Or is it? Clear-cut advantages seem to lessen proportionally as businesses' IT org charts flatten and narrow. Smaller companies that lack the clout of their Fortune 1,000 brethren may find themselves on the short end of the relationship stick. When deciding whether to outsource, it's wise to look beyond dollars saved. We created an RFI for an SMB and received some surprising results (see "Teaming Up With the Right Management Service")
Working in outsourcing's favor are the economic realities IT departments--especially those at relatively small companies--face today.
CIOs must do more with less as IT spending currently hovers around 3 percent of gross revenue. Inasmuch as revenue is down, IT spending is decreasing. The No. 1 priority for U.S. IT shops is cost reduction, with higher productivity a close second, according to Meta Group's Worldwide 2003 Benchmark Report, a survey of IT trends. This is driven in part by the flat IT budgets predicted for the rest of the year.
A major stressor for most businesses is containing the cost of managing and maintaining their networks (see "Top Network Problems by Company Size," left). This reality applies to all IT shops, but for SMBs, getting network management outsourced is a tough sell because the cost offset is harder to make (there's less money to reduce the budget by) and because successful outsourcing is a two-way street. Outsourcers balance efficiency against individualized service. From the management service provider's (MSP's) point of view, special services reduce efficiency, slashing margins.