At some point, most growing businesses face this question: should we hire an IT person, or keep using a managed IT provider?
The answer depends on factors that are specific to your business — your size, your complexity, your industry, your risk tolerance, and whether your IT needs are primarily operational or strategic. Here's an honest framework for thinking through it.
The True Cost of an In-House IT Person
When businesses think about hiring IT staff, they usually think about salary. The actual cost is significantly higher.
An IT generalist capable of handling a small business environment typically earns $55,000–$85,000 per year depending on location and experience. But the total employer cost — salary plus benefits, payroll taxes, PTO, health insurance, 401k matching, recruiting, and onboarding — runs 1.25–1.4x the base salary. For a $70,000 hire, that's a real cost of $87,500–$98,000 annually.
Then there's the tooling. Your IT person still needs the same software stack an MSP would use: RMM software to manage devices, EDR/MDR for security, backup software, patch management, monitoring. These tools cost $5,000–$20,000+ per year depending on your environment — and at small scale, you're paying retail rather than the volume-discounted rates an MSP has negotiated.
And there's the single-point-of-failure problem. When your IT person is sick, on vacation, or quits, your IT coverage disappears. Every business owner who has had an IT emergency during an employee's vacation knows exactly how much that problem costs.
The True Cost of an MSP
A full-service MSP for a 20-person business typically runs $2,000–$4,500/month ($24,000–$54,000/year) depending on the model and what's included. For that price, you get:
- Help desk coverage during business hours (and often after hours)
- Proactive monitoring and maintenance
- A team with multiple specializations rather than one generalist
- Security tooling included in the monthly fee
- Coverage that doesn't disappear when someone takes PTO
- No recruiting, training, or HR overhead
The tradeoff: they're managing many clients simultaneously. You're not their only priority. Response times, while contractually defined, are not the same as having someone on-site.
When In-House IT Wins
You have complex, proprietary systems. If your business runs custom software, specialized industrial control systems, or highly specific technical infrastructure, an MSP who spreads their expertise across dozens of clients may not be equipped to support your environment. An in-house IT person who lives in your specific stack every day builds institutional knowledge that's genuinely valuable.
You need IT presence on-site constantly. Physical IT work — setting up workstations, managing hardware, supporting in-person operations — is something MSPs do, but usually on a scheduled or on-call basis. If your business has daily physical IT needs, an on-site person makes more operational sense.
You're large enough that the math works. At roughly 75–100+ employees, the cost of an in-house IT team often becomes competitive with MSP pricing, especially when you factor in the depth of coverage an internal team can provide at scale. Many businesses at this size run a hybrid: an in-house IT manager who handles day-to-day and strategy, supplemented by an MSP or specialist consultants for overflow and security.
Your IT is a competitive differentiator. If how you use technology is a meaningful part of your competitive advantage — if IT is a revenue enabler, not just infrastructure — you probably want internal expertise shaping that strategy.
When MSP Wins
You're under 50 employees. Below this threshold, the economics almost always favor an MSP. You get broader expertise, tooling, and coverage for less than the fully-loaded cost of one in-house hire.
Your IT needs are unpredictable. If you have weeks with zero IT issues and weeks where everything breaks at once, an MSP scales with you. An in-house hire is a fixed cost regardless of utilization.
Security is a primary concern. No generalist IT hire at an SMB is going to be a cybersecurity specialist. MSPs that include MDR, security monitoring, and incident response give small businesses access to security capabilities that would require a dedicated internal security team to replicate.
You've had bad experiences with single-person IT dependency. If you've lived through the "our IT guy quit and took all the passwords" scenario, the institutional continuity of an MSP — documented systems, shared knowledge, multiple staff — is worth real money.
The Hybrid Approach
Many mid-size businesses land on a hybrid model: an internal IT manager or coordinator who owns vendor relationships, strategic planning, and day-to-day user requests, while an MSP handles the underlying infrastructure, security, and after-hours coverage.
This combination addresses the MSP's weakness (not knowing your business as well as an insider) while addressing the single-person problem (an MSP backstop when your IT manager is unavailable).
The most common mistake: hiring an in-house IT person too early, when the volume of work doesn't justify the fixed cost, and then being stuck with the overhead when business slows down. MSPs are variable costs that scale with your business.
The Question That Actually Matters
Before deciding between in-house and MSP, ask yourself what problem you're actually trying to solve.
If the answer is "our systems keep breaking and nobody fixes them fast enough" — that's an MSP selection or SLA problem, not necessarily a reason to hire internally.
If the answer is "we have specialized technology that no outside vendor understands" — that's a case for in-house.
If the answer is "we're growing fast and IT is becoming a bottleneck" — a hybrid or a better MSP might solve it before a hire is necessary.
If the answer is "our current IT person is the only one who knows anything and we're terrified of them leaving" — that's a documentation and process problem that in-house hiring won't fix by itself.
Getting clear on the actual problem usually makes the build-vs-buy decision obvious.