In a recent survey, we found that 43% of IT leaders have already outsourced some IT functions, with nearly 40% handing over the majority of their IT workload to external providers. But why the sudden surge in this trend?
In this blog, we’ll discuss the drivers behind this strategy and discuss whether this approach is the right way forward. Report findings are based on the 2024 IT Leaders in the Eye of the Storm report, collecting perspectives from ~1500 UK based IT leaders.
Tech Skills Shortage
The tech industry is evolving rapidly, with new technologies and tools emerging constantly. This rapid evolution requires a workforce that is equally adept and updated with the latest skills. However, there is a shortage of such skilled professionals in the market. Recruiting and retaining these skilled professionals can be challenging and costly for many organisations.
Furthermore, the report found that 33% of IT leaders say lack of in-house skills is holding them back from modernising key business processes or systems with new technology, which could significantly hinder growth, productivity, and profitability.
Therefore, many organisations choose to outsource these functions to Managed Service Providers (MSPs). MSPs have diverse teams with expertise in various IT fields, including the latest technologies. They can help organisations adopt new technologies effectively, providing the necessary skills and experience without the need to recruit or train in-house staff.
Cost Considerations
The report found that a significant portion - 40% of IT leaders say budget is holding them back from modernising. Modernisation often involves implementing new technologies, upgrading existing systems, and training staff to use these new tools - all of which can be expensive.
For instance, the cost of purchasing new hardware or software licenses, hiring new staff with specialised skills, and providing ongoing training can quickly add up. Additionally, there are often unexpected costs related to troubleshooting issues, system downtime, and maintaining security.
When budget constraints exist, IT leaders may have to prioritise their spending, focusing on keeping existing systems running smoothly rather than investing in modernisation. This can cause organisations to fall behind in terms of technology, impacting their efficiency, competitiveness, and ability to meet customer needs.
This is likely a contributing factor to organisations increasingly outsourcing IT services. Maintaining an in-house IT department involves costs related to recruitment, training, salaries, benefits, hardware, software, and more. Additionally, the cost of downtime due to IT issues can be substantial.
MSPs typically operate on a subscription-based model, where organisations pay a fixed monthly fee for a range of services. This allows for predictable budgeting, without the unexpected costs that often come with managing IT in-house. Additionally, MSPs have expertise across a wide range of technologies and can provide access to the latest tools and systems without the organisation needing to purchase them outright. They also reduce downtime by providing proactive maintenance, regular updates, and quick problem resolution.
By outsourcing to an MSP, organisations can pursue modernisation more aggressively, helping them stay competitive and meet the evolving needs of their customers.
Need for In-Depth Expertise
IT is a complex field that requires deep expertise in various areas, including cyber security, data management, cloud services, network infrastructure, and more. One-quarter (25%) of IT leaders stated that concern about making the wrong technology choice is holding them back from modernising their technology architecture. This concern is understandable given the rapid pace of technological advancement, the wide array of options available, and the high stakes involved in such decisions.
Choosing the wrong technology can have severe repercussions for an organisation. It can lead to wasted resources, compatibility issues with existing systems, and even operational disruptions. Moreover, once a technology is integrated into a business's operations, it can be costly and time-consuming to replace if it does not meet the organisation's needs.
Developing such in-depth expertise in-house can be time-consuming and costly. Moreover, it might not be feasible for smaller organisations. This is another factor influencing the drive to organisations outsourcing their IT Services.
MSPs have broad expertise across a range of technologies and are well-versed in assessing the suitability of different solutions for specific business needs. They can provide guidance on which technologies will best support an organisation's goals and help avoid costly mistakes.
In addition, MSPs stay abreast of the latest technology trends and innovations, giving them insight into which solutions are likely to provide long-term value. They also typically have experience implementing these technologies across various industries and organisational structures, providing them with a practical understanding of what works and what doesn't.
Next Steps
MSP such as Advanced are able to provide tailored IT services built in partnership with the client to meet their unique needs. Advanced will act as an extension of your team, working alongside you to support your organisation, delivering on XLAs and ongoing optimisation. At Advanced, our dedicated team, rigorous processes, and unwavering focus on user experience set us apart.
Get in touch today to learn more.
The findings in this report come from our report – IT Leaders in the Eye of the Storm. To read the report in full, download it for free here (select the 'IT Leaders' option).