6 reasons CEOs Outsource Their IT

Outsourcing gets a bad rap. There is typically a negative connotation with the term. Mainly because many believe that when you “outsource” something, it means you are sending work overseas. However, outsourcing and offshoring are two very different things.

Outsourcing is usually the preferred method when you cannot or do not choose to invest in building a team of experts in house. Executives choose to outsource work that takes time, money, and attention away from their core business. Plus, it usually provides financial stability due to the fixed fee model. For example, outsourcing payroll duties can be very common – payroll is a necessary part of business operations. Your people expect to be paid, the right amount and in a timely manner. However, it is a monotonous task that requires a ton of work and can be very time-consuming. While extremely important, it can take your internal team’s attention away from other human capital initiatives.

In more difficult times, like the economic downturn of 2008 or the recent COVID pandemic, the positive effects of outsourcing are exacerbated. For example, as the world continues to shift as a result of the COVID-19 pandemic, technology plays an increased and ever-important role in every business. Because of the continued shift, organizations choose to partner with best-in-breed companies to support functions that are unrelated to their core business but nevertheless critical to their success. Payroll, accounting, and HR are primary examples of these types of relationships. And one that continues to grow is information technology.

But why? Here are six main reasons why executives choose to outsource IT to managed IT service providers (MSPs):

1. Predictable budget

What’s most frustrating to a business owner? Feeling like you are pouring money into a division month over month or year over year that isn’t your core product, service, or mission of your company, when you could be using those funds for core business functions.

The biggest benefit to outsourcing your IT – knowing exactly how much you will spend in any given month, quarter, year, or even three to five years. You will not experience the big swings or surprises brought to you last minute, which is typically caused by an understaffed internal IT department. This is not the fault of the IT department as they are typically run thin and expected to manage it all: IT security, networking, end user support, vendor relationships, and more. But juggling so many tasks can create unpredictability in the budget.

Additionally, think about what happened the last time a member of your IT staff left. You had to create a budget for recruitment and training, and maybe even a higher salary or benefits to attract good candidates. And even if no one leaves, having your IT department contract an outside expert for “project” work can also create an IT budget overrun. Working with a MSP means you’re no longer at the mercy of fluctuations with IT staff or salaries.

Partnering with a MSP also helps you avoid any surprises when it comes to your actual IT infrastructure. You will have a clear three-to-five-year strategy that plans out how you will maintain and update technology, from hardware and software, so when you require an investment in these areas, it’s not unexpected. Additionally, quarterly business reviews will review technology frequently and give you expectations of adjustments prior to making any decisions. Having these plans in place means a more predictable budget.

Not only are you benefiting from a predictable budget, but you’ll also get a whole team of experts when you partner with a proficient MSP. From the executive-level support at the top of the list to the straight IT coverage at the bottom, a capable MSP will serve your C-suite and end users.

2. Improving your company’s focus

We often hear from clients that they did not become a CEO, President, or CFO to manage an IT department. One of our clients in architecture told us “I found myself wearing many hats… including fulfilling IT responsibilities. I had many late-night calls with Microsoft support, trying to handle upgrades and patches for our systems, which added unnecessary stress to my schedule. It was not the best use of my time.”

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When we speak with the average CXO, we know they did not go to college to learn how to manage a server or transfer data to the cloud. They want to be running their business, growing their core product(s) or service(s), building relationships with their customer base, and helping employees grow. They do not want to manage the technology behind it. CEOs should spend their time on visions of the future, strategy, analyzing key factors of success, and improving their personal leadership skills. Nowhere does any article mention that a CEO should manage IT.

IT is daunting to understand, and the ever-evolving nature of IT exacerbates that feeling! Trust us, we get it. There is nothing wrong with not wanting to oversee or manage an IT department. The focus of your company was not to be the jack-of-all-trades, but rather an expert in your specific industry. Companies that outsource their IT to those who are technology experts can then focus on their business strategies and their unique value proposition.

3. Handing over the risk

Perhaps one of the most stress-relieving benefits to outsourcing your IT could be sanded down to mitigating your risk. Since you’re working with an expert technology provider, you can expect that they will be equipped to make sure you’re complying with industry standards and regulations. In addition, they can help you bolster your cybersecurity strategy.

With rampant cyberattacks and information security failures, IT security is a top concern for all businesses. If you were to suffer an attack like Colonial Pipeline, or lose confidential information through the IT vortex, what would that mean for your business? It could shut your doors. So why take the risk? Why not partner with an expert that can mitigate your risk?

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4. Staying above your competition

The fact that IT is ever-evolving is great for techies, but a headache for anyone operating a business trying to stay in the front of the race. Most companies do not have the budget to hire a panel of IT experts, but when you outsource, you get that available to you 24/7/365 and with a quick dial of a number or submission of an email.

Outsourcing your IT helps you stay competitive. You are taking out the guess work for where you ought to be within your industry, and you are left feeling confident that you are the benchmark that developing companies aspire to.

A client shared with NetGain that “the nature of business for manufacturers is cutthroat competition, which makes efficiency everything.” He also shared that his executive team “found that many of our technology issues arose overnight or during the weekend. We would come in on Monday to find problems with business systems and transactions. Consequently, we would have to fix these errors manually to catch everything back up.” They ended up refocusing their internal IT staff member to work on core software development and entrusting their network management to NetGain’s managed IT program. Now, the executive tells us he never loses sleep over the weekends.

5. Focus on core business and foster business growth

With all that money and time saved, your company can begin to allocate those resources to other products or processes that can help grow your business. Not to mention, without IT issues and downtime, you will realize even more financial benefits. Think about how much time you or your employees lose while programs are slowly loading or turning on. What would be a better use of your time? Your answer probably contains something along the lines of process improvement, sales and marketing growth, product diversification, maybe even inorganic growth. With the IT burden lifted off your shoulders, you can focus on these things.

To help provide context, another NetGain client shared how much time his company saved since switching to managed IT services: “The help desk feature continues to save our employees time and headaches when problems arise. Personally, I would say that it’s saved myself anywhere from two to five hours a week, and will save us money long-term.”

6. Get Out of the IT Recruiting Business

Hiring is already a challenging part of running a business. And with IT staff turnover higher than an average position (IT professional’s tenure is under 3 years on average), maintaining a quality IT staff is even more difficult. Add in the hiring challenges created by the pandemic, which include higher turnover and a more competitive labor market, and you’ve got a perfect storm of technology staffing difficulties.

With managed services, you get access to all of the following as your IT staff, and you didn’t have to go through the hiring process or continued education requirements for any of them!

At the top of the list of IT specialists on your new team is the vCIO. A virtual chief information officer handles and oversees all inner workings of your IT infrastructure. He or she understands how your business works and ensures that your technology aligns to improve your business processes.
Another virtual C-level is the vCSO, or Virtual Chief Security Officer. Few companies can afford the $225K average annual salary of a chief security officer—but any business in an audited industry or with regulatory compliance requirements should have a C-level leader responsible for the organization’s security. A vCSO—virtual CSO—helps reduce your company’s risk to a possible breach and approaches IT security and compliance with an executive’s mindset rather than a purely technical approach.
A host of onsite support engineers with varied technical certifications are a scalable resource that easily beats the average two-member inside IT team who tend to spend most of their time on reactive issues. Credentialed engineers can resolve any potential or current IT issues quickly. Top MSPs offer service level agreements (SLAs) to guarantee how quickly engineers will be onsite to address specific issues.
Finally, another group of engineers who staff a 24/7/365 help desk. These remote technicians handle routine requests—password changes, data recovery, Microsoft Office questions—and are available around the clock. Pro tip: Find a MSP with an in-house help desk team and a SOC-certified network operations center (NOC).

So, what’s holding you back on outsourcing your company’s IT? Are you curious about it, but worried about the ease of transition? We get it. Really. Trusting that you’re working with a world-class MSP will allow for ease of mind when thinking about converting to a new business model.