A practical comparison of cost, performance, and scalability between internal I.T. teams and managed service providers.
Key Takeaways:
How do managed I.T. services vs. an internal I.T. department compare in terms of:
- Cost?
- Expertise and coverage?
- Reliability and support?
- Scalability and business growth?
When it comes to the topic of managed I.T. services vs. an internal I.T. department, many SMB leaders believe that in-house I.T. is always cheaper and more controllable…but is it actually?
The short answer is NO.
“In one case, I witnessed a company estimate their IT in-house model cost was about 15% cheaper than what vendors had quoted,” says Carlos Correa of Ringy. “However, they weren’t factoring into the equation that the tech industry attrition rate…is about 13%. That means when an engineer leaves, the company now has a…baseline recruiting hit, and then a major productivity hit.”
“It takes 2 to 6 months to get a new resource fully productive on all the internal tech stack. This costs them almost twice their baseline salary in lost productivity and training dollars.”
“It’s then that you start to realize the cost differential benefits of MSPs…because now the vendor takes on all the constant upskilling requirements, which 80% of IT pros have to do, because the stack is constantly evolving…[MSPs] come pre-trained and pre-specialized. This neutralizes a lot of otherwise cost variables.”
However, it’s easy to understand where these leaders are coming from. They’re doing a headcount-versus-contract comparison because it’s simpler and lets them work with concrete figures.
If we’re being honest, though, the choice of managed I.T. services vs. an internal I.T. department is much more complex than comparing direct costs.
For instance, when you factor in hidden costs, skill gaps, and scalability limitations, it becomes much more obvious how expensive in-house I.T. really is.
To make the absolute best technology management decision, you must compare the total value, reliability, and long-term efficiency of both options. And that’s exactly what we’ll help you do in this article.
What Is In-House I.T. vs. Managed I.T. Services?
So let’s get to it.
Managed I.T. services vs. internal I.T. department…What does each entail?
It’s relatively straightforward.
With in-house I.T., you directly hire employees to form an internal department that’s responsible for systems, support, and infrastructure.
In a managed services model, you outsource to an external resource (usually an MSP, or managed service provider) that delivers ongoing I.T. management, monitoring, and support.
Both are valid approaches. However, the right choice depends on your company’s size, growth plans, complexity, and what you actually need I.T. to do for your business.
With that said, let’s dive deeper into managed I.T. services vs. an internal I.T. department to fully understand how each impacts your business.
Detailed Managed I.T. Services vs. Internal I.T. Department Comparison
Here’s a quick overview of how managed I.T. services vs. an internal I.T. department compare in five critical domains.
| Managed I.T. Services | Internal I.T. Department | |
| Cost Structure | You pay a flat monthly fee. | You pay for salaries + Benefits + Tools + Emergency fixes and help from outside consultants, things go beyond your team’s capabilities. |
| Expertise & Specialization | You get access to a team of specialists across security, cloud, networking, and more. | I..T. is managed by a team of generalists who deeply understand your systems. |
| Availability & Support | You’re covered around the clock. | Employees are typically only available during business hours. |
| Scalability | Scaling only requires you to adjust your MSP service agreement. | Growth typically requires additional hiring and infrastructure investments. |
| Risk & Security | MSPs combine specialized expertise with enterprise-grade tools and practices, giving you a far superior security posture. | A generalist internal team may not have enough bandwidth to keep up with every cybersecurity development, and that elevates your risk exposure. |
Cost Comparison: Upfront vs Long-Term Value
If you’re like most business owners, cost is likely the largest driver for your decision. So let’s put some numbers on the table.
Assuming you have 20 to 150 employees and have a relatively complex environment that supports on-premises systems, cloud services, remote work, VoIP (Voice Over Internet Protocol), and other services, then you’ll need about two full-time resources: a generalist I.T. manager and technician.
If you hire people with between one and three years of experience for both roles, on average, you’ll pay a base annual salary of $90,000 and $60,000, respectively, according to Glassdoor.
That’s $150,000 in total, plus 20% to 30% on top in benefits.
What about when you need to replace them?
The Society for Human Resource Management (SHRM) advises you to budget for an additional 50% to 200% of each role’s salary. So, about $75,000 to $300,000 for both.
That’s already a huge sum, and yet you still haven’t accounted for tooling, infrastructure, emergencies, and training expenses.
Let it all sink in.
With managed I.T. services, you pay a flat monthly fee per seat, keeping the total cost of ownership (TCO) low and predictable. So, with 20 to 150 seats and a $200 fee, you pay between $48,000 to $360,000 per year, all inclusive.
Expertise and Coverage: Depth vs Breadth
So, who wins the managed I.T. services vs. internal I.T. department debate when it comes to expertise and coverage?
The answer is that it really depends on your business needs. If you just want people with deep knowledge of your environment to manage I.T. or if there isn’t much complexity, then a manager-technician team might suffice.
However, keep in mind that they might have limited bandwidth to cover security, cloud, networking, and support simultaneously.
If your environment is relatively complex or you need more comprehensive coverage, tapping into managed I.T. services’ access to specialists makes sense.
Reliability and Support: Reactive vs Proactive
Managed I.T. services vs. internal I.T. departments often have completely different operational approaches.
In-house teams tend to be more reactive (always rushing to put out fires) because their extensive workloads leave little time for strategy.
MSPs, on the other hand, are structured for proactive monitoring and prevention, making them the ideal choice for high uptime, performance, and business continuity.
Scalability and Business Growth
Scalability is a key advantage for growing businesses, and therefore something to consider in your evaluation.
So how does each model handle growth?
As mentioned earlier:
- MSPs scale services quickly without adding headcount.
- But internal teams require hiring and ramp time.
So the former also wins the managed I.T. services vs. internal I.T. department scalability debate.
When Managed I.T. Is More Cost-Effective
Generally, managed I.T. services are the more cost-effective option when you have:
- Rapid business growth.
- Increasing I.T. complexity.
- A non-negotiable need for 24/7 support.
- Rising security requirements.
- Limitations with internal I.T. resources.
If you check any of these boxes, it’s probably time to engage an MSP.
Key Benefits of Managed I.T. Services
There are many benefits of managed I.T. services, some of the most compelling include:
- Predictable monthly costs.
- Access to specialized expertise.
- Proactive monitoring and maintenance.
- Reduced downtime and risk.
- Faster response times.
Now that we’ve compared Managed I.T. services vs. internal I.T. department in detail and the benefits of managed I.T. services, let’s debunk three myths.
Common Misconceptions About Managed I.T. Services vs Internal I.T. Department
Misconception #1: “We Will Lose Control by Outsourcing”
Outsourcing I.T. doesn’t mean giving up control. If anything, it helps you regain it through better visibility and more proactive management of your I.T. assets
Misconception #2: “Managed I.T. Services are More Expensive”
According to our earlier calculation, your average annual managed I.T. services TCO for a team of 20 to 150 is $48,000 to $360,000, all-inclusive.
With in-house I.T., you’ll incur all the following costs:
- $150,000 in salaries.
- $30,000 to $45,000 in benefits.
- $75,000 to $300,000 due to turnover.
- Plus tooling, infrastructure, emergency, and training expenses.
And that easily exceeds your average annual TCO for managed I.T. services.
Misconception #3: “Internal Teams are Always Better”
The benefits of managed I.T. services, such as cost predictability, broader expertise, and stronger reliability, can’t easily be replicated internally.
Choosing the Right Model for Your Business
In a nutshell, deciding between managed I.T. services vs. an internal I.T. department really comes down to four factors:
- Company size and growth stage.
- Complexity of systems.
- Budget and risk tolerance.
- Strategic priorities.
So you need to make your evaluation from a business lens, not just an I.T. one.
Frequently Asked Questions About Managed I.T. Services vs Internal I.T. Department
1. What is the main difference between managed I.T. and in-house I.T.?
With in-house I.T., you hire your own employees to manage technology. Managed I.T. involves outsourcing that responsibility to a third-party provider for a monthly fee.
2. What should I look for when evaluating a managed I.T. provider in Seattle?
Look for a provider with a proven track record in your industry, clear and transparent SLAs (service-level agreements), a proactive support model, and one who’s willing to work with your business as a strategic partner rather than just a vendor.
3. Will we lose control of our I.T. environment if we switch to managed services?
Not if you choose the right provider. Reputable MSPs operate with transparent reporting, defined service-level agreements, and regular check-ins so you always know the state of your systems.
Get a Custom Managed I.T. Cost Analysis from Attentus
Ultimately, your evaluation of managed I.T. services vs. an internal I.T. department should be based on long-term value, reliability, and scalability, not just perceived cost savings. That’s the only way to gain real clarity of your TCO.
Need a comprehensive I.T cost analysis tailored to your business? Attentus Technologies can help.
For over two decades, we’ve educated Seattle SMBs on the benefits of managed I.T. services and helped many of them conduct a strategic evaluation of whether it’s the right choice for their business. We can do the same for you.
Get your custom managed I.T. cost analysis as you learn how Attentus Technologies goes beyond support to provide proactive and scalable I.T. aligned with your business goals.