Mike Hall found it less stressful captaining the Wales rugby team than trying to solve IT problems at his property management and investment business.

Hall, 42, led Wales at the 1995 Rugby World Cup and made more than 40 appearances for his country. Today he runs Cardiff-based PMG Estates, a property development company that outsources its e-mail, telephony, IT security and website work to eLinia, a provider of managed services, also based in the city.

PMG, which employs six people, is developing a stadium and retail complex for FA Cup finalists Cardiff City and redeveloping a 50-acre site called Trident Park in Cardiff Bay.

Hall says it is more cost-effective to outsource than to employ a full-time in-house IT manager on a salary of more than £30,000 a year. “It would be expensive and cumbersome for a company of our size to have its own IT department, but we do need to know that our BlackBerrys are working, that we can access our e-mails and that our data and website are secure,” he says.

There is a rule of thumb in IT circles that a business should have one internal IT person for every 25 staff. The problem is that many in-house computer experts in small firms have vast gaps in their knowledge.

“Effective IT support for an SME \ is about more than keeping a network server running, repairing printers, dealing with ISPs and overseeing the website,” says Mark MacGregor, head of Connect, a London-based IT support service. “There are more complicated areas, such as protecting financial and customer data.”

When computers fail or data is lost, a firm’s reputation can be seriously harmed. If problems persist, there can be financial implications as clients decide to go elsewhere. “Many SMEs do not have robust back-up procedures and can lose data that’s critical to the business,” says David Aitken, managing director of IT security company GreenWorld Electronics. “Outsourcing is all about insuring against that disaster scenario.”

At the same time, says Phil Morris, managing director, Europe and Asia, of IT and business consultancy EquaTerra, “outsourcing removes a barrier that could prevent an SME from competing at the same level as a rival with a bigger name or presence because they can leverage the economics of a ‘pooled’ set of IT resources”. He also claims SMEs can save up to 40% by outsourcing.

Accessing specialist support can be inexpensive if an owner-manager finds a reliable local freelance. Graham Burt, for example, is a graphic designer who provides pay-as-you-go hardware and software support to small London design agencies.

“These agencies do not have the need or money to keep an IT support company employed,” Burt says. “I charge £50 an hour for a visit or phone support, and if I am busy with one client I will get to another one the same day, whatever the time.”

Handing responsibility for IT to a third party can also help to keep small businesses within the law. Network audits of SMEs by the Internet Group, a support company, showed that 64% had illegal software installed, often unknowingly. Firms can be fined up to £10,000 for using pirate software, a situation outsourcers can help them to avoid.

Top tips

- Avoid long-term agreements: the price of IT services is falling

- Choose an IT partner that is used to working with firms of your size, and with clients in the same industry.

- Check the small print to see how long a supplier will take to resolve any problems and consider how you would cope over that period.

- Tell staff why you are outsourcing, and what the impact will be on their jobs.

- Don’t cut costs at the expense of customer service.

- Avoid having too many suppliers. A phone company and an ISP provider will blame each other when your internet connection goes down.

- Safeguard your data security. Think carefully before giving external firms access to your database and documents, which are probably your most important assets as an SME.

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