I fail to see the logic of how outsourcing all your applications reduces IT
staff support.

First of all, the organization still has to maintain a network to connect with
the services provider. This is the same whether you're using "thin clients" or
"fat clients."

Second, most of the IT overhead in supporting applications isn't in setting them
up and keeping them running, it's in training and supporting users in using the
applications. ("How do I archive my e-mail?") I can't remember the last time
Microsoft office applications crashed on me. Word goes south occasionally, but
my work is usually automatically recovered. So, I can't see where you save very
much by having applications on a host server someplace rather than having them
on a staff person's desktop computer.

Third, you almost invariably wind up running a hosted environment and an
in-house environment, because host service providers almost never provide all
the applications or services the organization runs. A corollary to this is
you're stuck with whatever applications or services the host provides, or you go
back to running the application or service on the desktop computer or
organization server. So now your IT staff is again supporting both in-house and
outsourced applications and services.

Finally, there are limits to what you can reasonably outsource. If the
organization is big enough to require the services of a trained IT person or
persons, You're going to need IT support regardless of where the applications
and services are physically located and run. I mean, aren't there good reasons
why an organization doesn't outsource the services that board members provide?