“It’s absolutely impossible, but it has possibilities.” — Samuel Goldwyn
“A differential equation is a mathematical equation for an unknown function of one or several variables that relates the values of the function itself and its derivatives of various orders.” Sounds complicated, eh?
So how can you compare one outsourcing group against another when they are charging by the hour? My gut tells me that 99% of businesses compare the hourly rate but this is the absolute worst way to go.
Why do I think this? Because it is ALWAYS the first question out of a prospects mouth when they speak with us; “what is your hourly rate?” I am sure that the current method of hourly support has caused this problem and is causing small businesses to focus on something that has absolutely NO bearing on making the right decision.
Many businesses make the decision on who ‘feels right’ but in the end, you’re not paying someone to be your friend! You are paying for results! Gauging a decision of this important on who ‘feels right’ is a recipe for disaster.
Other criteria that I have seen used that are just as dangerous;
- Their brochure or sales material
- How close the company’s office is to yours
- Discounts given for block hour purchases
Finding The Best Value?
So, let’s assume we are looking for a good computer support company. We have contact several, gotten their ‘hourly rates’ and are ready to make a decision. We are looking for the best value right?
Most companies offer a fixed rate; normally between $85 and $125 per hour although I have seen rates as low as $45 and as high as $175.
From the outside, all our options seem like good enough folks; they presented well and provided the information we asked for so what can we based our decision on? The only tangible thing is the dreaded hourly rate.
But unfortunately…
There is no common measurement you can use to compare outsourcers. Is a $125 an hour tech. better or worse than an $85 per hour tech.? Common sense tells you there must be some reason WHY they charge different rates but you can’t be sure.
Actually, there are lots of reasons for a low hourly rate;
- They are DESPERATE for business and willing to drop their hourly rate in an attempt to pick up business before the whole ship goes down (with you on it!)
- They hire ‘newbees’, technicians with a smattering of experience managing networks, to keep THEIR costs down so they can afford to undercut their competitors rates.
- They don’t really know what their costs are and are just guessing at the rate they need to make a go of it. Once they figure out that they can’t support your company at the low ‘intro’ rate; they will put the spurs to your invoices to make up the difference.
To further complicate things, there are no guarantees on the amount of time required to support your network or the efficiency with which a firm can meet your needs.
Can the $125 an hour tech. install a server in 4 hours while the $85 an hour tech takes 8 hours to accomplish same or is the reverse true? You simply don’t know because again, there are no standards for how long a task should take.
The ultimate brain twister; even after a tech is done with their work you still don’t know what you just bought…
Did the $125 an hour tech rush to get to his next appointment and leave you with mis-configured firewall, exposing your to hackers (that you then need to pay the same $125 an hour tech. to come fix)?
Did the $85 an hour tech use your company as his own personal classroom and not consider the umpteen dozen things a properly configured network needs? This will cause your network to be buggy, unstable and slow; all problems that your tech. is happy to come and charge by the hour to ‘fix.’
Chances are that these nightmare situations are occurring in your business. But as you can see; comparing a provider on their hourly rate, or any other of the inconsequential attributes is NOT the way to go.
What Criteria Should You Use
First, completely IGNORE the hourly rate. You read that right; IGNORE the hourly rate. It is a completely artificial measurement of value. After all the hourly rate needs to be multiplied by the number of hours (over which you have NO control) to arrive at your bill.
Second, if you are paying by the hour; STOP. This is a recipe for disaster and the soup is already on simmer.
Here are the criteria you need to use to select your IT support firm;
- Years in business. Have they stood the test of time or are they an upstart, eager to use your business as a test bed
- Number of Engineers. How many people do they have ready to help service your account? Even the best intentioned one-man-band gets completely overloaded; normally when YOU need him the most
- Certifications. Has the company and its employees PROVEN that they know their stuff?
- Familiarity with YOUR industry. Has the company proven over time that they understand your industry and can support your unique needs?
- References. You must call and check references.
Now THOSE are criteria that you can make a half way decent decision on. Ask questions, take good notes and you will make a great decision, certainly one with more chance of being right than just comparing hourly rates.
The Best Solution
In the end; it is a ‘best guess’ when selecting the best value in an outside pay by-the-hour provider. The main reason is that you don’t know what you don’t know and there are so many different types of firms with different philosophies on how to manage your network that it is impossible to make the single best decision for your company ahead of time.
What’s more the hourly rate and the resulting amount of money you spend has no bearing on the value provided to your company; there are simply too many variables involved.
Paying by the hour is like taking your car to the shop and telling them ‘fix it’, without any expectations for parts or labor or any constraints on what needs fixing and what does not.
The Best Solution is to understand that by-the-hour-support is a huge liability for you and your business and flat out refuse enter into an agreement that is more like Russian Roulette than IT support.
