The salary line is where most MSP-vs-hire comparisons go wrong. A mid-level IT generalist averages about $75,000 in base salary in the US (BLS Occupational Employment and Wage Statistics, 2025). The true annual cost of that hire is $110,000-$150,000 once you load benefits, tooling, training, and turnover risk.
Against that, a managed service provider for a 25-person company costs $37,000-$60,000 per year at 2026 market rates of $125-$200 per user per month (ChannelPro Network pricing survey, 2026). This guide runs the full math, builds a break-even table by company size, and flags the costs both sides hide. To price your specific case, browse providers in our directory and request like-for-like quotes.
What does an in-house IT hire really cost?
Loaded cost runs 1.25x-1.4x base salary before you add tools. Here's the full stack for one mid-level generalist:
| Cost line | Annual amount | Notes |
|---|---|---|
| Base salary | $75,000 | BLS median for IT support specialists, mid-level (2025) |
| Benefits + payroll taxes (~31%) | $23,250 | BLS Employer Costs for Employee Compensation, 2025 |
| Recruiting (amortized) | $5,000-$7,500 | ~20% of salary per hire, 3-year average tenure |
| Training + certifications | $3,000-$5,000 | One conference + cert path per year |
| Tooling (RMM, EDR, backup, PSA) | $8,000-$15,000 | MSPs amortize this across hundreds of clients |
| True annual cost | $114,000-$126,000 | Before management overhead |
Two structural problems come with the single hire. Coverage: one person works ~2,000 hours of the 8,760 in a year, takes PTO, and gets sick. Depth: nobody is expert in networking, security, cloud, and helpdesk at once.
Turnover makes it worse. IT staff turnover runs around 12-15% annually, among the highest of any corporate function (LinkedIn Workforce Report, 2024). When your one IT person quits, institutional knowledge walks out mid-project.
What does an MSP cost for the same coverage?
At 2026 rates, full-stack managed IT lands at $125-$200 per user per month. That buys helpdesk, patching, EDR, backup, vendor management, and usually 24/7 monitoring — a team, not a person.
| Company size | MSP annual cost (at $150/user/mo) | In-house equivalent | Cheaper option |
|---|---|---|---|
| 10 employees | $18,000 | $114K+ (1 hire) | MSP by ~$96K |
| 25 employees | $45,000 | $114K+ (1 hire) | MSP by ~$69K |
| 50 employees | $90,000 | $114K-$126K (1 hire, stretched) | MSP, with caveats |
| 75 employees | $135,000 | ~$240K (2 hires) | MSP by ~$105K |
| 100 employees | $180,000 | ~$240K-$280K (2-3 hires) | MSP or hybrid |
| 150 employees | $270,000 | ~$300K-$360K (3 hires) | Hybrid |
| 250 employees | $450,000 | ~$420K-$500K (4-5 hires + manager) | In-house core + co-managed |
The pattern: pure MSP dominates below 60-80 employees. Between 80 and 150, the lines cross depending on how IT-intensive your work is. Above 150, an internal core with co-managed MSP support usually wins — strategy and floor presence in-house, after-hours and specialty work outsourced.
Where is the break-even point?
Around 60-80 employees for most office-based businesses, for one reason: that's where one stretched internal hire stops being plausible and the comparison becomes "MSP vs two hires."
Three factors move the line:
- Device density. Manufacturing or clinical environments with 2x devices-per-user push MSP per-device bills up, moving break-even down toward 50 employees. The per-user vs per-device math matters here.
- Compliance load. HIPAA, CMMC, or SOC 2 favor MSPs longer — compliance specialists cost $130K+ to hire and most SMBs can't fill the role (CompTIA Workforce and Learning Trends, 2025).
- Custom software. If IT is product-adjacent (internal apps, dev environments), in-house pays off earlier because context-switching costs MSPs more than tickets.
What does each option cost you beyond money?
Hidden costs of the MSP route
Response time is shared. Even with a 1-hour P1 SLA, you're queued with other clients on a bad day — get the SLA with service credits in writing (benchmark response times here).
Onboarding takes 30-60 days. Offboarding has switching costs if documentation terms are weak.
Hidden costs of the in-house route
Coverage gaps: nights, weekends, PTO, and the 6-10 weeks a backfill takes. Single-point expertise: one generalist can't match a 24/7 SOC — and the median ransomware recovery cost for SMBs hit $1.5 million including downtime (Sophos State of Ransomware, 2025). Management time: someone has to direct, review, and retain the hire.
When does in-house IT clearly win?
Four situations justify the loaded cost early:
- Latency-critical floor support — warehouses, labs, and trading floors where a 4-hour remote SLA is useless
- Proprietary systems — custom software that takes months to learn
- IT as product — software companies where infrastructure is the business
- Scale — 150+ employees, where per-user MSP fees exceed a small internal team
Even then, most companies that size keep an MSP for after-hours SOC coverage and overflow. Pure in-house with no external security partner is increasingly rare — 89% of mid-size companies use some form of outsourced security service (Gartner Midsize Enterprise Survey, 2025).
How do you compare quotes fairly?
Normalize to total annual cost of ownership. For the MSP side: contract value + onboarding fee + estimated project hours at the quoted rate. For in-house: loaded salary + tooling + the cost of an external incident-response retainer, because one person can't be a SOC.
Then weigh coverage hours. $45K buys 2,000 hours of one person, or 8,760 hours of monitored coverage from a team. For most sub-100-employee companies, that's the decisive line.
Use our 15-point evaluation checklist to score the MSP bids you collect.
Frequently Asked Questions
How much does it cost to replace one IT employee with an MSP?
For a company small enough to run on one IT generalist (10-50 employees), an MSP typically costs $18,000-$90,000 per year at $125-$200 per user per month — versus $114,000-$126,000 loaded cost for the hire. Savings shrink as headcount grows, hitting break-even around 60-80 employees.
What's included in MSP pricing that an in-house hire doesn't cover?
24/7 monitoring, a multi-person skill bench (network, cloud, security, helpdesk), enterprise tooling (RMM, EDR, backup platforms worth $8K-$15K/year), and coverage continuity through vacations and resignations. The in-house hire offers physical presence and dedicated focus instead.
At what company size should I hire internal IT instead of an MSP?
Most office-based businesses cross at 60-80 employees, when ticket volume justifies a dedicated person on-site. The common move isn't a full switch — it's hiring one internal IT manager and shifting the MSP to a co-managed contract for after-hours coverage, security operations, and overflow.
Is an MSP cheaper than in-house IT for a 100-person company?
Usually yes on raw cost: roughly $180,000/year for an MSP versus $240,000-$280,000 for the 2-3 internal hires that headcount needs. But at 100 employees the better question is hybrid structure — an internal lead plus a co-managed MSP often outperforms either pure model on both cost and response time.
Does an in-house IT person improve security versus an MSP?
Generally no. One generalist can't replicate EDR tuning, 24/7 SOC monitoring, and incident response depth. With median SMB ransomware recovery costs at $1.5M (Sophos, 2025), the security argument favors MSPs or hybrid models for companies too small to staff a real security team of 3+.
Related Reading
- MSP vs In-House IT: When Each Makes Sense
- Co-Managed IT: When Hybrid Beats Full Outsourcing
- How Much Do Managed IT Services Cost in 2026?
Sources
- U.S. Bureau of Labor Statistics. "Occupational Employment and Wage Statistics: Computer User Support Specialists." 2025. https://www.bls.gov/oes/current/oes151232.htm
- U.S. Bureau of Labor Statistics. "Employer Costs for Employee Compensation." 2025. https://www.bls.gov/news.release/ecec.nr0.htm
- ChannelPro Network. "MSP Pricing Model Survey." 2026. https://www.channelpronetwork.com/2026/02/06/best-pricing-model/
- LinkedIn. "Workforce Report: Turnover by Function." 2024. https://www.linkedin.com/business/talent/blog/talent-strategy/industries-with-the-highest-turnover-rates
- CompTIA. "Workforce and Learning Trends." 2025. https://www.comptia.org/content/research/workforce-and-learning-trends
- Sophos. "The State of Ransomware." 2025. https://www.sophos.com/en-us/content/state-of-ransomware
- Gartner. "Midsize Enterprise Technology Survey." 2025. https://www.gartner.com/en/industries/midsize-enterprises
— The MSP Directory Team