I run a managed service provider, so treat what follows with appropriate suspicion. But the question comes up often enough, usually from businesses around twenty-five to eighty staff, that it’s worth answering honestly rather than defensively.
There is a point at which hiring internally beats outsourcing. Most MSPs won’t tell you where it is.
What an MSP is genuinely better at
Breadth and continuity. One internal person cannot be good at networking, Microsoft 365, security, telephony, procurement and vendor management simultaneously, and they cannot cover annual leave.
An MSP also amortises tooling you wouldn’t buy alone: monitoring, patch management, endpoint protection, documentation platforms, a service desk system. And crucially, it doesn’t leave. When an internal IT person resigns, a lot of undocumented knowledge walks out with them, and I’ve been called in to rebuild that understanding more than once.
What internal IT is genuinely better at
Context and presence. Someone in the building learns how your business actually works, notices problems before they’re reported, and can be pulled into a conversation without a ticket.
They’re also better where your systems are unusual. If your business runs on a bespoke application, a specialised production system or an industry platform with genuine depth, the learning curve is steep enough that you want it walked once by an employee rather than repeatedly by whoever picks up the ticket.
Signals you’ve outgrown a pure MSP relationship
- Your ticket volume is steady and predictable. The economics of outsourcing work best when demand is lumpy. Consistent load is cheaper to employ.
- Most tickets are about systems specific to your industry, not about email, laptops and passwords.
- You’re regularly paying for project work that a competent internal person would absorb.
- You have someone internally doing IT already, unofficially, alongside their real job. This is more common than most owners realise, and it’s the most expensive arrangement of all because you’re paying twice and getting neither properly.
Signals you’re not ready
- You’d be hiring one person. One person is a single point of failure who cannot take leave, cannot be sick, and has no one to ask when they’re unsure. The first internal hire is genuinely harder than the second.
- Nobody in the business can assess IT competence. If you can’t evaluate the work, you can’t tell a strong hire from a confident one, and you won’t find out for a year.
- You want it to be cheaper. Salary plus on-costs plus tooling plus recruitment rarely undercuts a well-scoped managed service at that size. Hire internally for responsiveness and context, not to save money.
The arrangement that usually wins
For most businesses in that awkward middle band, the answer isn’t either. It’s an internal person who owns context, relationships and the systems specific to your business, backed by an external team for depth, escalation, out-of-hours cover and the tooling.
That’s co-managed IT, and it works for a straightforward reason: it puts each party where it has an actual advantage. Your person isn’t expected to be an expert in eight disciplines. The provider isn’t expected to understand a business they visit fortnightly.
It fails in one predictable way, which is worth naming. If the boundary is vague, everything ambiguous falls into the gap and each side assumes the other has it. Write down who owns what, including the awkward middle items like licence purchasing and vendor escalation, before you start rather than after the first thing gets dropped.
How to decide
Look at three months of tickets and sort them into two piles: things any competent generalist could resolve, and things requiring either deep specialisation or deep knowledge of your business.
If the first pile dominates, you’re paying a premium for capability you rarely use, and internal or co-managed will serve you better. If the second pile dominates, keep the specialists.
And ask your current provider directly what they think. The answer tells you a lot. A provider who argues you should keep everything with them regardless of what the tickets say is optimising for their revenue rather than your outcome, and you’ve learned something useful either way.