Controlling Costs Part II: Using Managed Services to Optimize Expenses

In part one of this series, we explained how the COVID-19 pandemic is putting tremendous pressure on enterprise decision makers to reduce costs. Unfortunately, this could significantly impact workers, with 67 percent of CFOs considering making cuts to their workforce.

Just how serious is the threat on a global scale? According to the UN, COVID-19 is expected to eliminate 6.7 percent of working hours, or about 195 million jobs worldwide, during 2Q20. This is largely because more than four fifths of global workers live in countries affected by partial or full measures.

As we pointed out our previous post, there are ways that enterprises can reduce costs during this difficult time instead of parting ways with valuable workers. This is something that we will continue to explore over the next several weeks.

One way this can be accomplished is to leverage managed IT services.

Let’s explore.

Managed Services: A Brief Overview

Using managed services involves outsourcing tasks to third party providers. Managed services can provide cost-effective coverage for a range of needs, including daily operational support, computing infrastructure, maintenance, network monitoring, and trouble ticketing. Companies commonly leverage managed services to streamline cloud management, cybersecurity, disaster recovery, virtualization, data storage, and so on.

Using managed services is a great way to increase internal staff production, as it can free IT workers to focus on more impactful projects that can save money or generate revenue instead of spending all of their time — including night and weekends — on low level backend tasks.

At the same time, companies often bring in expert architects to design complex environments and hand off management once completed to their internal teams. This is a great way to reduce project completion time, while eliminating costly learning curves.

The Benefits of Managed Services

According to one study, for every 100 users, about $400,000 can be saved annually — amounting to several worker salaries. However, savings can vary from company to company.

One easy way to calculate the benefits of managed services is to run a simple cost comparison, analyzing how much money the business typically spends on IT expenses each year, compared to the cost of investing in a managed IT services program.

Managed services can provide a variety of additional benefits for an organization, too:

Support during layoffs: As some companies will experience during the next few months, layoffs can be inevitable, even after large spending cuts. When this happens, managed services can be used to offset employee loss, allowing depleted departments to keep functioning.

SLA-backed agreements: Managed service providers are held in check by the information outlined in their service level agreements (SLAs). By signing an SLA, a company can transfer responsibility for certain processes that carry extra financial risk.

Scalability: IT workers can be very expensive to hire, especially when filling top tier positions. In fact, the average IT decision maker salary is now hovering around $141,024. Outsourcing responsibilities to a managed service provider can help a growing company scale its IT team without breaking the bank.

Security and Compliance: Cybercrime is advancing at a rapid pace, with a variety of sophisticated threats coming to market that are too difficult for the average enterprise to combat on their own. Working with a managed cybersecurity provider is a great way to stay ahead of the technology curve, as it can provide access to advanced systems and safeguards that would be too resource-intensive to bring in-house. Many managed IT suppliers specialize in ensuring their clients are compliant in one or multiple compliance requirements, making it much less of a burden to monitor internally.

Tax benefits: Investing in managed services can also be better for tax purposes. For example, a company may lease computing hardware from a vendor instead of buying it outright. In doing so, the cost of leasing can be classified daily OPEX instead of CAPEX — allowing the company to deduct expenses, and reduce income tax.

Telarus offers a robust portfolio of managed services from leading providers such as CenturyLink, AT&T, and Verizon, as well as smaller organizations with niche offerings.

For more information about Telarus’s managed services portfolio, contact the team today.