As a managed services provider (MSP), you strive to be an IT superhero for your clients—covering all of their needs and providing exceptional service—all within a certain budget. Unfortunately, this is often easier said than done. Supporting your customers’ every need can become wearying, overwhelming and costly, which is why many MSPs are beginning to seek outside help. Every superhero needs a sidekick, and outsourcing can empower you to elevate your business and become the leading provider you strive to be.
Whether you’re looking to free up your staff to work on more strategic projects or reduce in-house costs and resources, outsourcing has plenty of advantages for MSPs. Let’s take a closer look at the top five benefits of augmenting your business model by outsourcing certain functions to a third-party provider.
1. Control Costs
Cutting and controlling costs is one of the most common reasons why MSPs choose to outsource. Utilizing an outside partner can help you cut capital costs by reducing the amount of internal equipment (such as servers, software costs, etc.) required to keep your systems running smoothly or needed to roll out new solutions for clients.
More importantly, outsourcing can help you reduce labor costs—which represent a significant burden for IT providers today. Many MSPs believe that the “hire-as-you-grow” method is best, but this can actually put a damper on your profitability and growth rate. Think about it: it costs your business a lot of time and money to find, hire, train and retain in-house staff to support your clients—and you'll need to keep hiring over time as you continue to scale the business. However, with a partner like Continuum, you'll have the means to scale human resource capacity up or down at a moment’s notice—helping you minimize these costs and eliminate the uncertainties surrounding workforce management.
2. Increase Efficiency
When MSPs attempt to do everything in-house, they end up having much higher research, development and implementation times, all of which increase cost and can decrease efficiency. But by utilizing an outsourcing partner, MSPs can gain access to more manpower and knowledge—without hiring or increasing headcount—that can allow them to optimize operations, increase efficiency and take on customers with more complex environments.
With Continuum's integrated Network Operations Center (NOC), MSPs can tap into the expertise of an entire staff of proficient IT professionals that act as an extension of your team. With our technicians tackling resource-heavy tasks, your employees are able to be more productive in their day-to-day efforts and take on more revenue-driving work. Through smarter, proprietary technology and dedicated technical expertise, outsourcing can help MSPs operate more efficiently and support more clients.
3. Improve Service Delivery
The majority of your clients may follow a traditional 9-to-5 work schedule, but technology certainly doesn't. What if a mishap were to happen outside of normal work hours? Most clients today expect 24x7 support, and if you’re not able to provide that it may lead to frustrated users, complaints and potentially major headaches. Fortunately, many of the challenges associated with maintaining a 24x7 operation can be overcome with the help of an outsourced partner.
Through outsourcing, you’ll be able to provide 24x7x365 IT support for your clients without the high costs. Through our backend NOC support and frontline Help Desk services, Continuum partners and their end-clients can receive support during both peak and non-peak hours from real individuals. Without needing to increase your headcount or payroll, outsourcing can provide you with the staff you need to elevate your service delivery and foster client satisfaction.
4. Reduce Risk
Markets, technology, compliance and regulatory requirements can change very rapidly, and there’s a lot of risk involved in managing this all on your own. If you’re trying to support clients with sub-optimal technologies or if you don’t have all of the information and training required to support certain businesses, you could be at serious risk. Therefore, it’s often safer to pass off that risk a third-party partner who is capable of managing it.
A trusted outsourced partner can assume and manage much of the risks associated with today’s IT industry. Due to their higher level of expertise in the field, they will have the knowledge to make informed decisions, provide your business with the proper technologies and expertise, and ensure risk is reduced.
5. Focus on Business Growth
In this line of business, it is neither practical nor possible to be a jack-of-all-trades. If you’re stuck handling all IT-related issues yourself, that’s precious time and resources that could’ve been spent on developing your products, winning over customers or coming up with innovative business strategies.
By outsourcing to a reliable partner, you can free up valuable resources and invest in growing your MSP business. With mundane tasks such as monitoring, ticketing, scripting and patch management taken care of, you’ll be able to dedicate those resources to higher-value projects that build your business. Never had any time to devote to marketing or product development? Now you can! Essentially, outsourcing can help remove the burden of day-to-day IT management, allowing you and your team to focus on more important business initiatives to grow your business.
If you’re looking to be more successful in your managed services business, outsourcing might be the answer. These are just some of the major advantages outsourcing can provide your business, and there are partners out there who can help you achieve a new level of success. In fact, it’s been shown that MSPs who partner with Continuum are already realizing these benefits—and you can too!
Could Continuum Be Your Ideal Sidekick?
Recently, we released an analysis from Service Leadership, Inc., the leading financial and operational benchmark organization for MSPs and IT solution providers worldwide, that indicates that MSPs can achieve greater profitability, operate more efficiently and withstand market pressures as a result of Continuum’s transformative platform and business model. By partnering with Continuum for your outsourcing needs, you could experience all the benefits we discussed above. Let’s take a closer look at some of the key advantages Continuum could provide your MSP business.
Improve Efficiency and Service Delivery
Continuum’s IT management platform is built upon a principle of strategic “smart-sourcing,” in which MSPs leverage our Network Operations Center technicians as the foundation on which to take their business to new heights. Continuum’s NOC enables MSPs to provide full, 24x7x365 issue resolution and mitigation. Because our NOC employs hundreds of highly skilled and certified technicians who act as a direct extension of our partners' workforces, MSPs and their teams can become significantly more agile and efficient with their time and resources.
What's more, Continuum’s white-label Help Desk can provide around the clock coverage to clients without the labor costs, maintenance and overhead required to keep an in-house operation functioning. There’s no need to worry about relaying issues across systems and between third-party vendors that are difficult to coordinate, because the Continuum Help Desk seamlessly integrates with the NOC and allows for speedy and direct communication and escalation of issues.
By combining smarter technology and processes, Continuum’s model is designed to empower MSPs to optimize their IT operations and become as efficient as possible.
Mitigate Risk and Focus on Growing Your Business
For MSPs who don’t take full advantage of outsourcing, they have more invested in their systems and processes, meaning they’re at higher risk if they don’t drive a certain amount of recurring revenue from that investment. On the other hand, Continuum’s business model enables MSPs to shift material operational responsibility, financial risk, and management effort to Continuum—thereby reducing overall risk for the MSP.
In fact, the recent Service Leadership analysis supports these findings. While non-Continuum MSPs in this dataset saw a decline in managed services margins of 4 percent from 2012 through 2016, Continuum’s partners saw their margins on managed services hold steady on average during that same period.
The analysis also shows that MSPs leveraging Continuum grew their Adjusted EBITDA dollars at a much faster rate than non-Continuum MSPs. Continuum partners in the $1-$5MM revenue range grew profit dollars 7 percent on average, while MSPs who do not use Continuum realized just over 3 percent growth. Similarly, Continuum partners with $5-$12MM revenue grew profit dollars by 17 percent while their non-Continuum peers realized just under 13 percent growth. These findings help illustrate the advantage of Continuum’s business model as MSPs strive to grow their business, increase profitability and remain competitive in today’s managed services market.
Cut Costs and Drive Profitability
Additionally, Continuum partners are spending less of their gross margin on General and Administrative (G&A) expenses than their non-Continuum peers, according to the analysis—perhaps because leveraging our on-demand workforce may enable them to invest more heavily in other areas of the business. MSPs working with Continuum were found, on average, to spend 6 percent less of GM on General and Administrative expenses between 2012 and 2016. Without the need to hire or add costly technicians to their payroll, Continuum MSPs can focus their resources on business growth to drive greater profitability.
Moreover, the analysis illustrated how Continuum’s model provides MSPs with a material advantage across key profit and growth measures.By comparing financial data from a random sample of 140 of Continuum’s partners in the Service Leadership Index® (S-L Index) to those in the S-L Index who do not use Continuum, the analysis illustrated the real, long-term effects of Continuum’s business model to not only achieve greater overall profitability than their peers. Of the MSPs in the top quartile of the S-L Index, Continuum partners achieved gross margins on managed services that were on average 8 percentage points higher than their non-Continuum peers. And, among all MSPs in the S-L Index, Continuum partners recorded Adjusted EBITDA figures that were on average 7 percentage points higher than their peers using other platforms. This goes to show how Continuum truly empowers its MSP partners to control costs, strategically allocate resources, focus on important business initiatives and optimize profitability.
Want to learn more about the Service Leadership analysis and how Continuum could be the most strategic choice for your success? Click here.
By Carlos Borges
By Ray Vrabel