The out-sized cost of outsourcing
This fourth installment in our MSP series takes a deep dive into the hidden costs that make hiring an MSP more costly than building an in-house team to perform the same IT services.
"But it's too late," you say. "We've already outsourced our ITSM, configuration, and cloud management!" "Good news," we say. "It's never too late!" Here are the top four ways MSPs are more costly than hiring internal talent—and not just costly in terms of $$. We're talking everything from long-term expenses to deficits in mindset.
If you need continuous, full-time services from your MSP, get ready for a wake-up call. Because day-to-day convenience comes at a cost. Specifically, In the long term, ongoing fees will exceed the cost of full-time staff. So be sure to conduct a cost analysis to compare those outsourcing fees with the cost of building an internal team. Generally, you'll find that recurring monthly service fees for ITSM, configuration, and cloud management far outweigh the cost of internal IT.
Just like a child who becomes dependent on parents who always do everything for them—unable to do anything on their own—organizations can become dependent on their MSP. "Overparenting frustrates emerging adults’ basic psychological needs and discourages the development of adequate competencies and skills, which in turn lead to psychological distress." Don't stifle your in-house staff! Oftentimes, outsourcing critical IT services does the double-injury of costing you a bundle while stifling in-house staff from becoming proficient at the same valuable skills—further prolonging the cycle of reliance on external vendors. At the same time, this persistent lack of internal expertise also prevents any effective oversight into what your MSP is doing—and charging for.
Worse yet, an organization that has outsourced its cloud management or configuration for the last few years, will find itself in hot water should they unexpectedly lose their MSP and suddenly realize they lack the internal expertise to manage, troubleshoot, or optimize systems on their own.
MSPs typically offer standardized service packages with limited flexibility and customization. Any deviation from the service package (for instance, due to scaling, organizational restructuring, or recovery from disaster) incurs added costs. Additionally, rapid adjustments and emergency response simply are not on the menu—and for good reason: your MSP knows you'll likely need them at some point. This level of inflexibility typically causes operational inefficiencies and costly project delays, along with charges for services that don’t align with the business’s needs. In contrast, in-house teams enable what MSPs prevent: real-time flexibility and response without incurring extra cost.
Like pretty much everybody else on the planet, MSPs do what they're best at—and downplay (or avoid) the rest. They focus on their area of expertise and their assigned area of control. And sometimes that works out fine. But problems inevitably arise when your MSP's limited menu of services (or limited expertise) fails to integrate with your organization’s broader operations. In contrast, full-time internal teams have the time, energy, and motivation to develop a holistic understanding of the company's IT ecosystem—and how it interconnects and aligns with broader company processes and goals.
For example, an MSP hired to manage your cloud services may not fully appreciate how your services impact workflows or interact with other software. This creates inefficiencies, misaligned strategies, and missed opportunities for savings and process improvements at best—or has debilitating consequences at worst.
Though MSPs provide short-term convenience, their long-term costs, limited flexibility, narrow focus, and stifling effect on internal expertise development make them far more costly in the long run than building an in-house team. Additionally, keep in mind that while your MSP may have a dozen clients, your employees (hopefully) only have one employer. So, the main point of all this is that an internal team will not only be invested in the functions of your IT, but (more importantly), they'll also be invested in how those functions align with company goals and drive success. What's more, an internal team will be more motivated to drive your business's success to begin with. Because as full-time employees, they're literally invested in your business. Your business's success is their success.
For over twenty-five years, Seabeck Systems has empowered enterprises to navigate complex digital transformation decisions. Our tailored consulting approach helps businesses evaluate when to invest in full-time IT teams versus outsourcing to MSPs, ensuring technology strategies align with overarching business goals. With a focus on cost efficiency, internal capability building, and sustainable growth, Seabeck Systems equips clients to make impactful decisions that optimize resources and reduce long-term expenses.
