One of the most common questions we receive from new perspective clients reaching out to our office is, "What are the charges for your IT services?" While pricing is undoubtedly a crucial factor to consider, it's vital to make an informed decision when choosing the right IT services company, rather than solely relying on the price as the primary determinant.
This may seem self-evident, but the reality is that many business leaders, such as CEOs, CFOs, and others, may not be familiar with the right questions to ask or the key factors to consider when selecting one IT company over another, often giving undue importance to the quoted price.
It's important to steer clear of falling for a low-cost quote from an IT company that might be facing financial difficulties. Such companies might cut corners to reduce their fees to secure your business but might then struggle to afford experienced and knowledgeable technicians, dedicated account managers, and the essential security tools needed to provide you with the security, stability, and service your business requires.
So, how do you determine what is "too much" to pay for IT services, and what are the signs that someone is underpricing their services?
Recently, an industry report revealed that a significant 28% of Managed Service Providers (MSPs), or IT services companies, were operating at a loss, and almost half of all MSPs had a net profit margin of less than 10%. While everyone appreciates a good deal, here are the reasons why opting for a "cheaper" option might not be the advantage you expect when selecting an underpriced IT company:
1. Inadequate staffing: IT companies often allocate a significant portion of their budget to their technical staff. Opting for an underpriced provider could mean that they are understaffed. If one of their technicians’ leaves, they may struggle to maintain adequate support for your account, leading to longer response times and potential lapses in critical security and backup maintenance for your network.
2. Lower-skilled staff: Companies offering underpriced services often hire staff at the lower end of the pay scale. This means that you may not have the most competent professionals managing your data backups, network security, and other critical operations vital to your business.
3. Lack of dedicated account management: Underpriced providers are less likely to have a dedicated account manager and team to handle your account due to budget constraints.
4. Financial instability: These providers are often one or two bad months away from going out of business, lacking the financial buffer needed for stability. This means that you might wake up one day and find yourself without IT support, necessitating a frantic search for a new provider.
5. Operational immaturity: Operational maturity, which includes having the right people and professional processes, is essential for providing high-quality services. Underpriced IT companies often lack this operational maturity, which could result in lower service quality.
In Uganda, the average cost per user for managed IT services may differ from global averages. While someone quoting $10 per user for network management might appear appealing, it's essential to question how they can charge far less than more mature IT firms. The answer is often a trade-off: they might cut corners, hire less experienced personnel, and omit critical security and compliance services.
If you're looking for guidance on the questions to ask your IT firm (Managed Service Provider) in Uganda, feel free to download our executive guide, "16 Questions You Should Ask Any IT Company Before Signing a Contract or Entrusting Them with Your IT." This guide offers insights into what to look for to meet your specific needs without incurring unnecessary expenses, hidden fees, or lengthy contracts. Most importantly, it will help you identify the right support to minimize risk and eliminate the frustrations associated with an inadequately competent IT company.