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At what point does a SMB need a full time IT person?

An answer to the In-House vs Outsourced debate

Barrett Dilger

September 26, 2022

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Should I Hire IT

One thing that isn’t clear to most SMBs (Small & Midsize Businesses) is when they should hire a Full-Time IT employee or outsource their IT to a Managed Service Provider (MSP). To be fair, it isn’t a clear answer – not by a long shot. Every company is a bit different, with varying needs, locations, staff, and technology in use, to name a few.

We tend to want a simple answer though. Something like, “At 25 employees you should have a full-time IT person on hand.” That isn’t the case. I’ve seen companies with over 25 employees not need a dedicated person for their computer needs. Likewise, I’ve seen companies with staff under 10 that do. It’s never an easy answer like that.

Not all businesses are created equally, so no one rule fits them all.

How do you know when you need to look at hiring a full-time IT person?

Here’s the breakdown.

You should look at hiring full-time IT if one or more of these things applies to your company:

  1. You use proprietary technology to run your business
  2. Your product or service is 100% reliant on technology
  3. You require specific compliance for your product or industry
  4. You are heavily invested in growing your technology strategy for the future

These are the 4 main reasons to look at hiring an in-house IT person full-time. Let’s explore what these scenarios look like.

You should hire an IT person if:

You use proprietary technology to run your business

Most businesses are running with off the shelf software. When they set up their systems they had a need, and they sourced a software solution for that need. No problem there.

That doesn’t work for all businesses. Some can’t find a solution that fits their needs, so they create a custom solution to get the job done. With a custom environment like that, you want to have an IT person on staff to support it. There are too many specifics or subtleties involved with customization. It would benefit your company to have somebody on hand that is well acquainted with this software, its environment, and your specific business.

Proprietary Tech

Your product or service is 100% reliant on tech use

Reliant on Tech

Every business is reliant on technology to some degree these days. I’m sure there are some that aren’t, but I can’t think of any – if you can, drop a comment to let me know. Some businesses are completely reliant on its use though. Imagine Uber. Their product uses custom software (as in point 1) but also relies on 100% uptime to work. Try to grab a ride but something isn’t working. I guess you’re using Lyft instead. Their entire functionality resides in technology use. If their tech fails, then their entire revenue stream is gone. If your business model utilizes tech in this fashion, you need a full-time IT staff (and more than 1 person).

You require specific compliance for your product or industry

You don’t have a proprietary application running your business, but you require some specific compliance in your industry. For instance, a medical facility needs to be HIPAA compliant. This means that any system in use to transmit or store electronically protected health information (ePHI) of their patients remains private and secure. While the actual management or certification would most likely be audited by a third party, it could be beneficial for an internal IT person to know all the ins and outs of the technology behind the operations, in order to assist the third party and implement the securities they deem necessary.

Compliance IT

You are heavily invested in growing your technology strategy for the future

Future IT Investment

So today everything is under control, but you have big plans for tomorrow. If you intend to develop platforms, integrate IT architecture, develop technology, or increase business value through technology, then you need an IT person on staff. In fact, you would actually need an executive CIO (Chief Information Officer) to handle deep responsibilities such as these.

If none of these factors apply to your business, then you probably don’t need to hire internal IT staff yet. “Probably” applies, as we discussed before, not every company is the same. So what else do you look at to know if you need to hire a full-time IT employee?

Here are the top items to consider when looking at hiring IT staff vs outsourcing your IT with a service provider:

Costs of hiring a Full-Time IT Employee

It might be tempting to trivialize this concept by thinking, “Once the cost of outsourcing my IT is greater than hiring an employee, then I should hire an IT employee.” That IT employee has a big price tag on them though.

If you’ve spent any time looking at the costs involved with having employees, then you know that they are expensive. On top of the actual hiring process, which will run you a little over $4k, you can expect to pay an extra 25%-40% in other employment fees.  That means if you hire a moderately qualified person at $84k a year, it will cost you anywhere from $105,00-$117,600 total.

This is only a ballpark example, as expertise and experience will affect the salary greatly.  Though I do assume you want a qualified individual and not your neighbor’s son who is “good with computers” to look after your business.

IT tech

It should be pointed out that this does not include any “Solutions” costs, such as hardware or software needed. These are only “Expertise and Labor” costs. With hardware costs comprising 30% of most SMB IT budgets and software consistently having year over year growth of 10%, those can be some big numbers. Make sure you compare apples to apples with any quotes you receive which will probably include both.

In-House IT vs Outsourced IT (MSP)

As you compare the Pros and Cons of In-House IT versus outsourced Managed Service Providers, other factors besides cost will need to be factored in. These factors will help you decide if you should hire internally or go with a managed service provider.

One nice thing about internal IT is having a single point person to go to. If the tech needs of your business are consistently changing, it could be better to have a team member on the floor attending to changes and needs as they arise.

That isn’t to say that an outsourced service cannot attend to you equally as well, but with an IT person on staff the chances increase for them being on top of things.

MSP Team Group

Having that single point person becomes a con in other scenarios though.

A single in-house employee is exactly that, a single person. What happens when they are out sick or on vacation? Your IT needs won’t be met.

Their work is also limited to what one person can do. Their knowledge, expertise, and perspective are restricted to one person as well. Outsourcing your IT to an MSP is having a team of experts attending to your tech needs. It allows for a multitude of experiences in many areas of computing.  It is the MSP who invests resources into building out a staff for the benefit of your business.

Does having IT staff negate the need for an MSP?

If you hire an internal IT employee, does that mean you don’t have the need for a Managed Service Provider?

Well actually, no.

For many businesses, utilizing an MSP to manage and service their IT does relieve the company from needing to invest in internal staff.

A growing trend for businesses is to utilize BOTH internal IT staff and an outsourced MSP to handle all their tech needs. Why?

Using an MSP can manage day-to-day activities such as workstation updates, email security, and user maintenance. This actually alleviates the internal IT so they aren’t bogged down with smaller tasks. Then they can focus and prioritize on bigger and/or future management needs.

Remember the list of 4 reasons why you should hire internal staff back at the beginning of this article?

Well, those hold true, but they do not negate the need for outsourced IT services. In fact, an MSP working with internal staff in each of those scenarios would be beneficial. Xentric has customers that tick each of those boxes, yet we still provide valued services to better their business.

For instance, one specific account utilizes proprietary software. They have their own internal IT guy who knows it inside and out because he wrote the software. They still rely on us for a slew of services, such as file server hosting, cloud application hosting, backup and disaster recovery. They are glad they do too, as we have helped them navigate some instances of trouble.

Bullseye Target

Another customer of ours uses our cloud services to host the back end for their retail chain. While not quite the 100% reliant as my Uber example, if their systems are down then they are essentially out of business as they cannot process any sales transactions. We keep them up and running, and segregated so they can meet PCI requirements.

This brings me to compliance. My example of a medical facility requiring HIPAA compliance wasn’t an accident.  We service the health care industry and provide secure networks and document transmissions.  Typically, their internal IT has a hard time seeing all branches in real-time. Our assistance makes it much easier to manage their entire organization. Plus, our advanced knowledge of HIPAA requirements let us target and address instances where they would fall short in compliance – and we explained it and remedied it before it became an issue.

While we would never claim to replace a CIO (Chief Information Officer), we do offer vCIO (Virtual CIO) services to help businesses plan their success. Xentric doesn’t simply “do IT.” We are a partner for businesses that use our rich knowledge and experience to assist in strategic planning for your company’s future. Technology doesn’t just happen, it is planned and implemented like other facets of a business. In fact, this is a key market driver for outsourced IT. We help strategize that investment so your tech is scalable and grows with you.

Not all IT Providers are equal

You can see that there really are few times you actually need in-house IT. An outsourced MSP can take care of you 99% of the time. What’s the biggest hitch either way?

Quality and Fit.

Finding the right candidate to bring on staff is difficult.  They need to have the knowledge and experience for your tech infrastructure, which is multi-faceted. There are some really good people out there but getting that aligned to your business is tougher than it sounds. Like I stated previously, one of the benefits of an MSP is that they take on the burden of finding the right staff.

Likewise though, finding the right MSP is hard. There are a lot of IT support companies that might not fit your needs. They might be smaller in scale and only focus on basic workstation support. On the other end of the spectrum there are larger companies that can handle more, but they are too busy with a multitude of clients that they are slow to respond to your needs. It’s a bit of a Goldilocks scenario where you need to find the IT solution that is “just right.”

At Xentric, we pride ourselves on our customer service.  We are very customer-centric (which is part of where we get our name) and respond to our clients and provide quality solutions promptly. We do more than simple workstation maintenance, and include network engineering, cloud hosting, backup images (tested for viability), and advanced layered cybersecurity. The quality of our services is top notch. Our customers love us, and we are humbled by that.

This isn’t to say that Xentric is the perfect solution and a must for your business. It’s our desire that every SMB finds their “just right” IT support, whether outsourced or in-house. We have great satisfaction that we are “just right” for many, and help their businesses succeed.

Contact Us

Do you need in-house IT or will outsourcing it work for you? Should you have both?

Again, it boils down to each specific business and what its needs are.

If you’re unsure, we’d love to help clarify it for you. You can get a free 15-minute evaluation, with no strings attached or obligation to buy. Reach out by phone or email or access our live calendar to book a time that works for you.