How Can the FTE Model Compete with the MSP Model?
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@kelly said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
In addition, there are so many variables that affect the calculation of whether or not an MSP can provide better value over an FTE that it is a case by case evaluation that is difficult to "rule of thumb" or "best practice".
This is only "sort of" true. Every FTE has the potential to be a better MSP. The comparison is of models or approaches, not of this employee vs. that MSP. For the apples to apples, we have to compare the same people. Not equivalent people, the literal same people.
So why choose the MSP then?
Because the model is always better. And in the real world, no one goes for the "equals" because the upside of the "better" is SO much better. I don't understand why anyone ever considers anything else, I think it's crazy.
You are asking the question in reverse. Try it this way...
"If you know the FTE is never the right decision ever no matter what, why ever choose it? Why is it even considered an option when it is known to not be the best choice?"
That FTE is even left in the decision pool is actually a problem. Once it can be ruled out, it should be. You choose the MSP approach because no matter who you want to hire, or how many people, the MSP approach always makes it equal or better.
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@kelly said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
Given that, most organizations are going to have mixed experiences, at best, with outsourced IT labor.
This just suggests that most businesses are foolish and emotional and don't use business decision making processes - which is totally true in every sense - but is irrelevant. If we used the fact that "nearly all businesses are idiotic" as the basis for all learning and decision making, the only logical place to go is "never bother doing anything well or caring because most people are idiots and nothing matters."
That's not a good approach. And it's not taken universally, why would you apply it to staffing approaches but surely not keep it when talking about patching or passwords?
We know that understanding what is good is important, even if most people don't take good advice. That most people are idiots and don't listen to logic is never a dispute to logic.
The sky IS blue no matter how many people don't believe it. You can argue that knowing that the sky is blue is futile if no one will ever believe you. But you can't use people not believing you as a suggestion that the fact is wrong.
You're not wrong, but this seems irrelevant. If a company has worked with outsourced labor and had repeated poor experiences compared to FTE labor than they are not idiots for choosing the latter.
No, they are idiots for using bad decision making on their part (hiring bad MSPs, managing them poorly) as a reason to make worse decisions. It's true that people who make bad decisions tend to keep making them in more and more places, so people who screw up their MSP situations will then react to that information incorrectly and make things even worse - but that doesn't make any of those mistakes "good".
Hiring outsourced staff is just like hiring insourced. If you are bad at one, you'll be bad at the other. And guess what, companies have terrible track records of hiring FTEs. Really, really bad.
The real problem here is perceiving a mistake (hiring the wrong firm) as being associated with something that it is not (the model rather than the firm.)
Imagine if you bought two cars, both didn't work, and you concluded that cars don't work rather than figuring out that you either got unlucky or possibly know very little about how to buy a car?
No, this is more like getting a series of Uber rides that didn't work out and deciding to buy a car.
To hire a chauffeur, not to buy a car. But that's not quite right, because Uber is ONE vendor. It would be using many ride sharing services (well two or three) and then deciding that you can't pick a good one, so you feel you can hire drivers better than they can and hire a chauffeur yourself.
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@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
Given that, most organizations are going to have mixed experiences, at best, with outsourced IT labor.
This just suggests that most businesses are foolish and emotional and don't use business decision making processes - which is totally true in every sense - but is irrelevant. If we used the fact that "nearly all businesses are idiotic" as the basis for all learning and decision making, the only logical place to go is "never bother doing anything well or caring because most people are idiots and nothing matters."
That's not a good approach. And it's not taken universally, why would you apply it to staffing approaches but surely not keep it when talking about patching or passwords?
We know that understanding what is good is important, even if most people don't take good advice. That most people are idiots and don't listen to logic is never a dispute to logic.
The sky IS blue no matter how many people don't believe it. You can argue that knowing that the sky is blue is futile if no one will ever believe you. But you can't use people not believing you as a suggestion that the fact is wrong.
You're not wrong, but this seems irrelevant. If a company has worked with outsourced labor and had repeated poor experiences compared to FTE labor than they are not idiots for choosing the latter.
No, they are idiots for using bad decision making on their part (hiring bad MSPs, managing them poorly) as a reason to make worse decisions. It's true that people who make bad decisions tend to keep making them in more and more places, so people who screw up their MSP situations will then react to that information incorrectly and make things even worse - but that doesn't make any of those mistakes "good".
Hiring outsourced staff is just like hiring insourced. If you are bad at one, you'll be bad at the other. And guess what, companies have terrible track records of hiring FTEs. Really, really bad.
The real problem here is perceiving a mistake (hiring the wrong firm) as being associated with something that it is not (the model rather than the firm.)
Imagine if you bought two cars, both didn't work, and you concluded that cars don't work rather than figuring out that you either got unlucky or possibly know very little about how to buy a car?
No, this is more like getting a series of Uber rides that didn't work out and deciding to buy a car.
To hire a chauffeur, not to buy a car. But that's not quite right, because Uber is ONE vendor. It would be using many ride sharing services (well two or three) and then deciding that you can't pick a good one, so you feel you can hire drivers better than they can and hire a chauffeur yourself.
Fair enough. Not sure how that supports your point
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@kelly said in How Can the FTE Model Compete with the MSP Model?:
Your original postulation appears to be that the FTE model cannot compete with the MSP model. If the value is the same there is no compelling reason to switch.
The value is always the same or better. I think you are working from a stance of "To not use an FTE you must not just make something else equal or better, but always much better" and that's flawed decision making.
In a case like this, you can't choose a de factor answer and an arbitrary "improvement over it" for something else to be better.
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Could be better doesn't mean IS better.
I'm not seeing the true value of MSP over FTE, especially if costs to the company are identical.
I haven't seen any example of a value that takes the MSP from being equal to the FTE, to better, other than hypothetical modeling... no actual examples, which I think is what we're all waiting for.
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@kelly said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
Given that, most organizations are going to have mixed experiences, at best, with outsourced IT labor.
This just suggests that most businesses are foolish and emotional and don't use business decision making processes - which is totally true in every sense - but is irrelevant. If we used the fact that "nearly all businesses are idiotic" as the basis for all learning and decision making, the only logical place to go is "never bother doing anything well or caring because most people are idiots and nothing matters."
That's not a good approach. And it's not taken universally, why would you apply it to staffing approaches but surely not keep it when talking about patching or passwords?
We know that understanding what is good is important, even if most people don't take good advice. That most people are idiots and don't listen to logic is never a dispute to logic.
The sky IS blue no matter how many people don't believe it. You can argue that knowing that the sky is blue is futile if no one will ever believe you. But you can't use people not believing you as a suggestion that the fact is wrong.
You're not wrong, but this seems irrelevant. If a company has worked with outsourced labor and had repeated poor experiences compared to FTE labor than they are not idiots for choosing the latter.
No, they are idiots for using bad decision making on their part (hiring bad MSPs, managing them poorly) as a reason to make worse decisions. It's true that people who make bad decisions tend to keep making them in more and more places, so people who screw up their MSP situations will then react to that information incorrectly and make things even worse - but that doesn't make any of those mistakes "good".
Hiring outsourced staff is just like hiring insourced. If you are bad at one, you'll be bad at the other. And guess what, companies have terrible track records of hiring FTEs. Really, really bad.
The real problem here is perceiving a mistake (hiring the wrong firm) as being associated with something that it is not (the model rather than the firm.)
Imagine if you bought two cars, both didn't work, and you concluded that cars don't work rather than figuring out that you either got unlucky or possibly know very little about how to buy a car?
No, this is more like getting a series of Uber rides that didn't work out and deciding to buy a car.
To hire a chauffeur, not to buy a car. But that's not quite right, because Uber is ONE vendor. It would be using many ride sharing services (well two or three) and then deciding that you can't pick a good one, so you feel you can hire drivers better than they can and hire a chauffeur yourself.
Fair enough. Not sure how that supports your point
Because having one bad Uber ride and one bad Lyft ride and then hiring a chauffeur would be insane. What makes you good at selecting chauffeurs? What if that one chauffeur sucks? Now you are REALLY screwed.
I think it exactly supports my point.
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@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
Here is the basis of my logic, this is an assumption so this is where I think you have to prove me wrong: An MSP staffer can act identically to an FTE in price, capability, and function making them identical in all ways to an FTE, but also has the flexibility to do other things that an FTE cannot.
I can only give you this in a greenfield situation. I.e. the client is greenfield regarding all staff.
But consider this.
Company Acme today has 100 employees, one of which is payroll/accounting, Sue. They handle all 100 people worth payroll/accounting. Bob works for Acme, and he costs the company after all benefits, etc $100K/yr, additionally he adds, let's say 20 mins of work/week to Sue. Sue is paid $60K/yr.
So Bob leaves and joins a brand new MSP, There's the owner (Joe) and now Bob. That MSP pays Bob $100K/yr after all benefits. This cost is passed directly back to Acme (caveat to come) with no upcharge, and Bob goes back to work at his old desk at Acme.
My question is - Who submits the bills for Bob's time to Acme? How is that person paid for that work? Now the answer seems obvious to me - The owner (Joe) does. But Joe does deserve to get paid for that work, doesn't he? And therefore wouldn't he normally charge say $40-50 per week for that thing that has to be done? If so, then now Acme is paying more for Bob.
Now - if you tell me that Sue, that accounting person, is now getting paid $40-50 less a week because she is not doing the work on Bob's account, then fine, it becomes a wash - but I can tell you, my accounting person here is not paid on the job, she's paid a flat hourly rate, and she's expected to be able to handle an influx of 2-10 people with no actual extra spent clock time - and well, and they succeed at it. So, since Sue likely isn't getting paid less, the Acme will be paying more - basically because they are now over paying Sue.
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@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
Given that, most organizations are going to have mixed experiences, at best, with outsourced IT labor.
This just suggests that most businesses are foolish and emotional and don't use business decision making processes - which is totally true in every sense - but is irrelevant. If we used the fact that "nearly all businesses are idiotic" as the basis for all learning and decision making, the only logical place to go is "never bother doing anything well or caring because most people are idiots and nothing matters."
That's not a good approach. And it's not taken universally, why would you apply it to staffing approaches but surely not keep it when talking about patching or passwords?
We know that understanding what is good is important, even if most people don't take good advice. That most people are idiots and don't listen to logic is never a dispute to logic.
The sky IS blue no matter how many people don't believe it. You can argue that knowing that the sky is blue is futile if no one will ever believe you. But you can't use people not believing you as a suggestion that the fact is wrong.
You're not wrong, but this seems irrelevant. If a company has worked with outsourced labor and had repeated poor experiences compared to FTE labor than they are not idiots for choosing the latter.
No, they are idiots for using bad decision making on their part (hiring bad MSPs, managing them poorly) as a reason to make worse decisions. It's true that people who make bad decisions tend to keep making them in more and more places, so people who screw up their MSP situations will then react to that information incorrectly and make things even worse - but that doesn't make any of those mistakes "good".
Hiring outsourced staff is just like hiring insourced. If you are bad at one, you'll be bad at the other. And guess what, companies have terrible track records of hiring FTEs. Really, really bad.
The real problem here is perceiving a mistake (hiring the wrong firm) as being associated with something that it is not (the model rather than the firm.)
Imagine if you bought two cars, both didn't work, and you concluded that cars don't work rather than figuring out that you either got unlucky or possibly know very little about how to buy a car?
No, this is more like getting a series of Uber rides that didn't work out and deciding to buy a car.
To hire a chauffeur, not to buy a car. But that's not quite right, because Uber is ONE vendor. It would be using many ride sharing services (well two or three) and then deciding that you can't pick a good one, so you feel you can hire drivers better than they can and hire a chauffeur yourself.
Fair enough. Not sure how that supports your point
Because having one bad Uber ride and one bad Lyft ride and then hiring a chauffeur would be insane. What makes you good at selecting chauffeurs? What if that one chauffeur sucks? Now you are REALLY screwed.
I think it exactly supports my point.
So MSPs are better because they're easier to fire?
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If I am working for <company>, and then get hired by NTG to continue working at <company> doing the same work for the same cost to <company>, why switch? There are scenarios where it would make sense, but it continues to be a case by case evaluation, not something that can be generalized.
Because not one loses. There is no caveat. But there are potential benefits everywhere, for everyone. In the worst case scenario it's a break even. In any other scenario people actually benefit.
Here is another way to look at it...
Under what insane situation would you ever, ever, ever not jump at anything that is "equal or better"?
The only smart answer is "never". Equal or better has no downsides.
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@kelly said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
Given that, most organizations are going to have mixed experiences, at best, with outsourced IT labor.
This just suggests that most businesses are foolish and emotional and don't use business decision making processes - which is totally true in every sense - but is irrelevant. If we used the fact that "nearly all businesses are idiotic" as the basis for all learning and decision making, the only logical place to go is "never bother doing anything well or caring because most people are idiots and nothing matters."
That's not a good approach. And it's not taken universally, why would you apply it to staffing approaches but surely not keep it when talking about patching or passwords?
We know that understanding what is good is important, even if most people don't take good advice. That most people are idiots and don't listen to logic is never a dispute to logic.
The sky IS blue no matter how many people don't believe it. You can argue that knowing that the sky is blue is futile if no one will ever believe you. But you can't use people not believing you as a suggestion that the fact is wrong.
You're not wrong, but this seems irrelevant. If a company has worked with outsourced labor and had repeated poor experiences compared to FTE labor than they are not idiots for choosing the latter.
No, they are idiots for using bad decision making on their part (hiring bad MSPs, managing them poorly) as a reason to make worse decisions. It's true that people who make bad decisions tend to keep making them in more and more places, so people who screw up their MSP situations will then react to that information incorrectly and make things even worse - but that doesn't make any of those mistakes "good".
Hiring outsourced staff is just like hiring insourced. If you are bad at one, you'll be bad at the other. And guess what, companies have terrible track records of hiring FTEs. Really, really bad.
The real problem here is perceiving a mistake (hiring the wrong firm) as being associated with something that it is not (the model rather than the firm.)
Imagine if you bought two cars, both didn't work, and you concluded that cars don't work rather than figuring out that you either got unlucky or possibly know very little about how to buy a car?
No, this is more like getting a series of Uber rides that didn't work out and deciding to buy a car.
To hire a chauffeur, not to buy a car. But that's not quite right, because Uber is ONE vendor. It would be using many ride sharing services (well two or three) and then deciding that you can't pick a good one, so you feel you can hire drivers better than they can and hire a chauffeur yourself.
Fair enough. Not sure how that supports your point
Because having one bad Uber ride and one bad Lyft ride and then hiring a chauffeur would be insane. What makes you good at selecting chauffeurs? What if that one chauffeur sucks? Now you are REALLY screwed.
I think it exactly supports my point.
So MSPs are better because they're easier to fire?
That's a major factor, yes. For a company, FTEs are a massive risk that make no sense.
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@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
But there are potential benefits everywhere, for everyone.
...such as?
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@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
Your original postulation appears to be that the FTE model cannot compete with the MSP model. If the value is the same there is no compelling reason to switch.
The value is always the same or better. I think you are working from a stance of "To not use an FTE you must not just make something else equal or better, but always much better" and that's flawed decision making.
In a case like this, you can't choose a de factor answer and an arbitrary "improvement over it" for something else to be better.
The value could be equal or better. There are bad MSPs just like there are bad FTEs.
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@obsolesce said in How Can the FTE Model Compete with the MSP Model?:
Could be better doesn't mean IS better.
I'm not seeing the true value of MSP over FTE, especially if costs to the company are identical.
well, from a company POV, one way an MSP is better is because the client can fire the MSP at will (baring contracts) and no deal with post employee costs - Cobra, Unemployment, etc.
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@obsolesce said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
But there are potential benefits everywhere, for everyone.
...such as?
Such as making any change. There can be more work, a bigger pool of resources, more variety, more advancement, more opportunity, more growth. MSPs bring options that FTE models don't have. Options are positives, you only choose them when they improve things. So having the same situation with the only difference being more options means it is better.
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@kelly said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
Your original postulation appears to be that the FTE model cannot compete with the MSP model. If the value is the same there is no compelling reason to switch.
The value is always the same or better. I think you are working from a stance of "To not use an FTE you must not just make something else equal or better, but always much better" and that's flawed decision making.
In a case like this, you can't choose a de factor answer and an arbitrary "improvement over it" for something else to be better.
The value could be equal or better. There are bad MSPs just like there are bad FTEs.
That's why I explain the apples to apples. The MSP model is better, period. Not "could be".
A specific MSP might be better or worse than a specific employee. But the same people are better under MSP than under FTE. The model is without exception better.
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@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
If I am working for <company>, and then get hired by NTG to continue working at <company> doing the same work for the same cost to <company>, why switch? There are scenarios where it would make sense, but it continues to be a case by case evaluation, not something that can be generalized.
Because not one loses. There is no caveat. But there are potential benefits everywhere, for everyone. In the worst case scenario it's a break even. In any other scenario people actually benefit.
Here is another way to look at it...
Under what insane situation would you ever, ever, ever not jump at anything that is "equal or better"?
The only smart answer is "never". Equal or better has no downsides.
But you're applying absolutes to situations where you cannot do that. In addition, the situation you're postulating in your model rarely happens in my experience. Why would an FTE move to an MSP to do the same work for the same pay. Immediately the model is broken. Either there is an increased cost to the company or there is a change in staff.
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if FTE = MSP, and MSP can be >= FTE, then yes it makes sense that MSP is the better option.
The problem here, and why this is now 100+ posts, is because there has been zero examples of what could potentially make the MSP > FTE.
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@dashrender said in How Can the FTE Model Compete with the MSP Model?:
@obsolesce said in How Can the FTE Model Compete with the MSP Model?:
Could be better doesn't mean IS better.
I'm not seeing the true value of MSP over FTE, especially if costs to the company are identical.
well, from a company POV, one way an MSP is better is because the client can fire the MSP at will (baring contracts) and no deal with post employee costs - Cobra, Unemployment, etc.
This isn't true everywhere, so can't be used. Depends on the state, company, etc... Many companies in many states can fire FTEs at will too, without consequence.
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@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
Your original postulation appears to be that the FTE model cannot compete with the MSP model. If the value is the same there is no compelling reason to switch.
The value is always the same or better. I think you are working from a stance of "To not use an FTE you must not just make something else equal or better, but always much better" and that's flawed decision making.
In a case like this, you can't choose a de factor answer and an arbitrary "improvement over it" for something else to be better.
The value could be equal or better. There are bad MSPs just like there are bad FTEs.
That's why I explain the apples to apples. The MSP model is better, period. Not "could be".
A specific MSP might be better or worse than a specific employee. But the same people are better under MSP than under FTE. The model is without exception better.
I am not necessarily arguing the validity of the model, but rather the applicability.
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@dashrender said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
Here is the basis of my logic, this is an assumption so this is where I think you have to prove me wrong: An MSP staffer can act identically to an FTE in price, capability, and function making them identical in all ways to an FTE, but also has the flexibility to do other things that an FTE cannot.
I can only give you this in a greenfield situation. I.e. the client is greenfield regarding all staff.
But consider this.
Company Acme today has 100 employees, one of which is payroll/accounting, Sue. They handle all 100 people worth payroll/accounting. Bob works for Acme, and he costs the company after all benefits, etc $100K/yr, additionally he adds, let's say 20 mins of work/week to Sue. Sue is paid $60K/yr.
So Bob leaves and joins a brand new MSP, There's the owner (Joe) and now Bob. That MSP pays Bob $100K/yr after all benefits. This cost is passed directly back to Acme (caveat to come) with no upcharge, and Bob goes back to work at his old desk at Acme.
My question is - Who submits the bills for Bob's time to Acme? How is that person paid for that work? Now the answer seems obvious to me - The owner (Joe) does. But Joe does deserve to get paid for that work, doesn't he? And therefore wouldn't he normally charge say $40-50 per week for that thing that has to be done? If so, then now Acme is paying more for Bob.
Now - if you tell me that Sue, that accounting person, is now getting paid $40-50 less a week because she is not doing the work on Bob's account, then fine, it becomes a wash - but I can tell you, my accounting person here is not paid on the job, she's paid a flat hourly rate, and she's expected to be able to handle an influx of 2-10 people with no actual extra spent clock time - and well, and they succeed at it. So, since Sue likely isn't getting paid less, the Acme will be paying more - basically because they are now over paying Sue.
See the problem there? You have FTEs where you should have outsourcers in other departmetns. Again, one mistake to justify another.
But in reality, the "cost" to process a person is trivial on both sides. Sue now has time to do more other work. Are you telling me she's idle anyway and they have idle FTEs with nothing to do and no value for them to add? I think that proves the point more than anything. Or is she actually worked right to the limit? That seems like a risk, one sneeze and she can't get payroll done that month.
Either Sue is probably not an effective FTE, or she's a risk. There is a reason that accounting is very much like MSPs, that it should always be outsourced.
