Is it better to hire internally or to partner with a technology company for your technology support needs?
Like all complicated questions, the answer depends on several variables. The goal of this article is to help identify some of the factors involved in this weighty decision.
There are several signs that an organization has reached the point where changes are needed in the IT services area. These will often show up in the following ways:
- Regular frustration from employees and management relating to IT
- Noticeably lost productivity (staff spending time dealing with IT issues)
- Stress and headaches around technology
- Security incidents or noticeable lack of cyber security precautions
- Regular downtime – computers down, server down, tools down…
- IT department/resource is a revolving door
Many small to mid-size organizations struggle with the decision of whether to build an internal Information Technology (IT) team or to use a partner for that service. We see discussions come up in these scenarios:
- It feels like an IT person is needed to run around handling the day-to-day IT firefighting.
- An existing IT person is not working out well – or, that IT person just quit/left.
- The existing IT department has historically struggled to keep people or execute well.
- A nagging feeling that the IT environment needs to be cleaned up / improved.
Paths companies might be tempted to take with internal hires:
Option 1: Hire a single, L1/L2 technician to handle day-to-day IT issues (computer problems, email, printers, etc.)
Option 2: Recruit a “mid-level” L2/L3 Sys Admin-type person to oversee IT environment, backbone, and deal with day-to-day issues.
Option 3: Bring on a full-stack engineer to cover architecture, backups, security, networking, computing, software, and tools.
Aside from the cost of attracting and retaining an internal IT department, we have seen that these additional problems need to be considered when deciding whether to hire internally or partner with an IT firm.
Problems seen with hiring a single “L1” IT person:
IT professionals tend to do better in teams where they get better accountability, higher job satisfaction, and have the advantage of team-based problem-solving.
The single technician feels responsible 24/7/365 and will burn out, there is little to no documentation because the knowledge is held by the individual.
That situation usually ends when they get frustrated and leave. Someone will need to manage this technician, and provide a higher-level IT strategy, architecture, security, and back-end systems.
This method is highly reactive and will look like firefighting (dealing with the urgent issue at hand). The proactive work required to resolve underlying, root cause issues are often ignored. This resource will cost an organization between $7-$9K per month, when combined with the additional supervision support required.
Problems with hiring a “mid-level” L2/L3 IT person:
When hiring an L2/L3 IT person – normally they will be focused (good at) one aspect of the IT environment – Servers, Network, Security – leaving gaps in your maintenance and strategy.
They are not excited about doing the daily reactive work and prefer the higher-end tasks. These technicians are more expensive and will result in costs of $9000-11,000 per month.
Problems with Option #3 (Full-stack engineer):
A full-stack engineer can architect full environments and handle most any issue, but they are expensive and ridiculously hard to keep if they are not supported by a staff of L1/L2/L3 technicians. Usually, they are unlikely to be happy doing day-to-day support for an extended period.
They are expensive, costing $11,000 – 13,000 per month alone. Also, when you factor in additional staff to support day-to-day, you are looking at $17,000 – 22,000 per month.
Hiring statistics in the IT industry around hiring and retention:
- Average days to fill an IT position – 30 Days (Bika)
- Percentage of employees looking for new work within 6 months of being hired – 33% (Ariella)
- Cost to replace a salaried employee – 6 to 9 months’ worth of salary (Ariella)
- Annual Turnover Rate – 57% (Ariella)
- Average time until turnover in IT industry – Median tenure is 1 year (Bean, Delcie)
While there are some tangible and measurable costs involved with attracting and retaining an internal IT team, there are also some intangibles that are harder to measure, but certainly play a role. Let us illustrate with a true story.
Example: 250 Employee Organization
We recently partnered with an organization with around 250 users that has historically had a 4-person, internal IT team. The organization has struggled to attract and retain IT talent and each time an internal IT person left, the organization was left with a knowledge gap because they lacked a documentation process and a standardized approach to IT support.
When we were called in, 3 of their 4 IT support staff had suddenly quit, leaving them in a panic. Fast forward 3 months. While the environment is far from perfect, a system of documentation has begun, and the primary business processes have been documented and are repeatable by everyone on our technical staff.
The CEO gave us permission to quote her when she said: “it feels like P3 has wrapped us in a warm IT blanket…”.
As a technology company, we face the same challenges as any organization when it comes to attracting and retaining IT talent. Because this is our primary business focus, we have had to become good at facing these staffing challenges.
How do we attract and retain employees? In the spirit of transparency, we are incredibly open to sharing our processes for accomplishing this.
Many of the benefits that we used to use to attract talent are becoming neutral (bring your dog to work, free food, unlimited PTO etc.) because so many other companies are offering them.
Employees in the IT industry want competitive pay, a transparent and challenging career ladder, training, training, training, support from a larger team, and flexibility in their schedule and environments. The flexibility is important because what recharges one employee might not work the same for another.
Does this stop employee turnover in the IT industry? Not even close. We have found the key to sustaining the flow of business in a high-turnover environment is to plan for it.
Our company has been in this industry for over 20 years. Philantech3 has certainly had our share of turnover, and not all turnover is bad for the employee or the company.
For example, our primary business centers around organizations with 10-250 employees. There is a certain level of technicality needed to serve that demographic. We understand that rising star technicians want and need to progress in their craft.
We understand that top talent will eventually outgrow the work that we do. If we can recruit, train and work with this type of talent for 3-5 years, we feel that this has been a successful relationship and wish them well.
We have even helped top talent find more challenging enterprise-level positions if that was part of their career track.
So, knowing that the IT industry has a higher-than-average turnover rate, how do we keep daily operations functioning?
First, we have created a culture of sharing and documentation. When we share openly and clearly document the environments that we support, the work continues even when a team member leaves.
Next, we form teams that share the work. By organizing support technicians into teams, we can quickly add junior technicians as needed.
We know that it takes time to hire new technicians. With an average time to hire of 30 days (we have found that it takes slightly longer in our market), we build and develop relationships with the local colleges for technology interns.
We hire personality and train for technology. Often, we will hire two technicians, knowing that almost 50% of new hires will not last out the first year.
Ongoing training and career development has been found in research studies to be the number one reason for technicians leaving (or staying) in a position, even above rate of pay (Walters).
When we provide training opportunities and requirements for our staff, we have found that they are more engaged in their work and that knowledge is often shared with the team, causing a net lift in the team.
By creating a culture of learning, growth, and positive change, we can increase the amount of time that we keep good technicians, celebrate new team members coming into the team, but also celebrate those who are graduating or moving on, in a way that does not significantly impact our ability to provide highly responsive helpdesk support.
Partner with Philantech3 for IT Services:
When you partner with our team, you get a full-team (including full-stack engineers, L2/L3 Sys Admins covering all areas of IT, plus L1/L2 Technicians for day-to-day troubleshooting. Plus, you get thorough documentation and continuity along with decades of experience and knowledge.
Approximate Costs for Partnership Model:
- 50 Employee Company: $8,500 / month ($170/user)
- 75 Employee Company: $12,000 / month ($160/user)
- 100 Employee Company: $15,000 / month ($150/user)
By choosing to partner with our team, your company can focus on your core competencies and avoid the hassles and downtime associated with attracting and retaining IT staff. To learn more about Philantech3, checkout out our “About Us” page.
Employee Tenure in 2020. Bureau of Labor Statistics. September 22, 2020. https://www.bls.gov/news.release/pdf/tenure.pdf
Bean, Delcie. (Dec 3, 2019) Employee Turnover. CNBC. https://www.cnbc.com/2019/12/03/a-tech-firm-tried-it-all-to-stop-turnover-only-one-thing-worked.html
Ariella, Sky. (Dec 6, 2021). 27 US Employee Turnover Statistics. Zippia. https://www.zippia.com/advice/employee-turnover-statistics/
Bika, Nikoletta. (n.d). What Is the Average Time to Hire. Workable. https://resources.workable.com/stories-and-insights/time-to-hire-industry
Walters, Kelley & Rodriguez, Joel. (2017). The Importance of Training and Development in Employee Performance and Evaluation.
With an undergraduate degree in Applied Management, a graduate degree in Business Administration and as a doctoral candidate in Organizational Psychology, let’s just say that business and leadership are Wil’s passions! He is also a small business owner who understands the rigors and joys of business building.