In-House IT vs. MSP: The Real Cost of IT Support for Businesses

Every business today faces a fundamental question: should IT be handled in-house, or is outsourcing to a Managed Service Provider (MSP) the smarter financial and operational choice? On paper, hiring an internal IT team might seem like the safer bet. After all, they’ll be dedicated solely to your business, right? But once you stop and do the maths, that logic falls apart faster than a budget laptop running Windows Vista.

For smaller businesses, in-house IT is a financial black hole. If you’ve got fewer than 100 users, hiring an internal IT person is like hiring a private chauffeur when you only take the car out once a week—it’s overkill. Even at 150-200 users, you might justify an IT manager, but they’ll still need backup. And once you hit 500 users, an internal IT team makes sense, but even then, they won’t be able to cover everything. The idea that one or two people can manage an entire company’s IT in today’s threat landscape is pure fantasy. It’s like expecting one barista to keep up with the morning rush at a London coffee shop—someone’s getting burnt.

The Full Cost of an In-House IT Team

Building an internal IT team isn’t just about salaries—it’s about total cost of ownership. A UK-based IT manager or senior engineer earns around £80K, and that’s before the 30% bump for the South East or the extra 20% if you’re in London. A junior IT support technician runs about £35K, or £50K+ in London. A cybersecurity specialist? You’ll need at least £90K, if you can find one willing to work in-house. Once you factor in National Insurance, pensions, benefits, training, sick leave, and holiday cover, the real cost of your IT team skyrockets by at least 25%. And that’s just the people.

Then, there’s the cost of keeping up. Cybersecurity threats evolve faster than a politician’s excuses, and an underfunded in-house team trying to keep up is like bringing a butter knife to a gunfight. IT isn’t just about having someone to fix the printer when it stops working. You need security tools like Endpoint Detection and Response (EDR), Managed Detection and Response (MDR), Security Information and Event Management (SIEM), Patch Management, and Backups. These come in at around £40 per user per month. Then there’s ticketing and documentation, which adds another £5 per user, and monitoring and automation tools, costing another £10 per user. Before you’ve even paid your staff, you’re already spending £55 per user per month just to keep things running. And that doesn’t include surprise expenses, like replacing hardware, emergency troubleshooting, or compliance audits.

For a 200-user business, an in-house IT function costs over £250K per year in salaries alone. Software, tooling, and security add another £8K per month. And that’s before factoring in downtime, training, and emergency response costs. Even worse, an in-house IT team creates a single point of failure. If your IT manager gets sick, goes on holiday, or quits, who picks up the pieces? That’s right—no one. A small team also can’t stay ahead of the latest cybersecurity threats without pouring even more money into constant training. And let’s be honest, most in-house IT teams end up reactive, firefighting one crisis after another rather than proactively preventing them. It’s the IT equivalent of fixing leaks in a sinking ship—eventually, you’re going under.

The MSP Alternative: More IT, Less Hassle

MSPs, on the other hand, solve all these problems without the staffing headaches. For a fraction of the cost, an MSP provides 24/7 support, no sick days, no holiday gaps, and security that’s baked in from the start. Cyber Essentials Plus, ISO 27001, GDPR compliance—you name it, it’s covered. And instead of being reliant on one or two overworked staff members, you get an entire team of experts, always available. A proper MSP costs a 200-user business around £144K per year—saving over £100K compared to an internal IT team. That’s a six-figure difference, all while giving you better coverage, more advanced security, and a guarantee that someone will always be there when something breaks.

What Happens When IT Goes Wrong?

For businesses with fewer than 50 users, hiring in-house IT is madness. A single IT hire costs upwards of £50K per year, and that’s before pensions, NI, and benefits. Meanwhile, MSP pricing at £60 per user per month means a 20-user business gets full IT support, security, and compliance for £14.4K per year—less than a third of the cost of just one full-time IT employee. And let’s not even entertain the idea of DIY IT. One ransomware attack or catastrophic server failure will wipe out years of ‘savings’ overnight. Hope your data enjoys its new home on the dark web.

Then there’s compliance. You don’t need to be a regulated business to know that data security laws are tightening. GDPR fines are no joke, and cyber insurance providers now expect businesses to have multi-layered security in place before they’ll even consider paying out in the event of an attack. A cheap IT setup won’t pass muster when it comes to proving compliance after a breach, and regulators won’t care that you ‘didn’t have the budget.’ A well-run MSP has compliance baked into its processes, helping businesses avoid costly fines and reputational damage.

Scaling IT Without Scaling Costs

If your company has fewer than 150 users, an MSP isn’t just the best option—it’s the only financially viable one. Between 200 and 500 users, a hybrid model works best: an internal IT manager for oversight, with an MSP handling cybersecurity, compliance, and out-of-hours support. Even at 500+ users, no in-house team can cover everything, so you’ll still need external IT security partnerships.

The bottom line is simple: hiring an internal IT team isn’t just about paying salaries—it’s about managing risk, staying compliant, and ensuring business continuity. If you don’t have the budget for a fully staffed IT department, cutting corners will cost you more in the long run. And if you think a single IT manager can handle everything, you might as well start setting money on fire now. Because when the inevitable security breach, system failure, or data loss hits, the costs won’t just be financial—they’ll be reputational and operational, too.

Businesses that invest in proper IT management avoid these disasters before they happen. Those that cheap out? They’re the ones scrambling when an ‘unexpected’ cyber incident or network failure shuts them down. And at that point, the cost of doing it right in the first place suddenly looks like a bargain.

Want to know why cheap MSPs are a disaster waiting to happen? Read our deep dive into why low-cost IT support is a false economy here.