The idea of outsourcing – once restricted only to a company’s non-strategic functions such as transport and financial services – now is gaining traction across IT and e-discovery departments everywhere.

In fact, research firm MarketsandMarkets predicts that global spending on managed service providers (MSPs) will top $193 billion by 2019, almost double its 2014 level of $107 billion.

A 2014 Gartner study projected IT services spending to hit about $960 billion, and $2.9 billion specifically in e-discovery. If MarketsandMarkets’ survey proves true, then in four years spending on MSPs could represent nearly 20 percent of all IT spending globally, according to the MSP Alliance. 

According to a June 2014 report by Ari Kaplan Advisors, many law firms are fairly evenly divided between insourcing and outsourcing, but 97 percent of law firms outsource at least some part of their e-discovery process.

MarketsandMarkets expects MSP spending levels to increase at a compound annual growth rate (CAGR) of 12.5 percent.

MSP spending is on the rise already. A survey released in January by Spiceworks, a vertical network for more than 6 million IT professionals, found that IT professionals plan to spend 10 percent of their 2015 budgets on managed services.

So why are IT and e-discovery departments making the switch to an MSP? Companies and law firms increasingly are discovering that hiring an MSP to set up, manage and maintain their IT network and e-discovery services offers strategic and economic benefits that are too enticing to ignore.

MSPs can help IT and e-discovery departments:

Reduce Costs and Risks

MSPs charge a fixed monthly fee for managing a company’s entire network, no matter if they do so 30 hours a week or 300 hours weekly. Costs are kept in check and budgeting is easier for companies. For example, with a full in-house IT or e-discovery department, companies must pay for hiring, training, and certifying staff, as well as paying salaries. And that’s just personnel. The cost of buying, maintaining, and replacing technology can break the budget. However, MSPs assume responsibility for maintenance and repair, so firms don’t have to worry about losing money when technology fails or needs to be replaced. With MSPs, companies can gain access to enterprise-class experts, technology and processes at a fraction of the cost of having it in-house, according to NetGain Technologies, an MSP currently working in six states with 150 employees.

Improve Flexibility

Many companies are not prepared to react quickly to market changes or opportunities because they can’t expand their services quickly enough. MSPs, however, make it their jobs to stay on top of current latest technologies and quickly can make the necessary infrastructure changes when new opportunities arise, according to MSP MetroTech, which provides managed services to small and mid-size businesses in the Tampa and Clearwater, Florida, area. Outsourcing to an MSP also removes the need to invest in new technology. MSPs maintain state-of-the-art hardware, monitor the managed network and work with company officials to ensure the firm’s technology requirements are met.

Improve Productivity and Focus on Core Competencies

Mundane IT tasks such as monitoring routers and answering help-desk inquiries can distract highly skilled personnel from more important strategic initiatives and future projects. An MSP can transparently handle emergency disruptions and free company IT experts and legal teams to focus on their fundamental business goals. One lawyer interviewed for the Kaplan report stated that “the firm knows a lot, but lawyers are not technologists.” With an MSP managing a firm’s technology infrastructure or e-discovery processes, executives can stop putting out fires and start focusing on more strategic tasks at hand, such as boosting customer and client satisfaction and profits.

Boost Operational Efficiency

With an MSP, companies will need fewer IT staff because there will be fewer help-desk tickets, so the same amount of work will get done with fewer people. Unlike IT departments, which can become inundated and overwhelmed with projects, MSPs can handle the workflow in a more efficient, cost-effective way, according to MetroTech. According to the Kaplan report, 93% of lawyers said their clients are demanding increased efficiency. But most firms can’t handle massive processing of data, the report states, and that’s where MSPs can help.

A Cisco Systems white paper, “The Business Case for Managed Services in Midsize Businesses and Enterprises,” revealed that managed services tend to deliver comprehensive, higher-quality services because they have larger, more experienced staffs with specialists. Managed networks are larger and more robust, resulting in greater reliability and availability, with up to 99.999-percent network availability. Also, because MSP-managed networks are monitored 24/7, companies will experience higher monitoring levels and faster responses to network events. To reach that same level of service in-house, IT leaders managing an IP solution 40 hours a week would need to grow their staff by up to a factor of five, according to Cisco.

For its “Third Annual Trends in Managed Services” study, CompTIA surveyed 400 IT and business professionals last November and found that only 3 of 10 companies currently contract with an MSP. Experts say the adoption of managed services overall has been slow, and the formal IT department isn’t going anywhere anytime soon. Some law firms are expanding internal capabilities, but just as many are outsourcing to managed service providers, the Kaplan report states.

The MSP trend is not going away. There are many big cost and operational benefits that make outsourcing IT and e-discovery services worth considering for any IT or legal team.

Whether you’re a legal technology professional seeking your next opportunity, an IT or e-discovery department looking to expand your in-house staff, or an MSP wanting to grow your expert team, LTS is a critical client and candidate partner. Our unique perspective and intelligent insight into the legal technology industry can help MSPs as well as in-house IT and legal departments find highly specialized, skilled professionals. LTS is an invaluable asset in helping such professionals locate prized legal technology opportunities and careers. Interested in working together? Call us today at: 310-374-1100