Cost Comparison: In-House IT vs. Managed IT Services

In the rapidly advancing world of technology, organizations face a crucial decision when it comes to IT management – should they invest in an in-house IT department or outsource to managed IT services? Both options have their merits and drawbacks, and understanding the cost implications of each is key to making an informed choice.

In-House IT

Initial Setup Costs

Setting up an in-house IT department involves significant upfront investments. These costs include recruiting skilled IT professionals, acquiring hardware and software, and setting up the necessary infrastructure. The initial outlay can be substantial, particularly for small to medium-sized businesses.

Ongoing Operational Costs

Once established, maintaining an in-house IT team incurs continuous expenses. Salaries of IT staff, which often include benefits and bonuses, are a major component. Additionally, there are costs associated with ongoing training to keep up with the latest technologies, as well as maintenance and upgrades of equipment and software.

Hidden Costs

In-house IT also has several hidden costs that organizations might not initially consider. These include the time spent by HR teams in hiring and managing IT personnel, the potential for downtime due to staff absences or turnover, and the risk of outdated skills in a rapidly-evolving technological landscape.

Managed IT Services

Subscription-Based Pricing

Managed IT services typically operate on a subscription-based pricing model. Organizations pay a fixed monthly fee based on the services they require. This model offers predictability in budgeting, as the costs are relatively stable and can be scaled up or down based on the organization’s needs.

Reduced Overhead

Outsourcing IT services can significantly reduce overhead costs. There is no need to invest in expensive hardware or software, as these are usually provided by the managed service provider (MSP). Additionally, the responsibility for maintaining and upgrading technology lies with the MSP, freeing up internal resources.

Access to Expertise

One of the significant advantages of managed IT services is access to a broad range of expertise. MSPs employ specialists in various fields, ensuring that organizations benefit from the latest technological advancements and best practices. This can be particularly valuable for small businesses that may not have the resources to hire specialized IT staff.

24/7 Support and Monitoring

Many MSPs offer round-the-clock support and monitoring, ensuring that IT systems are always running smoothly. This can minimize downtime and enhance productivity, as any issues are addressed promptly by the provider’s support team.

Comparing the Costs

Staffing and Training

The cost of hiring and training IT staff can be prohibitive for many organizations. According to Glassdoor, the average salary for an IT manager in the US is around $90,000 per year, not including benefits and bonuses. In contrast, managed IT services might cost a fraction of this amount, with monthly fees typically ranging from $100 to $500 per user, depending on the services provided.

Hardware and Software

In-house IT departments require substantial investments in hardware and software. Managed IT services, on the other hand, include these costs in their subscription fees, offering a more predictable and often lower total cost.

Downtime and Productivity

Downtime can be a significant expense for businesses. Managed IT services, with their 24/7 monitoring and support, can minimize downtime and mitigate these costs, whereas in-house IT departments may struggle to provide the same level of constant surveillance.


Managed IT services offer flexibility and scalability that in-house departments often cannot match. As business needs evolve, MSPs can quickly adjust the level of service, adding or reducing resources as required. This scalability can be more cost-effective than the fixed costs associated with maintaining an in-house team.

The More Attractive Choice

Choosing between in-house IT and managed IT services depends on various factors, including budget, company size, and specific IT needs. While an in-house IT department offers control and direct oversight, it comes with significant costs and hidden expenses. Managed IT services provide a cost-effective, scalable, and expert solution, particularly for small to medium-sized businesses.

Ultimately, the decision should be based on a thorough cost-benefit analysis that considers both the tangible and intangible costs associated with each option. For many organizations, the predictable costs, access to expertise, and reduced overhead of managed IT services make it the more attractive choice.