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The Struggle is Real: MSP Staff Hiring and Recruitment

Written by George Bardissi | Feb 21, 2018 3:27:11 AM

The IT service provider and MSP space is not without its challenges when it comes to building a competent team that can handle the load. Being understaffed is a serious problem and effects everyone from your customers satisfaction and even your employees and their stress level. A growing business operation is a great problem to have but leads to a few critical moments in your growth cycle. 

It's worth mentioning that there is a cost to onboard people into your organizations. A constant churn of people or the ability to not properly target new staff can be costly without even realizing this at first glance.  If you don’t have the resources to properly recruit, onboard, and retain staff it’s not a bad idea to work with outside firms to assist you so that you can keep your eyes on the things that you do well. However, don’t ignore the importance of this effort. Here are some options and the steps you should take to help with that growing workload.

  1. The first option is to maintain your staff number where it is, audit and analyze your current staff and tools. We have the pleasure of working with thousands of MSPs and seeing how they run their business, an MSP with the right tools and processes will absolutely decrease their time burn and increase the workload their staff can handle.
  2. The other option is hiring which is a great thing to do, everyone is in business to grow it and increase their potential revenue. However, there are many things to consider before expanding your staff and that is what we would like to cover below.

How much does it actually cost to hire someone?

The cost of hiring an employee goes beyond the salary you will be paying the person. You’ll also have to cover the following costs in one form or another.....

  • Recruitment: You will need to find a good candidate to fill the new position, and doing so will cost you an amount dependent on your needs and the amount of time you’ll have to spend on the exercise. You can choose to undertake the exercise by yourself (which is cheaper but less effective) or look for help from a recruiter or online recruitment services. We are aware of some industry specific recruiting firms and these costs could range from $8-20k per employee.
  • Salary:Find out the hourly wage or base salary you will be paying your employee and ensure that you have at least four months’ worth of it in the pipeline before taking on a new hire. Of course this number can be a moving needle based on the qualifications and experience of your candidate.
  • Benefits:Determine whether you’ll provide the employee with benefits such as life insurance, retirement plan, healthcare, disability cover and so on and how much it will cost you.
  • Perks:Figure out what perks you will offer: free food and drinks, attendance for special events and the likes and add them to the overall employee compensation package.
  • Payroll tax:Also, include the amount you’ll need to pay in the statutory payroll tax of your region.
  • Equipment and supplies:You might need to buy furniture, computing devices, software and other tools and equipment for the new hire. But even the cost of pen and paper could add up so make sure to include everything.
  • Training:Factor in the amount of money it will cost to train the new employee. If you won’t be hiring someone to do it and have to do it yourself or have an employee do it, factor in the cost of the time that will be used on it.

Determine if you can afford a new hire

Now that you have a clear idea of how much it will cost you to hire, determine whether your business can afford it....

  • Estimate future sales. Look back the last few months in terms of profit and use this data to project future income for at least the next 12 months. Do you have any new deals coming? How many new clients do you expect to add? Figuring this out helps you know whether hiring is financially feasible.
  • Project the revenue the new hire will add.Will the new hire increase your capacity to produce more or serve more clients? If yes, by how much? Does the increase justify a new hire? Keep in mind that new employees take a while before they get up to speed, so you’ll have to cover the expenses in the meanwhile.
  • Examine your profit margin. If you’ve been making losses or slim profits for the last several months, then you probably can’t afford a new employee. If, however, you can add the new worker to the overhead expenses and still turn a decent profit, then you can be more confident about hiring. Just remember not to deplete your cash reserves so that you still have cover for unexpected eventualities.

This is not an easy topic per say. It's an important topic though. Don't be afraid to reach out for help so that you can be successful not just with your time but with your funds and mind space going through this process.