Outsourced vs. In-House: Company needs dictate best method for handling IT

A survey commissioned earlier this year by Town & Country-based Savvis Inc. suggests that outsourcing information technology services will be on the rise in the next decade for companies in the U.S., Singapore and the United Kingdom.

The annual survey found that while 17 percent of companies polled now outsource their IT needs, nearly two-thirds, or 64 percent, are expected to do so by 2020.

For Ozarks companies, deciding whether to handle IT needs on staff or through contracting with an outside company is an individual process, according to local IT representatives.

“Springfield is a good market for us. The average company size is around 16 people and it doesn’t make sense to hire an internal IT employee for that size of a company,” said Wayne Dipper, chief operating officer for KPM Technology, which handles IT needs for area companies. “It really doesn’t make sense to have an internal IT person unless there are 75 users or more and sometimes, not even then.”

The number of applications and servers is also a consideration.

“If a company has 10 or more applications, three or more servers and multiple locations, then it might make sense to have an internal IT person,” Dipper said.

Hollister-based Connell Insurance Inc. outsourced its IT services until eight years ago, but the decision was based more on timeliness than size.

The company was in the process of going paperless and due to strict regulations about how policies needed to be documented, leaders had to avoid down time when something needed to be addressed.

“Before, we might be down for days,” said Tim Connell, president and producer manager. “Having an IT person on site helps our workflow, and we avoid the risk of errors and people forgetting to document an electronic file.”

Then, there are the cost comparisons. Brian Plunkett, general manager of PC Net and its 85 Under data center, said outsourcing can be a less expensive way to tap into technology expertise.

Plunkett said a company that would spend $40,000 as a base salary for an internal IT employee could typically have a $20,000 annual contract with his firm, though Dipper said smaller companies with fewer IT needs could spend between $5,000 and $15,0000.

“When it comes to averaging cost … it depends on the level of contact, length of contract and if the system has been well maintained,” Plunkett said.

Cost is one of the main reasons Mattax Neu Prater Eye Center Inc., decided to outsource its IT needs when it was founded 11 years ago. The company, which has locations in Springfield, Lebanon and Branson, works with KPM Technology.

“We can’t justify a salary of a full time employee,” said Controller Suzanne Vert. Vert said that although KPM sends someone out twice a week, she can troubleshoot and solve small issues.

“I think it also helps to have someone on site who can do some of it. It works well for us,” she said.

On the flip side, Connell said having an in-house IT employee has brought his company savings.

“I would say having an IT person on staff easily benefits us in the amount of six figures,” he said.

The only downside, he said, comes when that employee has to be away from the office.

“We feel like we’ve lost our right arm,” he said.

Security concerns also can be a reason for companies to hire an outside IT contractor.

“Management and clients might also be concerned about giving the keys to the kingdom to someone who might leave and go to a competitor or another company in a year,” Plunkett said. “If we have a staff turnover, we can deal with the security issues for the company.”

While both on-staff workers and IT outsourcing have pros and cons, Dipper said IT companies can help companies assess their needs and choose.

“We don’t always say they need our service,” he said. “We can also help them hire an internal employee if that’s what we find they need.”
[[In-content Ad]]