In-House IT Hire vs. Managed Services: How to Work Out the Real Cost

At some point the question arrives: do we hire somebody to run our IT, or do we pay a company to do it? It usually gets settled by comparing a salary to a monthly quote, which is the one comparison guaranteed to give you the wrong answer.

Here is how to build a number you can actually trust. We are not going to hand you an average, because averages are made of other people's businesses. We are going to show you the arithmetic so you can run it on yours.

Why comparing salary to quote does not work

A salary and a managed services fee are not the same kind of number. One is a component of a cost, and the other is close to the whole of one.

The salary does not include the employment costs on top of it, the tools that person needs, the recruitment to find them, the time to bring them up to speed, or what happens during the fifteen or so weeks a year when they are on holiday, ill, or asleep.

That is not an argument for either option. It is an argument for comparing like with like.

Building the in-house number

Work through these and write down your own figures:

Salary, at the level you would actually need. Look at real listings in your area for the skills you want, not the ones you hope you can get away with.
Employment costs on top — your national insurance or payroll taxes, pension or retirement contributions, insurance, holiday. Your accountant can give you the multiplier for your country in about a minute.
Recruitment, whether that is an agency fee or the weeks of your own time.
Ramp-up. Nobody is fully productive on day one.
Tools and licences. Monitoring, backup, security, and management software are bought per business, and one person needs the same set that a provider already owns.
Training, because the field moves and a person who stops learning becomes a liability in it.
Cover. What your plan is for evenings, weekends, holidays, illness, and the day they resign.

Add those up. It is normally a good deal more than the salary line, and the last one on the list is the one that gets skipped.

Building the managed services number

The same discipline in the other direction, because a monthly quote also hides things:

The recurring fee, at your real user count rather than today's.
What is genuinely included versus billed on top. Project work, migrations, new starters, and out-of-hours calls are the usual extras.
Onboarding, which is often a one-off charge at the start.
The contract term, and what leaving involves.
What you still handle yourself. Almost nobody outsources everything, and the leftovers have a cost.

The thing neither number captures

An in-house person knows your business. They know which machine is temperamental, which member of staff needs a gentler explanation, and what you were mid-way through in March. That knowledge is real value and it does not appear on any spreadsheet.

A provider brings the opposite advantage: a team rather than a person, which means cover, a range of specialisms, and no single point of failure. Also worth nothing on a spreadsheet, and worth a great deal at two in the morning.

You are not really choosing between two prices. You are choosing between depth about your business and breadth of capability, and which one matters more genuinely depends on the business.

A rough shape

For most small businesses, managed services costs less than a competent full-time hire, and the gap narrows as you grow. Somewhere between fifty and a hundred staff, an internal person starts to make obvious sense — and then the common answer becomes both: someone in-house for the day-to-day and the relationships, a provider behind them for infrastructure, monitoring, and cover.

That combination is not a compromise. For a lot of businesses it is simply the right structure, and it arrives sooner than people expect.

Where we sit

We publish our prices, which is the least a provider can do. Web Hosting is ten dollars a month, Managed Cloud starts at fifty, and Managed AWS is enterprise-tier at five thousand and up. You can see what each rung includes before you talk to anybody.

We would also rather you did this sum honestly than took our word for it. If the arithmetic says hire someone, hire someone. We would prefer to be the right answer to a real question than the default answer to a vague one.

Working through the numbers and want a second opinion? Ask Faber, or hit the chat and talk to a person. Tell us your size and what is breaking, and we will tell you straight what we think you need — including if that is not us.