Cost of Managed IT Services: Price Driving Factors and Types of Agreements

Tech solutions are becoming more complicated and need attention to every detail. To build a robust and stable project, it’s common to migrate to the cloud. Such a solution is beneficial for business since it leads to cost reduction on equipment and performance.

To maintain the cloud, your company needs skilled and experienced DevOps engineers. However, it can be challenging to find qualified specialists in a short time. To hire skilled specialists in short terms, organizations often entrust managed software development services. According to Statista, this market will go over $300 billion by 2025.

So, how much does managed IT services cost? In this guide, we’ll discuss the factors that impact managed IT services pricing and take a closer look at typical managed IT service agreements.

Managed IT services refer to handing over infrastructure-related tasks to a third-party company. Those companies take care of cloud infrastructure management, data backups, cybersecurity needs, and many other aspects.

Managed IT services offer a bunch of benefits:

• Access to the pool of talented and experienced DevOps engineers.
• Development team can focus on the primary tasks.
• Reduced time and cost (there’s no need to pay a full-time developer if you don’t have enough tasks).

A lot of companies migrate to the cloud to become more scalable. Remote work makes businesses transfer data and applications from physical servers to the cloud.

Cloud based application development allows for scaling the capacity up and down to meet the demand. For example, if there are few visitors to the website or app, you can pay less respectively. But if there are many visitors (and the company hasn't foreseen this situation), the physical server will simply go down. The cloud offers to dynamically increase the space. As a result, you don’t lose money and clients.

In 2020, Emirates Group successfully migrated both its e-commerce and corporate platforms, including over 30 business-crucial applications, from more than 250 servers to Amazon Web Services (AWS).

The migration covered the airline's customer-facing systems, it’s main booking engine, customer websites, and mobile apps. A bunch of applications were optimized to work with the modern operating system.

Now, Emirates’ Internet Booking Engine responds faster, finishing the transaction 12 seconds faster. Mobile apps also work quicker — search results are returned 5 seconds faster.

According to the Gartner report, there are three obvious leaders in cloud computing — Amazon Web Services (AWS), Microsoft Azure, Google Cloud Platform (GCP).

Managed IT service pricing depends on your tech requirements and business goals. A lot of outsourcing software development companies offer useful cooperation, choosing a staff augmentation model. It means that you hire a required specialist to fulfill your tasks, meeting certain deadlines.

You basically have two cooperation options with a managed IT service provider. They are part time and full time.

This approach is perfect for companies that already have in-house specialists working with infrastructure, but they want to hire another expert to deal with specific tasks part time. So, they can hire a dedicated DevOps engineer that’d pay several hours a day or a week to their tasks.

A lot of IT outsourcing companies, including Cleveroad, offer partially managed IT services. It’s a handy option that lets you reduce costs as you don’t hire a full-time specialist for a part-time task.

When to choose partially managed IT services:

• You already have an in-house team.
• You require a specialist with specific knowledge and expertise.
• You have a part of work that needs to be done meeting a deadline.

For most small and middle-sized companies, it’s more reasonable to outsource managed IT services completely.

A qualified service provider can help you decide what kind of specialists you need and what type of work should be done. With no need to spend time and money on hiring employees in-house, you can significantly reduce operational expenses.

With fully managed IT services, you get a specialist working as a part of your team.

When to choose fully managed IT services:

• You don’t have in-house specialists to manage the system.
• You need expert advice on building and handling systems.

The cost of managed IT services can differ. So, the question arises — what are the main factors driving the cost?

• Project complexity. Let’s face it — complicated projects cost more. Developers need more time to support and maintain the required functionality, not talking about a higher qualification.
• Development team. There are two options to get managed IT services — hire in-house DevOps engineers and cooperate with a reliable vendor. The choice can depend on various factors like your requirements and business goals. Of course, the managed IT services pricing can change depending on the picked cooperation model.
• Region. Cost of managed IT services tends to vary depending on the region. For example, DevOps engineers from North America charge the highest rates in the world. On the contrary, Asian software companies have the lowest rates. But the quality of the services can be questionable.

• Seniority level. DevOps engineers can be divided into three groups based on their work experience — junior, middle, and senior. The higher qualification DevOps has, the higher their rates are. Usually, middle and senior engineers have experience in various technologies and offer better solutions.

Cleveroad is a software development company from Eastern Europe, Ukraine. For more than five years, we’ve been working with managed IT services to shorten development time.

Our DevOps engineers can help you:

• Create, adjust, support, and optimize integration and code delivery tools (Jenkins, Bamboo)
• Interact with Version Control Systems (Gitlab, Github, Bitbucket)
• Automate processes by creating scripts or using specific technologies like Ansible
• Administrate cloud platforms (AWS)
• Optimize a cloud IT infrastructure
• Integrate a required technology into a company’s IT processes