What is the Cost of IT Consulting Services?
IT consulting services cost is a fundamental question, and it is not asked often enough by companies. Every year, business owners usually look over annual expenses, which includes IT support. However, IT support is only one of several costs of running a network. Depending on your industry, downtime may be the highest actual cost of your IT expenses.
The actual cost of downtime
There is a large amount of small and medium-sized businesses with no plan for networks to go down. Problems such as server/desktop crashes, router/switch malfunctions, and firewall crashes can take down a business for several hours. Thankfully, these things usually do not happen very often, and some business owners are aware of it even happening! However, downtime has other costs that can be worse than just losing what is happening online.
Downtime expenses while the network is still running
Downtime is any time when technical issues hurt employee performance. Waiting for applications to load, slow web pages, software updates all lead to downtime. When a business tracks all of these factors, they begin to see an accurate cost of downtime.
How can we estimate the cost of this downtime? Assuming an employee makes $40,000 per year, less two weeks vacation, this comes to $20 per hour. Even something as simple as slow loading time causing just two minutes per hour becomes 16 minutes a day and an hour and 20 minutes per week. These costs turn into roughly $27 per week and $1350 per year!
The cost of employee downtime for ten employees for this aspect alone could be over $13,000! Here is another breakdown:
- 3 employees @ $20,000 / yr = $ 60,000
- 4 employees @ $35,000 / yr = $140,000
- 2 employees @ $50,000 / yr = $100,000
- 1 owner @ $80,000 / yr = $ 80,000
- Total payroll of $380,000 / yr
With a comparable staff, this comes to roughly $183 per hour. If a server goes down for two hours, this costs the company $366, not counting the cost of paying a company to fix the problem. A full day of downtime will cost almost $1500 in lost labor alone.
Besides the obvious fact that there are far more costs associated with downtime problems, losing a day of productivity per month, you are looking at over $17,000 in lost productivity alone. These costs are likely to double the price of IT consulting services cost to help manage your network for the year.
Can you hire a full-time IT person?
While many small and medium-sized businesses hire their own IT staff, these salaries can be $40,000 - $60,000 or more. Additionally, this does not count benefits, taxes, and other expenses. On the other hand, most companies pay $8,000 - $15,000 in outsourced IT consulting services costs. Hiring staff is a costly way to manage your IT support services. Hiring a dedicated IT person may make sense with enterprises with over 100 employees. However, for many smaller businesses, this is just too high of a cost.
Businesses who work with hiring out IT services when things break usually pay the following rates:
- Individual tech: $60-$100 per hour
- 1-2 person IT company: $75-$125 per hour
- Mid-sized IT Support (5-10 employees): $90-$150 per hour, with some offering a managed services plan (see below)
- More extensive IT Support (10+ employees): $100-$225 per hour with some offering a monthly service plan (see below)
Some IT firms have retainer contracts where the customer would pre-pay for 30-40 hours at a discounted rate. While this makes billing simpler for the IT company, most customers do not see value in this offering.
Do you want a flat monthly fee for IT services?
Several companies are offering monthly managed IT service packages. These are commonly referred to as IT Managed Service Providers. They offer monitoring and on-site and remote assistance when needed.
The main advantage of a flat fee is knowing you have a fixed cost. Moreover, if you have no problems with your network a given month, you still pay. Inconsistency is the part that annoys some business owners.
In addition, paying a monthly retainer for break/fix services makes little sense. Under this business model, the IT company does nothing for you unless something goes wrong. If this does not happen, the company does no work but gets paid regardless!
Fortunately, several more credible and experienced IT-managed service providers operate using a superior business model. These services provide constant monitoring of your network to optimize all aspects of your network performance. In addition to fixing things when they break, these companies constantly operate to help improve your business goals and overall bottom line.
Break down IT consulting services costs?
No matter how you manage your IT consulting services costs, you do wind up paying. Whether it is thousands every time something breaks or hundreds for a retainer service, you still pay for IT management. There is no way around it. In modern times, IT management is just a cost of business.
Of course, the primary concern for business owners is not paying too much for services. There is a concern about paying too much for employee downtime and a host of other technical issues. Further, any instance of a company not working at 100% productivity is money lost. Most of these issues are costly and preventable.
Flat monthly costs for managed services can fluctuate massively depending on the company. Frequently, companies charge per device and include constant monitoring, support, remote maintenance, app updates, and other services as needed.
Monthly IT consulting services cost can range depending on needs. Here are some averages:
- Desktop Management = $50/ month per desktop
- Server Management = $250/ month per server
- Network Management = $300/ month per company
This translates to annual costs for these sample companies:
- Company 1 – 1 server, 5 workstations = $793 / month or $9,500 annually
- Company 2 – 2 servers, 12 workstations = $1,385 / month or $16,620 annually
- Company 3 – 4 servers, 25 workstations = $2,520 / month or $30,240
Advantages of outsourcing IT
One of the main advantages of outsourcing your IT needs is that it allows you to focus on your primary functions. Generally, suppose you try to implement IT projects without a skilled partner to help. In that case, it will divert from your core business goals.
Access IT expertise
One of the main benefits of outsourcing your IT needs is that you now have access to your consulting companies' full range of experience and expertise. For instance, if you have a project that needs new infrastructure, you also gain access to the consultants to all of their hardware and software solutions. You also have their expertise in creating the proper plans for your success. In addition, they can help you develop custom applications and software solutions that best meet your needs.
With such expertise at your fingertips, you can now focus on reaching your customers as quickly and efficiently as possible in a world that demands immediate attention.
Decrease operating costs
Outsourcing all of your IT needs allows you to reduce your in-house IT expenses and labor. Whether you have your own IT staff or time spent by employees trying to navigate IT issues on their own, these things cost money. Further, in-house IT staff often spend 30% or more of their time managing low-level and mundane tasks rather than tending to the most critical business network issues. Partnering with an IT consulting service costs less and can help divide needs.
Having a dedicated IT consultant can help implement its requirements, allowing the entire company to operate more efficiently, not just the IT department. When working with IT consulting services, you pay them to streamline business operations, saving you money in the end.
Whenever you have a project that needs an improvement to your IT infrastructure, a dedicated IT service consultant will assess which solutions would work best for you. It does not matter whether they are hardware, software, or both. With this information, your business will be able to act quickly without affecting your business operations. In addition, if their solution is not perfect for your needs, the IT consultant can then reassess your needs and help improve.
Scale your services
As someone who runs a business, you are likely well aware of the difficulty in hiring the right people for your needs. Making sure they are a fit for not only what you need now but will need in the future is a challenge. As your company expands, your IT needs also grow. One problem with hiring your own IT person is while they may be a fit for your needs today, are they able to scale along with your business?
Outsourcing your IT needs is one way of guaranteeing your IT needs will be met now and in the future as your company expands. Most outsourced IT packages include a variety of experts to meet your future needs when they arise. In addition, IT consulting services are a fraction of what an in-house staff would cost and stays low as companies grow.
Reduce in-house staff
One of the most significant expenses of any company is employee costs. Employees cost in salary, benefits, taxes, and take up office space needed for other uses. Outsourcing IT services brings you all the benefits of an IT staff without the added expenses and office space. These factors are especially critical when a company is just starting.
New companies do not have the luxury of many hires as income is often low and revenue capable of wild swings. With these risks, it makes sense to hold off on hiring an IT manager.
Maximize your in-house team
Another benefit to outsourcing IT is it allows medium and larger-sized businesses to focus on core staff. With managing employees only in the company's primary functions, you are free to focus on more strategic initiatives.
Shrink overall IT expenditures
There are several reasons why outsourcing your IT needs reduces company costs, including:
Pay what you need: Most IT packages are flexible and offer multiple service levels. Costs can increase or decrease based on your company's needs at the moment. With an in-house staff, you do not have the luxury of increasing or decreasing budgets as temporary needs may require.
Maintaining less staff: By keeping employees' staff levels as low as possible, you can ensure payroll is as low as possible but also reduce office real estate expenses, taxes, and medical costs as well.
Reduced equipment costs: With an outsourced IT department, you can rely on your consulting company to provide much of the software and even some hardware to trim down house equipment expenses.
In short, the benefits of an outsourced IT consulting firm outweigh the costs in almost every way. Unless you are a business relying on a highly specialized IT staff, outsourcing your IT services is likely a significant investment in your business.