Modern businesses rely on information technology to store, manipulate, send, and retrieve data. This data could be credit card details of customers, stock in a warehouse, names of employees, as well as transactions carried out online between businesses and their clients. Traditionally, businesses relied on in house IT departments. Today, thanks to cloud computing, businesses can outsource their IT services easily. Here are some of the top benefits of IT outsourcing:
In general, setting up an in-house IT department is quite expensive. To start with, you have to hire people with the right IT skills. For example, a business involved in high frequency trading must hire the best programmers to set up its trading platform. Of course, such programmers typically command a six-figure salary. For example, a Wikipedia entry states that Sergey Aleynikov, employed as a programmer by Goldman Sachs from 2007 to 2009, used to earn a salary of $400,000 per year. Therefore, if a business were to hire four top shelf programmers, the business would essentially have to spend in excess of $1 million to pay its IT personnel.
In addition, the business would have to buy and install IT hardware and software such as servers, databases, operating systems, and firewalls. Depending on the business’s IT requirements, it could spend up to $300,000 to buy and install a single IT hardware/software item. For example, an SAS Visual Data Discovery Server Group 8 costs $567,120 per year, according to Executive Information Systems, LLC. The good news is you can save money by simply outsourcing your business’s information technology needs. This allows you to focus on running and growing your business instead of worrying about IT personnel hiring costs or hardware/software installation costs.
A business with a healthy bank balance can easily buy and install the required IT hardware and software in its premises. However, this can create inefficiencies that could make such a business uncompetitive. For instance, consider a scenario where an in-house server or database crashes making it impossible for employees to access client details or product price lists. Operations would halt completely as in-house IT personnel diagnose and fix the problem.
Consumers who rely on such a company’s products/services could jump ship and take their business elsewhere. Over time, frequent IT outages could make such a business inefficient and uncompetitive. A study carried out by the Aberdeen Group found that the average cost per hour of business disruption is a staggering $110,000. This is a huge sum of money for any business. This is where IT outsourcing comes in handy. Companies that provide managed IT services in Toronto usually have backups of their client’s data in multiple locations. This means a hardware or software failure at one location cannot force the closure of client’s business operations.
Scale up Quickly
If you run a fast growing business, you should be able to scale up operations as quickly as possible. However, this may be hard to pull off if you opt to set up an in-house IT department. On the other hand, cloud-computing technologies have made it easy to scale up business operations within a short time. For example, one can easily set up an Amazon Redshift data warehouse in the cloud that supports a single large compute node with SSD storage capacity of 160 GB, 2 virtual cores, and 15 GB of RAM. This can be easily scaled up to 100 eight extra-large nodes with 256 TB of SSD storage, 3,200 virtual cores, and 24 TB of RAM.
In summary, outsourcing IT services has many advantages including reducing inefficiency, saving money, making it easy to scale up quickly, as well as freeing up financial and human resources for other purposes. This can help a small business or startup to grow quickly and even expand into new markets.
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