In-House IT vs Managed IT Services
Building an internal IT department is the right answer for some companies and a six-figure mistake for others. Here's the honest math on when each model wins.
Who each option is best for
In-house IT fits companies with 200+ employees, complex internal applications that demand product-level expertise, and the capital to staff a real IT department (CIO, helpdesk leads, sysadmins, security engineers, network engineers).
Managed IT services fit mid-market businesses (25–500 employees) that need 24/7 coverage, specialization, and predictable cost without the overhead of hiring, training, and retaining a multi-disciplinary IT team.
Side-by-side comparison
| Criterion | In-House IT | Managed IT Services |
|---|---|---|
| Headcount required | CIO + helpdesk + sysadmin + security + network — typically 4–8 FTEs | 0 FTEs (BASG provides all roles) |
| Annual all-in cost (4 FTEs) | ~$600k–$900k including salaries, benefits, training, tooling | Per-user / per-endpoint flat rate, no benefits |
| After-hours / 24/7 coverage | Requires on-call rotation — often a retention risk | Always included |
| Specialization (security, cloud, compliance) | Generalists at this size; specialists need bigger budget | Specialists assigned by request |
| Scaling up or down | Slow — hire/fire cycle | Per-seat scaling, monthly |
| Single point of failure | Yes — illness, departure, vacation | No — team-based delivery |
| Compliance evidence collection | Requires dedicated compliance program | Built into managed engagement |
| Best for | Companies with 200+ employees and capital to staff a full IT department | Mid-market businesses (25–500 employees) |
| Limitations | Expensive, slow to scale, key-person risk | Less internal product / app expertise |
The real cost of in-house IT
A typical mid-market in-house IT department runs CIO ($180k+) + 1–2 helpdesk ($60–80k each) + sysadmin ($90k) + security engineer ($120k+). That's $510k–$650k in salaries alone, before benefits (add ~25%), tooling, training, recruitment, and turnover. All-in annual cost lands at $600k–$900k for a generalist team that still cannot deliver 24/7 coverage without burnout.
Managed IT delivers the same coverage at per-user / per-endpoint flat-rate pricing, with deeper specialization (24/7 SOC, dedicated security engineers, compliance specialists, cloud architects) because the cost is shared across many clients.
Limitations to know
- Managed IT means your internal team loses some product-specific expertise. If your business runs proprietary applications that require deep on-staff expertise, plan a hybrid.
- In-house IT creates key-person risk. One illness, departure, or vacation can leave you exposed.
- In-house IT at mid-market scale rarely affords true specialization — you get a generalist team with thin coverage on security, compliance, and cloud architecture.
How to choose
- If you're under 200 employees and don't have a CIO yet, choose managed IT.
- If you have proprietary internal apps that need product expertise on staff, run a hybrid (co-managed).
- If you're a defense contractor or healthcare practice subject to HIPAA/CMMC, managed IT almost always wins on total cost — compliance overhead is shared.
- If you have 200+ employees, complex apps, and the capital to staff specialists, in-house can win — but evaluate co-managed for after-hours coverage.
Recommendation
For mid-market businesses (25–500 employees), managed IT services almost always win on total cost, capability coverage, and scalability. Build internal IT only when you genuinely need product expertise on staff — and even then, consider co-managed IT rather than fully insourced. Talk to BASG for an honest math comparison specific to your headcount and stack.
Common questions
Run the build-vs-buy math with us
BASG will model the all-in cost of in-house vs managed for your specific environment — headcount, stack, compliance scope, and growth plan.