Should I hire an internal IT person or outsource?
Break-even analysis of hiring an internal IT person vs. outsourcing to an MSP. Learn the real costs and when each option makes sense.
This is one of the most important IT decisions you’ll make. Let’s analyze it honestly.
The Real Cost of an Internal IT Person
When businesses think about hiring IT, they often only consider salary. Here’s the complete picture:
Salary (San Diego Market, 2025)
| Role | Experience Level | Salary Range |
|---|---|---|
| IT Support Specialist | Entry (1-2 years) | $50,000 - $65,000 |
| Systems Administrator | Mid (3-5 years) | $75,000 - $95,000 |
| IT Manager | Senior (5+ years) | $100,000 - $130,000 |
For a single IT hire who can handle your needs, budget $70,000-$95,000 salary for someone competent.
Benefits and Employment Costs
Add 30-40% for:
- Health insurance: $6,000 - $15,000/year
- Payroll taxes: 7.65% (FICA)
- Retirement contribution: 3-6%
- PTO and holidays: ~10% of salary
- Workers’ comp, unemployment insurance
- Professional development and training
Fully loaded cost: $91,000 - $133,000/year
Tools and Resources
Your IT person needs tools:
- Remote management software: $1,500-$3,000/year
- Documentation systems: $500-$1,500/year
- Security tools licenses: $1,000-$2,500/year
- Training and certifications: $2,000-$5,000/year
Add: $5,000-$12,000/year
Recruiting and Turnover
- Recruiting cost: 15-25% of salary ($10,000-$25,000)
- Time to productivity: 3-6 months
- Average IT tenure: 2-3 years
Amortized cost of turnover: $5,000-$10,000/year
Total Cost of One IT Employee
| Component | Annual Cost |
|---|---|
| Salary | $80,000 |
| Benefits/taxes (35%) | $28,000 |
| Tools | $7,000 |
| Turnover (amortized) | $7,000 |
| Total | $122,000/year |
Monthly: ~$10,000
What One IT Person Can Actually Do
Here’s the uncomfortable truth: One IT person can only do so much.
They Can:
- Handle day-to-day support requests
- Manage basic infrastructure
- Perform routine maintenance
- Be a single point of contact
- Understand your business context
They Cannot:
- Be available 24/7 (they take vacation, get sick)
- Be expert in everything (security, cloud, networking, compliance…)
- Handle major projects without help
- Provide instant coverage for emergencies
- Scale with business growth
The Math Problem
One IT person working 2,000 hours/year supporting 50 users:
- 40 hours/user/year for support and maintenance
- That’s less than 1 hour per user per week
Factor in projects, meetings, training, admin work - there’s not much room for proactive improvement.
The Cost of Managed IT Services
For comparison, here’s what MSP services typically cost:
Per-User Model
| Service Level | Per User/Month | 50 Users/Month |
|---|---|---|
| Basic | $100-$125 | $5,000-$6,250 |
| Standard | $125-$175 | $6,250-$8,750 |
| Premium | $175-$225 | $8,750-$11,250 |
What’s Included
Quality managed services typically include:
- 24/7 monitoring
- Help desk support (unlimited)
- Security (endpoint, email, firewall)
- Backup monitoring
- Patch management
- Vendor management
- Strategic planning (vCIO)
- Team of specialists (not one generalist)
Side-by-Side Comparison
For a 50-person company:
| Factor | Internal IT | Managed Services |
|---|---|---|
| Monthly cost | ~$10,000 | $6,250-$8,750 |
| Annual cost | ~$120,000 | $75,000-$105,000 |
| Availability | Business hours | 24/7 |
| Expertise breadth | 1 person | Full team |
| Security depth | Limited | Specialized |
| Scalability | Need to hire | Flexes with you |
| Vacation coverage | None | Built-in |
| Emergency response | Hope they’re available | Guaranteed SLA |
Monthly savings with MSP: $1,250-$3,750 Annual savings: $15,000-$45,000
When to Hire Internal IT
Internal IT makes sense when:
You’re Large Enough
100+ employees - Now you can afford a small team, not just one person.
You Have Specialized Needs
- Custom software development
- Unique compliance requirements
- Proprietary systems only your team should access
- Manufacturing/OT environments with specialized equipment
You Need Embedded Presence
- Multiple shifts requiring on-site presence
- Extremely high-touch environment
- Culture that requires internal teams
You’re in IT-Centric Business
- Technology is your product
- You need development capabilities
- Technical innovation is competitive advantage
When to Outsource to an MSP
Outsourcing makes sense when:
You’re an SMB (10-100 Employees)
The economics clearly favor outsourcing at this size.
You Need Broad Expertise
One person can’t master:
- Security
- Cloud
- Networking
- Compliance
- End-user support
- Projects
An MSP has specialists in each area.
You Need 24/7 Coverage
After-hours support, monitoring, and emergency response require a team.
You’re Focused on Core Business
IT is important but not your expertise. Let specialists handle it.
You’re Growing
MSP services scale up without hiring. Growing from 50 to 100 users? Just add seats.
The Hybrid Model
Many businesses use both:
MSP + Internal IT Coordinator
- MSP handles technical work
- Internal person handles coordination, first-line support, vendor management
- Best of both worlds
- Cost: $50,000 internal + $5,000/month MSP = $110,000/year
MSP + Internal Specialized Role
- MSP handles general IT
- Internal hire for specialized need (developer, BI analyst, etc.)
- Each does what they’re best at
Internal IT + MSP for Specialties
- Internal team handles day-to-day
- MSP provides security, compliance, project overflow
- Common at 100+ employees
Questions to Help You Decide
-
How many employees do you have?
- Under 75: MSP usually makes sense
- 75-150: Hybrid or MSP
- 150+: Consider internal team + MSP support
-
What’s your IT budget?
- Under $100,000/year: MSP
- $100,000-$200,000: Hybrid or MSP
- Over $200,000: Options open up
-
Do you have specialized needs?
- Standard business IT: MSP
- Custom development: Internal developer
- Both: Hybrid
-
What’s your risk tolerance?
- Key person risk with one IT hire is real
- MSP provides team coverage
-
What’s your growth plan?
- Rapid growth: MSP scales easier
- Stable: Either works
Making the Transition
If You Have Internal IT and Want to Outsource
- Don’t blindside your IT person
- Consider keeping them in a coordination role
- Ensure knowledge transfer
- Plan a proper transition (90 days minimum)
If You’re Currently Outsourcing and Want to Hire
- Understand what you’re really getting from your MSP
- Budget for the FULL cost of employment
- Plan what your internal hire will actually do
- Consider keeping MSP for specialized support
The Bottom Line
For most SMBs (10-100 employees), managed IT services provide:
- Better coverage (team vs. individual)
- Lower total cost
- Broader expertise
- More flexibility
Internal IT makes sense when:
- You’re large enough for a team (100+ employees)
- You have specialized needs
- IT is core to your business
The question isn’t “which is better?” It’s “which is better for YOUR situation?”
Want help evaluating your options? Contact us for an honest assessment of what makes sense for your business.
Have More Questions?
Our team is here to help. Whether you're evaluating IT services or have a specific question about your technology, we're happy to have a conversation.