Get Out

When outsourcing makes sense

Back Article Jul 1, 2010 By Christine Calvin

With demand for cloud computing and virtual data storage on the rise, the job descriptions for technical support positions are dramatically changing.

“You won’t have the desktop person setting up your system anymore because it’s going to be more complex and complicated. The desktop is now a throwaway commodity,” says Cary Warner, vice president of sales and marketing at Aperio Information Technology Administrators in Sacramento. “Companies that move to cloud computing exclusively might be able to outsource all their IT needs, and as larger companies create their own internal clouds, they will be able to reduce their overall IT staff to fewer, more technical engineers.”

Meanwhile, engineers that have built their careers on fixing hardware might have a hard time keeping busy.

“With clouds, the dynamic will change from me hiring an engineer who fixes stuff to more of a consulting engineer,” says John Pyron, president and CEO of Intelligent Business Network Solutions Inc. in Roseville. “There are some major players in town who, if they don’t change their business model, won’t be here because they’re focused on break-fix and billing by the hour.“

Even companies that have not yet adapted to cloud computing are readily outsourcing their IT needs because it has become so easy and cost-effective.

“There are products out there that vendors are putting in front of customers that have allowed them to cut service staff down and streamline their computer infrastructure,” Warner says.

Cisco has a product called Smart Care, for example, which allows service providers to monitor Cisco equipment within the customer’s network and provide reports on system needs that should be addressed. That sort of program costs between $500 to a few thousand dollars a month, where paying an expert on staff can cost upward of $100,000.

“It’s a good long-term plan,” Warner says. “It works for larger organizations that don’t have the monetary resources right now and that need to cut expenses.”

And while many companies around the region are cutting in-house IT staff, Warner says, the health care industry is bringing in more than ever to address the IT push in the federal health care bill.

But health care isn’t the only sector that should be retaining in-house technicians. Pyron says the decision to keep or cut IT staff should be based on economies of scale.

He says there are a couple of variables to consider, but he recommends a 75-user range to warrant in-house help. “Seventy users in 30 locations make sense for a full-time guy because traveling to and from can add to the cost (of outsourcing). But if all those people are in one location, outsourcing might be more logical.”

Even Intelligent Business Network Solutions outsources.

“It helps me because I don’t have to have a full-time guy here for $60,000 a year when I only need him 20 hours a week,” Pyron says. “We have six engineers, and if I had to staff all that I need to do, I would probably need 10. We did more revenue in 2009 than we did in 2008 with almost half the people. This year is already up 38.9 percent over last year. I outsourced three IT positions, and our revenue increased.”

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