Insource or outsource IT: Seven questions to drive a decision
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The Wall Street Journal ran an article several months ago questioning if IT departments are a thing of the past. The idea stuck with me. Hiring is hard right now. There are five million open jobs and simply not enough people ready to go to work to fill them. Couple this with inflation driving up the cost of a full time IT staffer and business owners are scratching left their heads. Here are questions to consider if your team is trying to solve the insource or outsource riddle.
Finding great talent at a great wage is tough right now. According to a Wall Street Journal article companies have boosted compensation by as much as 20% for key IT jobs taking entry level job salaries over the $100 thousand per year mark. There’s a limited pool of workers skilled in areas such as cloud computing and data science. During the first quarter, U.S. employers posted 1.1 million tech jobs, an increase of 43% from a year earlier, according to information technology trade group CompTIA.
This creates a basic supply and demand economic conundrum. Is it better to outsource IT services given the current economy? Here are factors to strategically consider when making the decision.
- What’s the cost? The budget to staff a full time IT professional goes beyond salary. Consider training, benefits, paid time off, and basic tools for the job along with the cost of recruiting that person to join the team. Compare that to the cost to outsource based on the current need. Do you need cloud computing support, a software system buildout, or analysis of some sort? There are firms specializing in different areas of service and fee for service payment structures vary depending on the request. Compare options to make the best decision.
- How much work is required? Depending on the size of your business and requirements outlined, ask yourself, is this a project, a few days a month of work or a full-time job. Often the size of the business dictates the need. Businesses that hit 200 or more staffers seem to be those that hit the “sweet spot” to start hiring a full time IT professional who can counsel strategically and support day-to-day needs. Outline the job description and carefully analyze options.
- What functions do you need? Often mid-sized businesses hiring their first CIO need expertise both strategically and tactically. Boots on the ground provide employees the tools they need, server backups and daily questions answered. Meanwhile, as the business experiences growth, an experienced professional who can take a seat at the owner’s table to help think through strategic decisions is important. Decide which job functions are strategic and which are tactical along with how they complement each other.
- What’s your core business? Often the decision to in or outsource does not relate to the cost of the potential staff member. If core business is not IT related, perhaps outsourcing service and project work is a great option. Instead of having another staff person or team to manage, the business can stay focused on core services and products by using a complementary team for technology.
- Can you learn and cross-pollinate? When reviewing the job description, ponder this: could you hire a firm or two (depending on specialty) and have them cross-pollinate as their own external team? The WSJ article that asked if IT departments are outdated suggests, “Having an IT department is exactly what will prevent companies from being innovative, agile, customer-focused and digitally transformed.” The author goes on to point out IT departments really started as computer departments. The goal was to keep computers going. And over the years internal IT success measurements are “on-time and on-budget deployment.”
- Can you go hybrid? Instead of hiring a software engineer to take over and build a team, could you hire a project manager to find outsource teams with the right expertise and experience to deliver what staff expects—new software programs, improved cloud services and so on. In this hybrid model, the business can scale up or down based on what’s needed and turn measurement of success into the value added to the business.
Tech drives everything around us. The best last question (number 7) to think about is: Can this work be done by someone else better, faster and without impacting company goals? If the answer is yes, look externally. If it’s no, look in-house. And if you still don’t know, refer back to questions one through six.
Aaron Toops is co-founder and CEO of AERIFY.oi, managed services IT business that makes technology simple, safe, and fast. The team leverages the Cloud to allow small to mid-business teams affordable access to their information from whatever device at whatever time they need.