Increasingly, many small and medium-sized businesses are saying "no." Instead, they are out-tasking the management of some or all IT functions to service providers. Their goals: to boost efficiency, reduce costs, and enhance customer satisfaction, among other beneficial results.

For example, small businesses with 19 or fewer employees have traditionally been slow to out-task, because of cost or other concerns. Only 2% of businesses with 2 to 19 employees had all their IT functions managed by a service provider in 2004. But that number increased to 11% in 2005 and to nearly 18% in 2006, according to Yankee Group.

One reason for the increase is that the small business market has become mature, according to Kurt Potter, research director of IT services and outsourcing for Gartner Dataquest. "Service providers that might have ignored this market before are now courting it," he says. The result: "Small businesses have more managed service options from which to choose and at more competitive rates."

At the same time, businesses understand that to further enhance efficiency and trim costs, they need more sophisticated applications, such as IP Communications (IPC), videoconferencing, and mobility, says Jan Dawson, vice president of U.S. enterprise practice for Ovum Research. But some smaller businesses lack the resources or budget necessary to buy, install, manage and maintain such applications themselves. "They see the benefits," Dawson says. "But they also think those applications are beyond their capabilities."