A lot of small businesses rely on outsourced “fractional-service” partners for help with subject matter expertise and support for critical functions like IT, HR, marketing, and accounting. These partnerships make a lot of sense since they give the company access to experienced professionals at a fraction of the cost of a full-time employee. But what happens when the fractional service provider doesn’t hold up their end of the bargain, and you signed a long-term agreement with no escape clause?
I recently met with a small business owner who had that exact problem. They had been using the same IT company for years, but the service had been deteriorating slowly but surely. The IT company had stopped answering their phone, demanding instead that all problems be entered into a ticket system that they would get around to looking at eventually. Then the computers started freezing up, printers weren’t working correctly, plus a bunch of other small things that the IT company was supposed to take care of, but wasn’t.
The Trap
The owner finally decided they’d had enough, and contacted us about making a switch. It seemed like a good fit and we were looking forward to taking them on as a client, but then we got the news that they were locked into a perpetually renewing service contract, and the existing IT company had no intention of letting them out of it. The only options were to live with the bad service, or pay a huge fee to get out of the contract.
These long-term, automatically renewing contracts are all too common in my industry, and they almost always work to sole benefit the IT provider with little or no upside for the client. IT companies who demand these contracts will try to convince you that the contract ensures that your fees stay consistent, reduces your costs in the long run, and ensures stability in your IT support, but this rarely turns out to be the case. What is common is that the service provider knows that they can get away with doing little to no work and still get paid because you signed an agreement that said you would continue to pay them no matter what. It’s a sweet deal for them, and it’s the type of thing that any business owner would be wise to avoid. We don’t hire employees under these types of terms, why would we hire a service company this way?
What You Can Do About It
If you are looking for a new company to take care of your IT services, be sure to look at the fine print in the agreement to see if they are trying to lock you into a long-term deal. If they are, remember that contract negotiation is a two-way street, and you don’t necessarily have to take their first offer. If they are unwilling to budge on the terms of their contract, I’d at least make sure that the terms of their service performance are clearly spelled out and that you can exit the agreement if they don’t hold up their end of the bargain.
Of course, the simplest thing to do is to work with a partner that doesn’t try to handcuff you in the first place, which is our approach. Whenever you are ready, you can set up a free consultation with me and I’ll be happy to show you how you can get a team of IT experts working for your business for way less than it would cost you to hire someone in-house.
