Can or should a small IT start-up delegate sys admin activities to a 3rd party?

Following discussions triggered on another question: let's imagine a small start-up company who has to decide what to do with its capital. Two suggestions are made:

a) The company spends capital on a good sys admin, but takes the risk of not having enough work for him full-time (at least at the beginning). So, it is not an perfect allocation of capital.

b) One suggests to delegate sys admin work to a 3rd party company (at least at the beginning) and spend more of the money on software engineers. It looks like better allocation of capital, but is it really? One is taking risk by not having 'control' and quality on sys admin work. Plus can one trust a 3rd party to run servers containing critical info?

Has anyone ever attempted option b)? Was it successful or not? Was it worth it? Would you recommend it?

At my previous company after many years of expecting the developers to also play sys admin (as well as network, pbx and dba admin) I finally forced management to use two 3rd party services for general sys admin and dba work.

Obviously, you need to research in detail the 3rd party companies. the sys admin service was a local company that many of us knew people that worked there so there was an inherent trust.

The dba company flew out their sales team to meet with us and we were provided a list of clients that were willing to talk to us. so between that and our own research we felt comfortable using them.

Would I recommend it, yes! It's nice to delegate out the grunt work to someone else so I could spend my time doing actual dev work.

The problem is you don't need one great sys admin, you need four or five. Servers run 24/7 and problems are disrespecters of clocks and calendars. We have delegated our sys admin work for years. It took us three tries to end up with the company we have stuck with. The first two looked good on paper (24/7 coverage, senior sys admin on call at all times, lists of tech creds) but when things happened in the middle of the night, we found out what really goes on. I almost thought about creating an emergency in the middle of a holiday weekend just to see what would happen as a test. What I decided to look for that made all the difference was a company that would be proactive. So I left the req pretty open and then asked what they would do to get started. When I heard them list off a bunch of monitoring software they would install and some architectural changes they would make in the first week, I knew I had a keeper.