Inflation is still a hot topic. In July, we saw consumer prices increase by 8.5% compared to 2021 (although down from 9.1% in June). While there seems to be a small decrease, it remains top of mind for many Americans, especially business owners who need to compete with rising salaries, supply chain issues, and profitability.
So, how is inflation impacting the IT industry and how will these changes impact your business?
Increasing Labor Costs for Qualified & Experienced IT Professionals:
CompTIA, a nonprofit association for the IT industry, counted more than 443,000 employer job postings for tech positions in the US in April 2022, bringing the total to 1.6 million so far in 2022. That’s a 40% increase in US tech positions over the same period in 2021. At the same time CompTIA puts the US unemployment rate for technologists at 1.3%.
These statistics mixed with overall inflation means business owners and c-level executives are under immense pressure to increase salaries to retain qualified and experienced talent. Even if the cost to hire feels reasonable now, they are expected to continue to trend up as we look forward.
MSPs tend to be better positioned to pay out bigger signing and retention bonuses, and higher salaries compared to smaller IT firms or companies with in-house IT. This leads to higher levels of employee retention and can keep IT staffing costs low for your organization.
Supply Chain Issues Impacting IT:
Supply chain issues are expected to continue when it comes to new tech hardware – specifically laptops, workstations, and servers. According to Rick Villars, group Vice President for Worldwide Research at IDC, “...as they (CIOs) look into 2023 and 2024, they’re thinking inflation and backlog will affect prices. They’re expecting higher prices the next time they go to make a deal. There’s an anticipation that they’ll be paying more.”
When you work with an MSP like us, we conduct long-term planning for your business to get ahead of these backlogs. We look years into the future to see what projects or growth your company will experience and know how far in advance we need to order hardware for you. This way, you are not left scrambling at the last minute to obtain the materials you need. Our strong relationship with our vendors means we often get priority when it comes to backordered materials, and the ability to negotiate discounts on behalf of our clients.
Increase Your Investment into Tech Advancements to Increase Efficiency & Your Bottom Line:
Costs are going to increase in many other areas of your business, not just in the IT space. However, we suggest investing in your tech to help automate and optimize your business. When you invest your money into tech advancements such as automation, analytics, and machine learning you will increase your customer engagement, retention, and satisfaction. In the end, you could end up saving on labor costs, and increase your bottom line.
During our long-term planning sessions, we search for ways to create tech advancements. Our experts have worked in a variety of industries and are trained to identify specific software, hardware, or process recommendations to increase your company’s efficiency and profitability.
ACT NOW! - Prices will only increase!
Salaries will continue to rise, supply chain issues will continue to cause backlogs, costs for hardware will rise, and licensing fees will increase. Additionally, many businesses are increasing their own prices to keep up.
If your current IT provider hasn’t already increased their prices, it is likely coming soon. If they have told you they don’t plan on increasing prices, ask them why. If they don’t increase their prices, how will they be able to increase their staff’s salaries to keep up with the cost of living? They risk losing talented IT professionals to other companies who are willing to pay competitively.
We highly encourage you to prioritize your search to find the right IT provider for your company. Costs for IT support are projected to rise as well and locking in the prices now could help decrease costs in the future.
How an MSP Like Us Can Decrease Risk for Your Business:
In many cases, it is more cost-effective for organizations to either hire a Managed Service Provider (MSP) to fully-outsource their IT support, or partner with them to supplement their existing internal teams. An established MSP can keep up with hiring and retaining talented techs, maintains strong relationships with their vendors, and has experience guiding other companies, across a variety of industries, through the effects of inflation.
With over 20 years of experience supporting Vermont companies with their IT, we have experienced inflation before and helped our clients through it.
Do you have more questions on the impact of inflation on IT? Do you want to make sure the IT support you have now can help you ride out these hard economic times? Do you just want to conduct due diligence? Schedule a call with us to discuss!