Finding great people to work for your MSP is an essential part of having a successful IT company. Get the right people on the bus and everything should follow – right?
But.. MSP staff are often expected to be heroes. They need to hold considerable expertise in servers, client applications and complex network infrastructure and on, top of all of that, they are also expected to have incredible customer service while juggling many tickets at once. Those skills are not only hard to come by but are also becoming increasingly costly. Besides the sick days, vacation leave and re-hiring costs, the latest job statistics show that the best systems engineers are in high demand and are commanding considerable salaries in Western employment markets.
You may have some heroes in your team but do these high staffing costs always translate into higher fixed monthly fees or charge out rates? More often than not, the answer is no.
Regrettably, the cost of MSP staffing is quickly outweighing what customers are willing to pay for IT services. Increased commoditisation and competition in the IT services space usually means your customers are expecting to pay less per user or per device than they were 10 years ago!
The Profitable Shift
But worry not – there is a solution. MSP’s who get ahead of the market, focus on sales and control labour costs will always have better margins and be better positioned for scale than those stuck in the old paradigm of high cost labour and diminishing fixed monthly fees.
An MSP who controls labour costs by only paying for the skills they need when they need them is how smart IT companies are gaining a competitive edge. Rather than hiring more staff or offering bigger salaries these companies have determined that a pay-per-use model makes better sense and keeps costs under control.
Think about this, according to best practices in the MSP sector, a $70,000 a year technical employee should bill at least 3x his/her annual salary. But statistically most helpdesk and systems engineers fall well below this because they are only partially utilised or are only entering billable time for 25 hours per week or less. As a result, employee costs translate to somewhere between $50-$60 per hour whilst you still need to pay them for 40 hours per week, 52 weeks a year.
To make matters worse this is just one employee with a particular set of skills i.e. helpdesk support. Those heroes with a much broader range of skills tend to cost quite a bit more and are often attracted to working for a larger company where they can command a much higher salary than a small MSP can afford.
That’s why we started Benchmark 365. As a successful MSP with considerable experience, we came to realise that, in order to be truly successful, we needed to get our staff costs under control if we were ever going to grow our business. So we built a large, highly skilled team offshore to meet our clients demand and return us to a healthy profit.
Today, Benchmark 365 provides MSP’s with access to our entire team, so you can tap in to those cost savings, pay only for what you use, get access to a much broader range of skills and, most importantly, make a consistent and repeatable profit while doing so.
With less overhead and more time to spend on sales, we underpin your business development efforts – helping you to close more deals.
Being an MSP is an incredible journey. It’s always changing since the days of break/fix to helping customers navigate the cloud and it will continue to change.
The shift to highly skilled on demand services is just another step to keeping you ahead of your competition and ready for growth.