The decision in one line
For businesses under about 75 employees, an MSP is almost always the right call. Between 75 and 150 employees, the math gets closer, and the answer is usually co-managed (in-house IT person plus an MSP for the layers they can't realistically cover alone). Above 150–200, you have enough scale to justify a real internal IT team — though most still keep an MSP relationship for security operations and after-hours.
The fully-loaded cost of one IT person
Owners often anchor on the salary number, which is misleading. The real cost of an in-house IT hire is:
| Line | Range |
|---|---|
| Salary (mid-level IT generalist, 2026) | $60,000–$95,000 |
| Benefits (healthcare, retirement, FICA, etc.) | 25–30% of salary |
| Tooling (RMM, EDR, ticketing, security stack) | $5,000–$15,000/yr |
| Training and certification | $2,000–$5,000/yr |
| PTO coverage (vacation, sick, parental) | 2–4 weeks/yr uncovered or covered ad hoc |
| All-in annual cost | $90,000–$150,000/yr |
And one person doesn't cover 24/7. If your network goes down at 2 AM, your in-house person is asleep. If they're at the dentist, the help desk is closed. If they leave, the institutional knowledge leaves with them.
What an MSP includes at the same price point
For a 25-person professional-services firm, the same $90,000–$150,000 annual budget is dramatically more than the MSP cost. A reference example:
- Managed Endpoint on 25 devices × $79/device/month × 12 = $23,700
- Managed Inbox on 25 mailboxes × $20/mailbox/month × 12 = $6,000
- Managed Site × 1 location × $349/month × 12 = $4,188
- Recurring MSP total: ~$33,888/year
And the MSP brings: 24/7 SOC monitoring, EDR with response runbook, written incident-response plan, BAA, annual risk assessment, restore-tested backups, dedicated technical account advisor, after-hours emergency line, depth of bench (the person who specializes in M365 isn't the same person who specializes in Ubiquiti), and continuity (the relationship survives any individual leaving).
Where in-house wins
In-house IT has genuine advantages:
- Institutional knowledge. The person who knows your business has been there for years. The MSP technician picking up the ticket sometimes hasn't.
- Custom LOB software. If your business runs internally-developed or heavily-customized software, an in-house person can own that in a way an MSP can't.
- Real-time response on small things. "Hey can you come look at this?" takes 30 seconds in-house. It's an MSP ticket otherwise.
- Project leadership. The CRM rollout, the ERP migration, the new building — in-house IT can own the project in a way an MSP often can't.
- Specific compliance. Some regulated environments effectively require dedicated internal IT (large healthcare systems, defense contractors with CMMC requirements).
Where MSPs win
- 24/7 coverage. Real after-hours. Real holidays.
- Depth of bench. M365 specialist, network specialist, security specialist, backup specialist — the SMB MSP has all of them; one in-house person can't.
- Security operations. EDR + SOC + threat intelligence + tooling at a scale a single hire can't replicate.
- Vendor relationships. The MSP buys $X million/year of Microsoft, Datto, Ubiquiti. The escalation path is real.
- Documentation discipline. The MSP's whole business is making sure the next technician can pick up where the last one left off.
- Continuity. Individuals leave; MSP relationships persist.
The hybrid: co-managed IT
For mid-sized businesses (~75–300 employees) the answer is rarely either / or. It's both. The internal IT person owns the relationships, the LOB software, and the day-to-day; the MSP owns the layers they realistically can't (24/7 SOC, EDR, patching at scale, backup with restore-testing, after-hours response, specialist deep-dives). See co-managed IT vs. fully managed for the operational detail.
The honest decision matrix
| You are... | Recommended model |
|---|---|
| Under 25 employees | MSP, fully managed |
| 25–75 employees, no IT person today | MSP, fully managed |
| 25–75 employees, one IT person today doing well | Co-managed (keep them, add MSP for security ops + after-hours) |
| 75–150 employees | Co-managed |
| 150–300 employees | Co-managed or in-house team with MSP security ops |
| 300+ employees | In-house team; MSP for specialty layers only |