There is no employee headcount at which a growing business is required to hire an in-house IT person. That idea is common, but it is not accurate. Internal IT, outsourced IT, and co-managed IT are operating models. They are not company-size milestones. The right model depends on six factors that have nothing to do with your org chart size.
If you are a Phoenix-area business with 5 to 150 employees trying to decide which direction makes sense, this guide walks through each factor so you can compare the complete IT function, not just a salary figure against a monthly invoice.
Why the Salary-vs.-Invoice Comparison Misses the Point
The instinct to compare the cost of a Managed Service Provider (MSP) to the salary of one IT employee is understandable, but it produces a misleading number. A single employee is a single person with specific skills, a set number of working hours, vacation days, and no coverage when they are sick or leave the company. An MSP engagement represents a team, a toolset, a documented process, and defined operational responsibilities that continue regardless of individual personnel changes.
The real comparison is: what does your organization get from each model across all six dimensions of an IT function?
The Six-Factor IT Operating Model Framework
Run your current situation, or your planned situation, through each of these six factors. Where you land across all six will tell you more than any salary comparison ever will.
Factor 1: Tools
Running a modern IT environment requires more than a single technician with a laptop. It requires remote monitoring and management software, endpoint detection and response, patch management, backup and recovery, identity protection, email security, log aggregation, and more. Each of these tools carries a cost, requires configuration, and must be maintained.
A single internal hire typically brings access to what the company already has, or what they can justify purchasing on their own. An MSP spreads its tooling costs across many clients, which means the per-client cost of maintaining a deep security and monitoring stack is far lower than what a small business could build and sustain independently.
The practical question to ask: does your current or planned IT setup include all the tools required to protect your environment and keep it running, or are there gaps that exist simply because acquiring and managing those tools individually would not be practical?
Factor 2: Expertise
No single IT generalist is strong in every area simultaneously. Networking, cloud administration, endpoint security, identity management, compliance requirements, and helpdesk support are each their own discipline. A generalist hire covers some of these well and others less so, and that coverage profile does not change quickly.
An MSP team brings multiple engineers and technicians with different specializations. When a firewall configuration problem appears alongside an Active Directory issue on the same afternoon, a team can handle both. A single employee cannot be in two places or two disciplines at once.
The practical question: what happens when your IT person encounters a problem outside their strongest area? Is there a plan, or does the answer become "we are waiting on them to figure it out"?
Factor 3: Verification
This factor is one of the least-discussed and most important. When your IT function is a single internal employee, who verifies that the work is being done correctly? Who checks that backups are actually completing? Who audits security configurations? Who confirms that patches deployed correctly?
In a well-structured managed services engagement, verification is built into the recurring process. Business Technology Reviews (BTRs), documented change records, monitoring dashboards, and ticketing systems create an ongoing audit trail. The client can see what is happening, and the provider's own internal processes require that work be logged and reviewed.
An internal hire, especially a solo one, is largely self-verifying. That works when the person is skilled, thorough, and honest, and it becomes a significant risk when any of those conditions are not met, or simply when oversight is thin.
The practical question: how does your organization verify today that your IT function is performing correctly, not just that things seem to be working?
Factor 4: Coverage and Capacity
IT problems do not follow business hours. Servers go down on Saturday. Ransomware does not wait for Monday morning. A single internal hire is typically a business-hours resource. After-hours coverage requires either significant additional compensation, on-call arrangements, or accepting that certain problems will wait.
A properly structured managed services program includes business-hours helpdesk support, 24/7/365 monitoring, and after-hours incident response. Those are three distinct things. Monitoring and incident response run continuously. Live helpdesk staffing is business-hours. Both are part of the engagement.
Capacity matters beyond coverage hours, too. A single internal hire has finite bandwidth. When a major project, a migration, a compliance initiative, and routine helpdesk tickets all arrive at the same time, something gets delayed. A team scales capacity to the demand.
The practical question: what is your plan when your IT person is sick, on vacation, handling a major project, or has simply reached their limit for the week?
Factor 5: Security and Risk Responsibility
Security is not a product you buy once. It is an ongoing operational responsibility. Someone must configure it, monitor it, respond to alerts, patch vulnerabilities, review logs, and update policies as the threat landscape changes. That work has to be assigned to someone with the skills and the time to actually do it.
A generalist internal hire may have solid foundational security knowledge, but maintaining a layered security posture across endpoint detection and response, identity threat detection, email protection, application controls, backup verification, and security awareness training is a full-time discipline on its own, before accounting for any helpdesk work they also carry.
In a managed services engagement, operational security responsibility is explicit. The scope defines what is included, what is excluded, and who owns each piece. If a responsibility is not in scope, it does not disappear. It either falls back to the client, gets handled as a separate project, or it simply does not get done consistently. Either way, the scope should be visible so there are no assumptions.
The practical question: does your current IT function have a documented, operating security program, or does security largely mean "we have antivirus and we hope for the best"?
Factor 6: Continuity and Accountability
A single internal IT hire is a single point of failure. When that person leaves, retires, becomes unavailable, or is recruited away, the institutional knowledge, the configurations, the vendor contacts, and the documented processes often leave with them. Rebuilding takes time and money, and the gap in between is a real operational and security risk.
Accountability in a managed services engagement is structural rather than personal. Documented processes, ticketing records, configuration management, and periodic Business Technology Reviews create continuity that does not depend on any single individual staying with the organization. If a specific technician rotates off an account, the documentation and process remain.
The practical question: if your IT person left tomorrow, how long would it take to restore full function, and how much would that cost?
What About Co-Managed IT?
For businesses that already have internal IT staff, co-managed IT is a third model worth understanding. Rather than replacing internal staff, an MSP works alongside them. The internal person or team handles what they are best suited to. The MSP provides tooling, after-hours coverage, escalation support, security operations, and the depth of a larger team behind the scenes.
Co-managed arrangements work particularly well when an internal IT person is strong technically but stretched thin, when an organization is growing faster than its IT staffing can scale, or when a compliance requirement introduces security disciplines that are outside the current team's core expertise.
How Pricing Actually Works: Comparing the Full Cost
When comparing models, the cost of internal IT is not just a salary. It includes payroll taxes, benefits, recruiting and onboarding, training, tools the employee needs to do the job, and the cost of gaps in coverage and expertise. For many businesses in the 5-to-50-employee range, the all-in cost of a competent internal IT hire, including tooling, exceeds what a well-scoped managed services program costs, while still delivering less coverage and less depth.
For context, Onsite Technical Services' Standard Managed Services runs $150-$200 per user per month, all-in for the managed labor and security stack. Network management (firewall, switches, wireless) is always a separate line item, not bundled into the per-user rate. Microsoft 365 licensing is also always its own separate line, billed on Microsoft's terms. These are planning figures, not a guaranteed quote for your specific environment.
For a 30-user business, that puts managed services in the range of $4,500-$6,000 per month as a planning benchmark, before licensing and network management. Compare that to the fully loaded cost of a single competent internal hire plus the tooling that hire would need to do the job properly, and the gap is often smaller than it first appears, while the managed services model typically delivers broader coverage, deeper expertise, and built-in continuity.
The comparison changes at scale. At 75 or more users, internal IT begins to make more operational sense as a complement to managed services rather than a replacement for it, and a co-managed model often becomes the right answer. There is still no universal threshold. It depends on the six factors above.
Who Internal IT Is Right For
- Organizations with 75 or more users where IT is a daily-volume support function that benefits from dedicated on-site presence.
- Businesses with specialized, line-of-business applications that require deep institutional knowledge and a dedicated internal resource to manage.
- Organizations where an internal IT director or manager is coordinating strategy, vendor relationships, and compliance, while an MSP handles day-to-day operations and security (the co-managed model).
- Companies with sufficient budget to hire both the right people and the right tooling, and to maintain both over time.
Who Outsourced IT Is Right For
- Businesses with 5 to 75 employees where a dedicated internal hire would be underutilized some weeks and overwhelmed in others.
- Organizations that need a consistent security posture but cannot justify a dedicated internal security role.
- Businesses in regulated industries (healthcare, financial services, manufacturing with government contracts) where compliance-driven security requirements exceed what a generalist hire can manage alone.
- Any organization where continuity risk from a single-person IT function is a material concern.
A Practical Decision Checklist
| Question | Points toward Internal IT | Points toward Outsourced IT |
| How many users need IT support? | 75 or more, with daily volume | 5 to 75, variable demand |
| Do you need after-hours incident response? | Only if on-call is budgeted and structured | Built into a managed services program |
| Who verifies IT work is being done correctly? | You have a defined oversight process | MSP provides documented, recurring verification |
| What happens when your IT person leaves? | You have a documented transition plan | Process continuity is structural, not personal |
| Is your security posture documented and actively managed? | Yes, with dedicated security resources | MSP carries the operational security responsibility |
| Do you have compliance requirements (HIPAA, GLBA, CMMC)? | Only if internal team has the expertise | Regulated-tier managed services address this directly |
Frequently Asked Questions
Is there a specific employee count at which a business should hire internal IT?
No. There is no universal threshold. Internal IT, outsourced IT, and co-managed IT are operating models, not company-size milestones. The right model depends on your volume of IT demand, your security requirements, your budget for tooling and personnel, and your tolerance for continuity risk, not a headcount number.
What is co-managed IT and when does it make sense?
Co-managed IT is a model where an internal IT person or team works alongside an MSP. The internal staff handles what they are best suited to, and the MSP provides tooling, after-hours coverage, escalation support, and security operations depth. It works well when an internal person is strong but stretched thin, when a company is growing faster than its IT staff can scale, or when compliance requirements introduce disciplines outside the current team's expertise.
How do I compare the true cost of internal IT to outsourced IT?
Do not compare only a salary to an MSP invoice. The full cost of an internal hire includes payroll taxes, benefits, recruiting, training, and the tools that person needs to do the job. An MSP engagement includes team depth, tooling, and coverage that a single hire cannot replicate. Compare the complete IT function delivered by each model, not just the top-line dollar figure.
What does outsourced IT typically cost for a small business in Phoenix?
As a planning benchmark, Onsite Technical Services' Standard Managed Services runs $150-$200 per user per month, all-in for managed labor and the security stack. Network management and Microsoft 365 licensing are always separate line items. For a 30-user business, that is roughly $4,500-$6,000 per month in managed services before those additional costs. This is planning guidance, not a guaranteed quote.
What happens to my IT operations if my managed service provider changes staff?
In a well-structured managed services engagement, continuity is structural rather than personal. Documented processes, ticketing records, configuration management, and periodic Business Technology Reviews mean the institutional knowledge lives in the engagement, not in a single technician. If a specific person rotates off your account, the documentation and process remain.
