How Much Can SMBs Save by Outsourcing IT?

Ann All

As the economy continues to struggle, it's tempting to slash IT spending. But, as I wrote back in March, that may not be such a good idea. Companies that do so risk losing customers, says Accenture's chief technology strategist in an interesting Computerworld article I cite in my blog.


The key instead is spending smarter. To that end, I've written a few blogs offering advice gleaned from CIOs and other industry experts, promoting ideas such as using contract workers instead of making permanent hires and using software-as-a-service rather than traditional on-premise software.


I've got still more advice, much of which focuses on outsourcing IT tasks, from an Inc. article. Each of the four tips includes an estimate of how much a company employing the strategy could expect to save each year.


Most radically, the story offers the example of an 80-person Massachusetts company that decided to outsource its entire IT department. The cost: $25,000 to $35,000 a year, less than half the cost of hiring an internal IT manager. The off-site staff remotely monitor servers, perform needed upgrades and look after the e-mail system.


The company still has its hardware on-site but is planning to move it to the service provider's data center -- which the CEO says should reduce worries about data security. Says the CEO:

The less I have to worry about my IT systems, the more I can focus on growing my business.

The article also includes real-world examples of executives using hosted software applications, a hosted phone system and hosted e-mail. Estimated savings range from $1,800 a year to $20,000 a year. While savings are nice, thetop reason for outsourcing cited by SMBs surveyed by the Achilles Group is freeing resources to focus more closely on core competencies, as I wrote just last week.


Some SMBs remain leery of outsourcing, however, as evidenced by results of a recent CIO Insight survey that showed 8 percent of SMBs planning to expand outsourcing activities in 2008, vs. 16 percent of larger companies.

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