Why hiring internally rarely solves your IT issues

  • November 30, 2017
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  • Posted by Kevin Gemeroy

It seems like we hear this story with a different spin on it almost every week.  A company that’s grown and become more and more successful starts to outgrow their outsourced IT consultant or their first managed services provider.

As a company goes through the stages of evolution, the level of skill required to meet the business’s needs changes.  Just like you wouldn’t rely on your bookkeeper to provide CFO-level services for a 100-person firm, chances are that your outsourced IT guy or first MSP isn’t going to get the job done either.  Not to mention that higher skilled labor costs more money and better management takes longer, making the pill tough and expensive to swallow.

The biggest mistake that we see companies make is that they often try to hire that IT consultant internally or decide to replace that low-performing MSP with an internal “IT guy”.  While it’s great to have someone that’s right there when you need them, this approach creates a bunch of other problems.

First and foremost, you’ve got all your eggs in one basket.  Your newly minted internal employee will quickly become the one and only person that understands what they’ve built, and they’re incentivized to protect it (and their job) rather than to improve it.  If you’re the CEO or CFO and you’re not getting the answers you’re asking for, there’s a good chance that a really big problem is about to happen.

Next up, you’ve got a skills gap.  For the same reason you wouldn’t hire a handyman to build a skyscraper, you probably shouldn’t hire internally to build and manage your internal IT systems.  While that handyman may be great at fixing the day-to-day stuff like patching a hole in the wall, he’s probably not so great at designing buildings, creating structural or mechanical engineering plans, or leasing out and managing the space.  If you were building a skyscraper, you’d hire a team of experts to manage the project, and you’d know that not just anyone could to the job.

You’ve also got major time constraints.  In a 100-user firm, you’ll need help desk people to handle the day-to-day IT issues, systems administrators or engineers to design and administer new systems, IT managers to plan and oversee changes, and solutions engineers to investigate the right approach to each problem.  And of course, this team of specialists all needs to be under the leadership and management of an experienced CIO.

If you’re asking the help desk guy to implement a new IT system, then the help desk tickets don’t get done.  It’s even worse if you ask a systems engineer to handle the basic stuff – they’ll think it’s beneath them and make it their lowest priority.  Hiring one person to do it all just doesn’t work very well – they end up producing a mediocre result (at best) in just about every area, especially the areas they don’t have the skills to do.

Finally, you’ve got the challenge of managing the internal IT guy.  Since the CEO rarely comes from an IT engineering background, this task is usually delegated to the CFO or controller.  While they’re often great at finance and administration, they usually lack the technical expertise and experience to evaluate and assign work, review performance, suggest improvements, and most importantly assist and empower this internal IT employee with their growth and training.

At the end of the day, hiring internally usually doesn’t work until you can build a true team.  That usually takes a minimum of 3-4 people and $300,000 or more in annual payroll, tax, and benefits costs.  By comparison, a great MSP will charge about $300k/year to manage the IT for a company of 100 – 150 users depending on size, complexity, and a number of other factors.  That top-performing MSP already built the team you need years ago, and they know exactly how to execute to meet needs of small to mid-sized businesses.  They’ve also made the mistakes you’d like you avoid and did it on their own dime.

We usually tell our clients it starts making sense to think about bringing their IT in house at somewhere around 150 – 200 users.  That still depends on a ton of factors, including number of locations, complexity of the system, and the requirements of the users.  Many companies with 500+ employees outsource their IT successfully, and usually get a much better result at a lower cost than building a team internally.

Give it some thought next time you’re tempted to post an ad to hire that IT guy.

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