Choosing to build an in-house IT support team offers on-demand help but comes with financial challenges beyond the base salary. With global IT spending projected to hit over $5 trillion in 2024, costs continue to rise, forcing companies to make tough decisions with their budgets. We’ll discuss some of the often-overlooked expenses, ranging from operational costs and software licenses to required certifications. Use that information to help make an informed decision about the best IT strategy for your business.
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What Is In-House IT?
In-house IT refers to tech professionals employed directly by a company to handle its technology needs. The work is often onsite or within the same corporate network. This approach gives companies greater control over their technology infrastructure, data, and intellectual property. However, there can also be a lot of additional costs involved, which aren’t always practical when on a budget.
Skilled In-House IT Talent Comes at a Premium
Building an in-house IT team offers the benefit of specialized, dedicated resources. However, attracting and retaining this level of expertise comes at a significant cost. In a competitive job market where specialized IT skills are in high demand, top talent often commands premium salaries, benefits, and other incentives. The average IT support specialist earns $56,457 annually in 2023.
Beyond the base pay, additional perks like signing bonuses, 401K (with employer matching), health insurance, vacation days, and more are expected by most IT workers. The costs don’t end once the hiring process is finished, either. Familiarity with new cybersecurity threats and solutions is an ongoing job. While having skilled in-house IT professionals can be valuable, that level of expertise and availability doesn’t come cheaply.
IT Onboarding and Training Isn’t Cheap
For the technology industry, onboarding and training costs can add up faster than many roles. Some standard processes, like background checks, admin costs, orientation, and other introductions, have some initial fees. However, hardware and software licenses, skill-specific training, certifications, and continuing education can add up to thousands upfront and a few thousand yearly to maintain.
The training process may also take a few months as the new staff member becomes familiar with the workflow and IT infrastructure. That means even with all the upfront expenses, it may be a few months before they are fully productive. Additionally, if the new hire isn’t a good fit for the business, the time and money spent during that process will have been wasted.
In-House IT Support Involves Full Pay For Part-Time Work
One of the nuances often overlooked about in-house IT support is how many hours are being worked. Many organizations keep their IT staff on a full-time salary to ensure availability around the clock. That is especially true for businesses that operate 24/7 or have a global presence, requiring IT support at any moment. While this may seem logical, there can be extended periods when they’re being paid full-time and rarely needed for anything.
This situation creates a disparity between the actual work performed and the value of the labor. For instance, there may be periods when an IT staff member puts in only 10 hours of maintenance and help desk support across an entire week. While having on-demand access to IT expertise is undoubtedly valuable, the cost is sometimes difficult to justify.
The Hidden Costs of In-House IT
The salary of the IT professional is just the tip of the iceberg when it comes to IT. Operational costs, licenses, and other hidden expenses can quickly add up, affecting your bottom line more than expected.
Software License Fees
Many software licenses require annual commitments. While that can make for a more predictable cost and pay period, most licenses are per-user, so every new employee will need their own set of paid licenses as part of their work.
Compliance and Certifications
Depending on the industry, extra certifications may be required, especially for businesses that need IT compliance. Maintaining these costs both time and money while ensuring the quality of IT services.
Office Space and Utilities
Even in a remote job, some IT roles require on-premises presence for server maintenance, hardware setups, and immediate troubleshooting. The cost of physical space, electricity, and other utilities can add up.
Hardware Refresh Cycles
Beyond the initial purchase, most hardware is on a regular refresh cycle. A 5-year cycle is fairly standard, but it may be more or less depending on type, importance, and daily usage. Since the expenses may come in all at once every few years, it can catch some businesses off guard.
Redundancy and Backup Systems
Data protection is essential for any business that relies on technology. Redundancy and backup solutions can be expensive but are necessary for safeguarding critical data against disasters.
While difficult to predict, the cost of unplanned downtime due to system failures or cyberattacks can be high. Without enough time and cost investment, incidents can lead to lost productivity, service downtime, and other unexpected consequences.
Employee Benefits and Perks
In a competitive market, perks like health insurance, retirement plans, and bonuses can be expensive, but they are key to retaining employees and attracting new talent. Depending on what’s offered, it can quickly add 20-30% more expenses on top of their base salary.
Vendor and Third-Party Services
External vendors may still be needed for tasks that cannot be managed in-house. These services can range from specialized cybersecurity monitoring to cloud storage solutions. The cost can vary depending on what can’t done in-house and is often less efficient than full outsourcing.
These include items like office supplies, travel for offsite training or client visits, and minor but necessary software tools that aid productivity. What all the in-house IT specialist is needed for will impact what kind of miscellaneous costs are involved.
Overall, many hidden costs are involved in using in-house IT. When it’s all added together, it could easily be tens of thousands above the base salary per year, all of which are needed to ensure that the role continues to be filled.
Rethinking Your In-House IT Strategy
The cost of maintaining an in-house IT department goes far beyond looking at the base salary. When you factor in the wide range of hidden expenses, it becomes clear that the actual investment is much higher. These costs can affect not just your IT budget but also your company’s overall financial health. Hence, it’s critical to consider these factors when evaluating your in-house IT strategy.
A full-time in-house IT department is simply too expensive for many small businesses. Partnering with a third-party IT company for full outsourcing or co-managed IT can offer all the same strengths while dramatically cutting costs. When using outside specialists, you’ll also ensure you’re getting the work time you pay for while not being stuck with someone on the payroll who isn’t always needed during slower months. When deciding whether to use in-house IT, make sure to take a deeper look at all of the extra costs involved.