UpWork, and LinkedIn)
Option #4: Break-fix IT
The last option for your organization is break-fix IT.
The break-fix IT model involves calling technicians when something breaks within your system and getting them to fix that problem for you - hence the name break-fix.
The best part of this option: you only call them when needed. Hence, they’re generally more affordable than the other options. However, if you need them to fix something substantial, it increases costs.
It’s also impossible to have a steady, predictable bill due to the reactive nature of break-fix IT. There’s an inherent risk of going over budget, especially if you’re getting your IT budget on an annual or bi-annual basis.
RELATED: Managed-IT Service Provider vs. Break-Fix and In-House IT
Cost of Break-fix IT
Break-fix IT costs are unpredictable, as the bill depends entirely on your problem.
They’re usually on-site staff billed on an hourly basis. Minor issues can cost around $40 to $75/hour for one technician (depending entirely on where and who you hire), with extra costs such as hardware replacement, software licenses, and long-term technical support not included. More complex problems will push the rate higher.
|
IT Outsourcing Option |
Cost |
|
Managed IT |
$130-$250/user per month |
|
Co-managed IT |
$90-$110/user per month + in-house IT costs |
|
Direct Outsourcing |
$1,500-$3,000/person per month |
|
Break-fix IT |
$40-$75/hour + additional fees |
How Much Will Outsourced IT Cost for Your Organization?
How do you compute IT costs for you? While our IT cost calculator can give you an immediate answer, make sure to consider the following factors before settling on an estimated figure:
1. Choice of Outsourcing Type
First, you’ll need to decide whether you want Managed IT, Co-managed IT, direct outsourcing, or break-fix IT services.
2. Choice of Service Provider
Different providers have varying pricing models, expertise levels, and reputations, which can impact the overall cost of outsourcing IT services. Renowned or specialized providers may charge higher rates due to their expertise and track record.
RELATED: ITS Pricing: How Much Do We Cost?
3. Services needed
The cost will depend on the nature and extent of the IT services you need. For example, if you outsource various IT functions, such as software development, infrastructure management, or customer support, the price will likely be higher than outsourcing a specific task or a limited set of services.
4. Contract duration
The duration of the outsourcing contract can affect the cost. Longer-term contracts often come with discounted rates or other financial incentives, whereas short-term or project-based engagements may have higher hourly or fixed-rate charges.
RELATED: Long-Term or Short-Term Managed IT Support Contract: What’s the Best?
5. Number of Users and Locations
Lastly, the number of users and locations you have directly impacts your IT outsourcing costs. The more users that require IT support, the higher the cost. Service providers often charge based on the number of users or devices.
Meanwhile if your organization operates across multiple locations, this also increases complexity and cost. Providers may charge additional fees for supporting remote or multiple sites.
Ready to Outsource Your IT?
At the end of the day, you want to get the full value of the price you pay for IT services. And while cost is a crucial consideration, it should not be the sole determining factor in outsourcing decisions.
Quality, reliability, security, and the ability to meet specific business needs are equally important considerations that should be weighed alongside the sticker price.
As a third-party IT provider, we’ve prepared multiple resources to help you find the best outsourced IT option for you:
If you have more questions, schedule a meeting with our experts today to get immediate answers that can influence your decisions for the better.