In-House IT vs Outsourced MSP: Which Is Right for a UK SMB?

It is one of the most common questions I get asked when a business hits 15, 20, 30 staff: “should we just hire someone to do our IT in-house, or get a company like yours to do it?” It is a fair question, and the honest answer is that it depends on your business. So here is the genuine, both-sides comparison I would give you on a call, including the bits that point away from us.

In short: for most growing firms of small businesses up to 100 staff an outsourced MSP gives you a whole team’s cover for less than one in-house hire, while in-house only wins at larger scale or for very specialised needs. Here is the honest comparison, including the hybrid most firms actually end up with.

What “in-house IT” actually gives you

Hiring an IT person feels like the grown-up move. Someone in the building, on your team, who knows everyone’s name and can wander over when the printer plays up. There is real value in that, and I am not going to pretend otherwise.

The strengths of in-house IT are genuine: someone physically present, fully focused on your business, who builds deep knowledge of your specific setup over time and is part of the culture. If your business runs on something unusual or highly specialised, having that knowledge in the room is worth a lot.

But there are three things people tend to underestimate. The first is cost: a competent IT manager in the Midlands is rarely under £40,000 a year once you add National Insurance, pension, holiday, training and the kit they need, and a genuinely strong one is a good deal more. The second is the single-point-of-failure problem: when your one IT person is on holiday, off sick, or hands in their notice, your cover goes with them. The third is breadth: no one person is an expert in networking, Microsoft 365, cyber security, backups, cloud and strategy all at once. You hire for the skills you need today and discover the gaps later.

What an outsourced MSP actually gives you

An outsourced managed service provider (an MSP, like us) is a whole team you rent rather than one person you employ. You pay a predictable monthly fee, usually per person, and in return you get helpdesk cover, monitoring, security, patching, and someone to call when something breaks.

The strengths here are the mirror image of the in-house weaknesses. You get a team, so cover does not vanish when one person is away. You get broad skills, because different engineers are strong in different areas. You get security built in rather than bolted on, because it is core to what we do all day. And the cost is predictable and scales with your headcount, so you are not carrying a fixed salary through the quiet months.

The honest trade-off: an external provider is not sitting in your building, and a cheap or distant one can feel faceless. That is exactly why we keep our team small and local, so you still get a named person who knows your business. But it is a fair thing to weigh up.

The cost comparison, for a 25-person firm

Let me put real numbers on it, because that is what actually decides this.

In-house: one capable IT manager at, say, £45,000 salary becomes roughly £55,000 to £60,000 a year once you add employer’s National Insurance, pension and the rest. Add their tools, training and the cost of cover when they are away, and you are comfortably over £60,000 for one person, with one person’s worth of skills and no cover when they are off.

Outsourced: 25 people on a managed service at our middle tier works out around £20,000 a year, plus the flat fee for managing your Microsoft 365 tenant. For roughly a third of the cost of a single hire, you get a whole team, security included, and no gaps when someone is on leave. You can see exactly what your business would pay on our pricing page.

That gap is why, for most firms of small businesses up to 100 staff, outsourcing simply makes more financial sense until you are big enough to justify a full internal team rather than a single hire.

When in-house genuinely wins

I would not be doing my job honestly if I did not tell you when to go in-house. Hire internally when: you are large enough (usually well past 100 staff) to justify a proper team, not just one person; your business depends on a specialised or custom system that needs deep, constant, in-the-room knowledge; or you have regulatory or contractual reasons that require staff to be employed directly. In those cases, the in-house route is the right one.

The hybrid most growing firms actually want

Here is the setup I recommend most often for businesses in the awkward middle. You keep one internal person who knows the business, handles the day-to-day “where’s the file” questions and acts as the link, and you back them with an external team for the heavy lifting: security, projects, migrations, out-of-hours, and cover when your person is away. Your internal coordinator is never the single point of failure, and you get specialist depth without paying five specialist salaries.

So which should you choose?

If you are under about 100 staff, the honest answer is usually outsourced or hybrid, because one internal hire cannot give you the breadth or the cover, and a full internal team is not yet justified. If you are larger, or you run something genuinely specialised, building in-house starts to make sense.

The best way to decide is to compare the real cost and the real cover for your specific business, not the theory. If you want, we will map that out with you, honestly, even if the answer turns out to be “hire someone internally”. Book a no-obligation call and we will talk it through.

Frequently asked questions

At what size should we hire IT in-house instead of outsourcing?

Usually well past 100 staff, when you can justify a proper team rather than a single hire. Below that, one in-house person cannot cover the breadth of skills or provide cover when they are away.

Is outsourced IT really cheaper than hiring someone?

For most firms of small businesses up to 100 staff, yes. A single capable hire costs over £60,000 a year all-in, while an outsourced team for 25 people is roughly a third of that, with broader skills and no gaps when someone is off.

Can we have both in-house and outsourced IT?

Yes, and it is often the best setup. An internal coordinator who knows the business, backed by an external team for security, projects and cover, gives you depth without paying several specialist salaries.

What happens to our knowledge if we outsource?

A good provider documents everything: your setup, accounts and processes. That means the knowledge lives in the open rather than in one person’s head, which is safer than relying on a single internal hire.

– Andy Price, Founder & MD, Initial IT · 01543 524594 · hello@initialit.co.uk