Is Outsourcing Help Desk Services Cost-Effective for MSPs?

Running a managed service provider (MSP) business comes with countless challenges, one of which is managing help desk operations. MSPs need to deliver reliable and quick support to their clients, but maintaining your support service can be expensive.

This is where you can consider outsourcing as a viable option. Deloitte’s recent report points out that cost reduction is the leading reason businesses turn to outsourcing, with 63% of companies citing it as a major benefit. But is this kind of service really the budget-friendly solution MSPs are looking for? Spoiler alert: It could be but it’s more than just a quick fix.

This article explores the financial implications and helps you decide if MSP Help Desk Outsource solutions are the right move. By the end, you’ll have a clear understanding of how outsourcing help desk services could help your MSP thrive financially. 

Understanding the Costs of In-House Help Desk Operations

To get a full picture, you need to understand the true costs of maintaining your own help desk. At first glance, it may seem simple: hire a team, provide the necessary tools, and let them handle customer support. However, the costs go beyond just salaries. You also need to take into account these aspects:

• Employee Expenses. Hiring and training employees require both time and money. According to Glassdoor, the average salary for a help desk technician in the U.S. is around $55,700 annually. Now remember that still excludes benefits like healthcare, retirement plans, and paid leave.
• Infrastructure Costs. An in-house help desk requires up-to-date hardware, software, and security measures. Licensing fees for help desk software alone can take a big chunk out of your budget. Add to this ongoing maintenance and updates, and you’re looking at significant expenses.
• Turnover and Training. High turnover in IT roles isn’t uncommon. Each time a technician leaves, you not only lose productivity but must also invest in recruiting, onboarding, and training a replacement. As a result, you lose time, need to face added costs, and might experience a dip in service quality.

Financial Benefits of Outsourcing Help Desk Services

Now that we’ve covered the in-house costs, let’s talk about why outsourcing help desk services might be the better financial decision for your MSP.

Cut Labor Costs Without Cutting Corners

Outsourcing to a third-party provider reduces the need for in-house staff, eliminating salary and benefit costs. The outsourcing provider handles all the recruitment, training, and HR tasks.

In countries with lower labor costs like the Philippines, this can save your MSP tens of thousands of dollars a year.

Say Goodbye to Heavy Infrastructure Investments

Outsource and stop spending on expensive IT infrastructure and software. The third-party provider handles everything — hardware, software, and licensing fees.

You avoid costly tech upgrades and get the tools you need without a financial strain. It’s all handled seamlessly without extra effort on your end.

Scale Effortless as Your MSP Grows

One of the biggest advantages of handing off certain functions is scalability. You can easily scale up or down your support team depending on your business needs, without the overhead costs of hiring or laying off staff. 

When demand spikes, outsourced providers can quickly provide additional resources, and you only pay for the services you use.

Boost Efficiency Without Breaking a Sweat

As some offshoring or outsourcing providers specialize in help desk services, they can often use better processes and technology to handle queries faster. That means fewer backlogs and quicker resolutions for your clients.

For MSPs, that translates to better customer satisfaction, which can lead to client retention and more revenue.

5 Hidden Costs to Consider When Outsourcing

Outsourcing comes with numerous benefits, but it’s not without its challenges. There are hidden costs you should keep in mind when weighing out your options:

1. Vendor Management. You’ll still need someone in-house to manage the relationship with your outsourcing partner. This requires regular communication, check-ins, and performance reviews.
2. Quality Control. The cost of poor service is high. Forbes shared that bad service can cost companies all over the world over $3.7 trillion annually. If the outsourced team isn’t delivering high-quality support, it can hurt your reputation and lead to dissatisfied clients. Be sure to have service-level agreements (SLAs) in place to measure performance.
3. Data Security. Security risks are always a concern when dealing with third-party providers. Make sure your potential offshoring or outsourcing partner complies with all necessary regulations and has strong cybersecurity measures in place. Otherwise, you could face significant fines or, worse, the loss of client trust.
4. Cultural Differences. If your external support desk operates in another country, there may be language or cultural barriers that could affect how you handle issues and interact. These issues can lead to miscommunication, slower response times, and unhappy clients if not properly addressed.
5. Transition Costs. Moving from an in-house help desk to an outsourced provider isn’t an overnight switch. There will be transition costs involved, such as the time spent migrating data, training the outsourced team on your business’s specific needs, and adjusting internal processes. During this transition, there might also be a temporary dip in service quality as the new team gets up to speed.

These hidden costs can add up if not properly planned for, so it’s crucial to factor all of this into your MSP’s plans.

Comparing Long-Term Costs: In-House vs. Outsourced

Let’s break down the long-term financial differences between in-house help desk services and outsourcing.

• Initial Costs. Setting up an in-house help desk requires a considerable initial investment in personnel, equipment, and software. Outsourcing, on the other hand, typically involves fewer upfront costs, as you’re leveraging the provider’s existing infrastructure.
• Ongoing Maintenance. With an in-house team, you’ll need to budget for ongoing software updates, equipment upgrades, and employee training. Outsourcing helps eliminate many of these recurring expenses.
• Flexibility. Outsourcing gives you the flexibility to only pay for what you need. If your help desk demand fluctuates, you can easily adjust your outsourced team size without worrying about hiring or layoffs.

ROI Analysis: Is Outsourcing Worth It for MSPs?

To decide whether outsourcing is worth it for your MSP, let’s look at the potential return on investment (ROI). For every dollar spent on offshoring your business functions, McKinsey found that 58 cents is saved, and they even receive identical or better service. The reduced expenses on labor, infrastructure, and maintenance make a noticeable difference in your bottom line.

For example, if you’re spending $300,000 annually on an in-house team, you could potentially reduce that cost to $210,000 by outsourcing if your partner promises up to 30% on reducing costs. Over time, this leads to significant savings that can be reinvested into other areas of your business, such as marketing or product development.

Additionally, the efficiency gains from offshoring mean fewer disruptions and faster problem resolutions, which can improve client retention and drive revenue growth.

Case Studies: MSPs Saving Money Through Outsourcing

Let’s look at some real-world examples of MSPs that have saved money by entrusting their support to a trusted firm:

Acropolis Tech

When Acropolis Tech partnered with us at STAFFVIRTUAL, they weren’t just looking for extra hands. They needed a full-service IT Service Desk (L2) team that could elevate their entire operation, and that’s exactly what they got.

We stepped in and built a dedicated team across several critical areas — IT, desktop support, live help, and desk help. These departments had been struggling with understaffing, but not anymore.

What’s really impressive? Even with this major expansion, Acropolis Tech saw a 73% drop in operational costs. Think about that for a second, growing your team while slashing expenses. STAFFVIRTUAL didn’t just meet expectations, we redefined what’s possible when it comes to scaling smart.

And this didn’t just improve day-to-day operations, it also allowed Acropolis Tech to tap into a broader network of experts. Offshoring gave them the flexibility and talent they needed to thrive long-term.

Novatech

Novatech didn’t just grow their technical team — they skyrocketed it. Again, with STAFFVIRTUAL’s outsourcing strategies, their support team expanded by an unbelievable 1,600%. That’s not a typo. A team that big, and they didn’t break the bank doing it. In fact, they cut operational costs by 70%.

But here’s the kicker, it wasn’t just about saving money. With a stronger, more efficient team in place, Novatech saw a serious boost in customer satisfaction. They improved their ability to handle tickets faster and more effectively, leading to a level of growth that truly transformed their operations.

Final Thoughts: Making an Informed Financial Decision

So, is outsourcing help desk services cost-effective for MSPs? The answer is yes — when done right. Offshoring can significantly reduce your operational costs, provide scalable solutions, and improve service efficiency. But it’s important to choose the right partner and be aware of the potential hidden costs.

As we’ve established, partnering with STAFFVIRTUAL offers a proven solution to outsourcing help desk services. With a strong focus on quality, compliance, and data security, you can focus on growing your MSP business while leaving the help desk operations in expert hands.

Make sure to weigh all the factors, and don’t rush the decision. Outsourcing can be a powerful tool in helping your MSP thrive, but it starts with finding the right company. Schedule a meeting with us to see why we’re the right choice.

Sources:

Outsourcing and Shared Services 2019-2023 | Deloitte

Salary: Help Desk Technician in United States 2024 | Glassdoor

Bad Customer Service Could Cost More Than $3.7 Trillion | Forbes

Offshoring: Is It a Win-Win Game? | McKinsey & Company