SMBs and the Outsourcing Decision

Ann All

When CIO Insight asked companies about their IT spending earlier this year, SMBs showed far less interest in outsourcing than their larger competitors, planning to spend less on consulting/outsourcing/training services and managed services than the big guys.


While it's obviously a bad idea to adopt a business strategy just because the bigger guys are doing it, outsourcing can obviously help companies save money, as I illustrated by citing an article that details the savings SMBs can expect to gain through outsourcing software applications, a phone system and e-mail. In the article's most radical example, the CEO of an 80-person Massachusetts company says he figures he saves $25,000 to $35,000 a year by outsourcing his entire IT operations.


While stories like this may be enough to interest SMBs in outsourcing, they may still be too intimidated to give it a try. As a Datamonitor analyst noted last summer, many SMBs just aren't familiar with all of the outsourcing options.


This unfamiliarity is why I like to pass along outsourcing advice geared toward SMBs whenever I can. Earlier this year, for instance, I linked to an HR World article titled 100 Small Businesses Tips and Tricks for Effectively Outsourcing to India.


A colleague just forwarded me a Processor article that contains some great basic suggestions for SMBs considering outsourcing. For instance, it cautions SMBs performing a cost/benefit analysis to look beyond straight staffing costs to include items like potential equipment costs, software application upgrades and consulting expertise. I especially like the suggestion to look for suppliers that can help SMBs stay on top of tech trends that may not relate directly to the contracted services.

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Jul 4, 2008 11:13 AM Nick Preuss Nick Preuss  says:
Our customers can attest to this type of major savings even the much smaller ones down to say 5 employee size companies, using outsourcing and they do it outsourcing to companies right here in the US like FuzeData.By choosing SaaS applications / providers that integrate well SMB's can outsource anything from email to their entire network paying as they go at low fixed monthly costs.Not only are they saving money they are getting the latest technologies and piece of mind that their applications are patched, monitored, and actively managed.With no risk free trials available of most products there should be no fear of trying something new with the potential to save vast amounts of money regularly.When you think about it outsourcing using SaaS makes a lot of sense considering 'software' is the goal of most IT projects and 75% of IT budgets are spent on items other than software with the goal of supporting software initiatives. SaaS generally recoups a large portion of that 75% allowing SMB's to implement more software to run the business at a lesser price or to use that savings to fund other business needs. Reply
Aug 7, 2008 9:22 AM Ashok V Patil Ashok V Patil  says:
Even SaaS and other outsourcing services dont encourage the sentiments of the SMB companies. As most of these small firms consider security and privacy of data as an important issue. Also in some cases, companies might not have a full functional department such as purchase or procurement department. Such a senario will restrict companies to use the full benefit of new applications.Hence advising SMB market to outsource thier IT would be tough task. Convincing the customers about the benefit from SaaS and IT outsourcing will take some more time to mature Reply

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