IT Outsourcing For SMEs

Outsourcing IT has become a popular practice among small and medium-sized enterprises (SMEs) to manage their IT infrastructure and operations effectively. By hiring third-party companies to handle tasks like network administration, server maintenance, software development, and help desk support, SMEs can reap several benefits. This blog post explores the reasons why SMEs opt for outsourcing IT and examines both the advantages and potential drawbacks involved in this decision.

Reasons to Consider Outsourcing IT for SMEs

Cost Savings

Outsourcing IT can significantly reduce costs for SMEs, and many businesses choose to do so. In fact, according to a study by Deloitte, 59% of businesses outsource IT functions to reduce costs. Third-party providers often offer lower labor costs compared to hiring in-house IT staff. Moreover, they can take advantage of economies of scale, leading to further cost reductions.

Access to Expertise

One of the key benefits of outsourcing IT is gaining access to a wider range of expertise that SMEs may not be able to afford in-house. This is especially beneficial for specialised IT skills like cybersecurity and cloud computing. A survey conducted by Gartner found that 78% of businesses believe that outsourcing IT enhances access to specialised skills and expertise not readily available in-house. This includes areas like cybersecurity, which is crucial for SMEs to protect their sensitive data.

Improved Focus

By outsourcing IT responsibilities, SMEs can free up their internal resources to focus on core business activities, leading to increased productivity and profitability. As a research report by Aberdeen Group shows, businesses that outsource IT experience a 32% increase in productivity due to improved focus on core business activities.

Reduced Risk

Outsourcing providers often offer higher levels of IT security than SMEs can achieve on their own. This additional protection helps safeguard SMEs from data breaches and other security threats. According to the 2023 Cost of a Data Breach Report by IBM, the average cost of a data breach for small businesses was $3.86 million, highlighting the potential importance of outsourced IT services.

Availability of Support

In small IT departments, obtaining assistance and support during IT staff absences can be challenging. With outsourcing, SMEs can rely on continuous support, preventing disruptions during staff holidays or sick leaves.

Potential Drawbacks of Outsourcing IT for SMEs

Loss of Control

Outsourcing IT means relinquishing some control over IT infrastructure and operations, which can be a concern for SMEs with sensitive security and compliance issues.

Communication Challenges

Geographical distance between SMEs and outsourcing providers can lead to communication challenges, primarily relying on telephone assistance, making it harder to ensure IT needs are met effectively. This is supported by a study ran by ITProPortal, revealing that 64% of SMEs struggle with communication issues when outsourcing IT services, citing geographical distance and language barriers as primary concerns.

Data Security Risks

Data breaches are always a risk when outsourcing IT. According to the Ponemon Institute’s 2021 State of Endpoint Security Risk Report, 70% of businesses experienced an increase in endpoint attacks in the last year. This highlights the importance of thorough vetting and selecting reputable outsourcing providers to mitigate data security risks. SMEs must carefully vet potential providers and implement robust security measures to protect their sensitive data.

Factors to Consider When Deciding on Outsourcing IT

The Size and Complexity of Your IT Infrastructure

The larger and more complex your IT infrastructure, the more likely it is that outsourcing will provide significant benefits.

Your Budget

While outsourcing IT can be cost-effective, it’s essential to consider the overall cost when making your decision. The National Small Business Association (NSBA) conducted a survey revealing that 33% mentioned that cost-effectiveness played a crucial role in their decision-making process.

Your Level of Expertise

If your SME lacks in-house expertise to manage IT infrastructure, outsourcing may be the optimal solution. In fact, the NSBA also report that  46% of SMEs consider lack of in-house expertise as a primary factor driving their decision to outsource IT.

Your Risk Tolerance

SMEs concerned about data security and compliance issues may prefer to avoid outsourcing IT.

Is Outsourcing IT Right for Your Business?

The decision to outsource IT for SMEs is multifaceted, encompassing various factors such as specific needs, cost, and risk evaluation. To make an informed choice, diligent research and selecting an experienced and reputable provider are crucial. By weighing the pros and cons of outsourcing IT, SMEs can make the right decision that aligns with their business goals and requirements.

If you’re looking to outsource the IT function of your business, it could be time to hire a Part-Time IT Director. They’ll be able to take your business to the next level and help you stay ahead of the competition. Leadership Services provides senior and experienced part-time IT Directors to growing businesses. Get in touch today to see how we can help your business.