The question usually arrives as a budget line: do we hire someone, or do we pay a provider? Framed that way it looks like a straight salary-versus-fee comparison, and the salary usually looks better than it is.
The honest comparison has to include the things that do not appear on a job offer — employer taxes, tooling, holiday cover, and the specific risk that everything you know about your own network lives in one person's head. Once those are in, the picture changes, and for most businesses the answer turns out not to be either/or.
The short version
- One internal IT hire costs roughly 1.4 to 1.6 times their salary once employer taxes, benefits, tooling, and training are included.
- Managed IT for a 25-person business typically lands between $30,000 and $75,000 a year.
- The break-even for a full internal team is usually somewhere between 75 and 150 staff, depending on complexity.
- A single IT hire cannot provide 24/7 coverage. That is an arithmetic limit, not a performance one.
- For most businesses between 20 and 100 staff, co-managed IT beats a pure choice in either direction.
What an internal hire actually costs
Take a competent IT generalist in the Los Angeles market. The base salary is only the starting point.
Fully loaded cost of one internal IT hire
| Cost component | Typical annual | Notes |
|---|---|---|
| Base salary | $85,000 – $110,000 | Mid-level generalist; senior or security-focused runs higher |
| Employer payroll taxes | $7,000 – $9,000 | Social Security, Medicare, unemployment insurance |
| Health and benefits | $12,000 – $20,000 | Varies significantly with the plan offered |
| RMM, ticketing, security tooling | $8,000 – $20,000 | The stack an MSP already owns and spreads across clients |
| Training and certification | $3,000 – $6,000 | Needed to keep skills current, often first to be cut |
| Recruitment (amortised) | $5,000 – $12,000 | Agency fees or internal time, spread over expected tenure |
| Loaded total | $120,000 – $175,000 | Before considering cover for absence |
The tooling line is the one most often missed. An internal hire needs remote monitoring and management, a ticketing system, endpoint detection and response, patch management, backup software, and documentation tooling. A managed provider already licenses all of it across their client base, so the per-seat cost to you is a fraction of standalone pricing.
The coverage problem no salary solves
One person works roughly 240 days a year, eight hours a day. That is about 1,900 hours out of the 8,760 in a year — a little over a fifth of the calendar. Everything outside that window is either unmonitored or dependent on someone answering their phone on a weekend as a favour.
This is not a criticism of internal IT staff. It is arithmetic. Providing genuine 24/7 coverage requires four to five people minimum once you account for holiday, sickness, and turnover. That is the real reason businesses under a certain size do not staff it internally, and it is why the comparison is rarely one salary against one fee.
When one person holds all the institutional knowledge, their resignation is an operational incident. Two weeks' notice is not enough to transfer an undocumented environment, and the replacement spends their first quarter rediscovering what was already known.
Where managed IT genuinely wins
- Breadth of skill. A single hire is strong in some areas and thin in others. Nobody is simultaneously excellent at Azure architecture, endpoint management, firewalls, and compliance.
- Coverage. Overnight and weekend monitoring with automated remediation, without paying four salaries.
- Tooling economics. Enterprise security and monitoring stacks, amortised across many clients rather than bought outright.
- Continuity. Documentation and process survive individual departures, on both sides of the relationship.
- Predictable cost. One monthly figure that scales with headcount, rather than a step change every time you hire.
Where an internal hire genuinely wins
There are real advantages on the other side, and providers who pretend otherwise are selling rather than advising.
- Business context. Someone in the building learns how your business actually works, which requests are urgent in practice, and who needs help before they ask.
- Immediate physical presence. Hardware faults, new-starter setups, and meeting-room problems are faster when someone is on site.
- Bespoke systems. If you run a heavily customised line-of-business application, in-house knowledge of it is worth a great deal.
- Cultural fit. An internal person attends the meetings, hears the plans, and can raise technology implications early.
Where the break-even actually sits
Typical shape by business size
| Headcount | Usually the right shape | Why |
|---|---|---|
| Under 20 | Fully managed | Not enough work to justify a salary; coverage matters more than presence |
| 20 – 75 | Managed, or co-managed with one hire | One hire cannot cover the hours; a provider fills nights, weekends, and specialisms |
| 75 – 150 | Co-managed with a small internal team | Enough volume for internal staff, not enough for 24/7 or deep specialists |
| 150+ | Internal team, provider for specialisms | Scale justifies staffing; providers used for security, cloud, and project surge |
These bands shift with complexity rather than headcount alone. A 40-person architecture practice with heavy file storage and a compliance obligation needs more than a 90-person business where everyone works in a browser.
The combination most businesses land on
The framing as a binary is what makes this decision hard. In practice the arrangement that works for most businesses between 20 and 100 staff is one capable internal person handling day-to-day support and business context, with a provider carrying overnight monitoring, security tooling, escalation, and project work.
That costs more than managed alone and less than building a team. What you get for the difference is someone who knows your business in the building, and someone who knows the technology deeply on call — without asking either to be both.
How to run the numbers for your own business
Do this before talking to anyone selling either option.
- Take your current IT spend for the last twelve months, including hardware, licensing, external help, and any internal salary.
- Add an honest estimate of downtime cost: hours lost, multiplied by loaded hourly cost, for incidents you can actually remember.
- Get two or three managed quotes on a like-for-like basis, using the checklist in our guide to choosing a provider.
- Compare against a fully loaded hire, not the base salary. Use 1.4x to 1.6x as the multiplier.
- Ask what each option does at 2am on a Sunday, and price the answer.
Whichever direction you move, there is a one-off cost to get there — onboarding and discovery for a provider, recruitment and ramp-up for a hire. Both take one to three months before the arrangement runs at full effectiveness.
The short answer
Under about 20 staff, hiring is difficult to justify. Between 20 and 100, one internal person plus a provider almost always beats either alone. Above 150, an internal team makes sense with providers retained for specialisms. And at every size, the number that matters is the loaded cost of the whole arrangement, not the salary or the seat price in isolation.
Frequently asked questions
Is managed IT cheaper than hiring someone?
For businesses under roughly 75 staff, usually yes. Managed IT for a 25-person business typically runs $30,000 to $75,000 a year, against $120,000 to $175,000 fully loaded for one internal hire.
Above that size the gap narrows, because per-seat fees scale with headcount while a salary does not. Somewhere between 75 and 150 staff, internal staffing starts to win on pure cost — though usually not on coverage.
Will a managed provider replace my existing IT person?
It depends entirely on the model you buy. Co-managed IT is designed around keeping internal staff and adding capability alongside them, which is the more common arrangement for businesses that already have someone.
If a provider responds to news of your internal hire by explaining how they would take over that role, treat it as information about how the relationship would run.
What happens to our internal IT person under a co-managed arrangement?
Typically their job gets better. Repetitive work — patching, monitoring alerts, password resets, routine onboarding — moves to the provider and its automation, and the internal person moves toward projects and business-facing work.
The transition is worth managing deliberately. Internal staff who first hear about a provider when the provider arrives tend to be defensive, understandably. Bringing them into the selection process avoids that.
Can we start with managed IT and hire later?
Yes, and this is the most common growth path. Businesses often start fully managed, hire their first internal person somewhere between 50 and 100 staff, and shift the provider agreement to co-managed at that point.
It only works cleanly if your environment is properly documented and the credentials are in your name — which is exactly why those points matter when choosing a provider in the first place.
Not sure which shape fits your business?
Book a free 30-minute assessment. We will look at your size, complexity, and current spend, and tell you honestly whether managed, co-managed, or hiring is the better move.