Catch Advisors
IT Strategy

MSP vs In-House IT: How to Decide What Your Business Needs

The MSP versus in-house IT debate is one of the most common questions we hear from business leaders. The answer is rarely all-or-nothing. Most organizations benefit from some combination of internal resources and external expertise. The key is knowing which functions to keep in-house and which to outsource.

1. The Real Cost of In-House IT

When evaluating the cost of an internal IT team, most organizations undercount. The true cost includes:

  • Salary and benefits for IT staff (the average IT manager salary in the US exceeds $100,000 before benefits)
  • Training and certifications to keep skills current across networking, security, cloud, and communications
  • Tools and platforms for monitoring, ticketing, remote management, backup, and security
  • Coverage gaps since a single IT person cannot provide 24/7 coverage, and vacations and sick days create vulnerabilities
  • Recruiting costs when IT staff turnover occurs (the average tenure for IT professionals is 2-3 years)

For organizations with fewer than 100 employees, a fully staffed IT department with adequate coverage across all technology disciplines is difficult to justify financially.

2. The Real Cost of an MSP

MSP pricing typically falls into one of three models:

  • Per-user pricing ($100-$250/user/month) covering help desk, monitoring, patching, backup, and basic security
  • Per-device pricing ($10-$50/device/month) covering management of specific endpoints, servers, or network devices
  • Tiered bundles that package different service levels (basic monitoring, standard management, premium management with security)

The total cost is predictable, which is an advantage for budgeting, but the value depends entirely on what the MSP actually delivers versus what the contract promises.

3. When an MSP Makes Sense

An MSP is typically the right choice when:

  • You have fewer than 200 employees and cannot justify the cost of a multi-person IT team with diverse specializations
  • You need 24/7 coverage that a small internal team cannot provide
  • Security is a concern and you need SOC monitoring, EDR management, and vulnerability scanning that require dedicated security expertise
  • You want predictable costs rather than the variability of hiring, training, and retaining IT staff
  • Your IT needs are standard (Microsoft 365, networking, endpoint management, backup) rather than highly customized

4. When In-House IT Makes Sense

Building an internal team is typically the right choice when:

  • You have 200+ employees and the volume of IT work justifies dedicated staff
  • Technology is core to your business and you need people who deeply understand your specific systems, workflows, and industry
  • You have custom applications or proprietary systems that require specialized knowledge an MSP cannot provide
  • Response time is critical and you need someone on-site who can address issues immediately
  • Regulatory requirements demand that certain IT functions remain under direct organizational control

5. The Hybrid Approach

The most effective approach for many organizations is a hybrid model:

  • Keep a small internal team (IT manager plus 1-2 staff) who understand the business, manage vendor relationships, and handle day-to-day issues
  • Outsource specialized functions like security monitoring (SOC/MDR), backup and disaster recovery, network management, and after-hours support to an MSP
  • Use an IT advisor to evaluate MSPs, negotiate contracts, and ensure accountability

This gives you the business context and responsiveness of internal IT with the specialized expertise and 24/7 coverage of an MSP.

6. How to Evaluate an MSP

If you decide to work with an MSP, here is what to look for:

Ask for evidence, not promises:

  • Request sample monthly reports showing patch compliance, ticket resolution times, and security scan results
  • Ask for references from clients in your industry and of similar size
  • Verify their security certifications (SOC 2, ISO 27001) and what tools they actually use

Understand the contract:

  • What is the contract length and what are the termination terms?
  • What is included versus what costs extra?
  • What are the SLA commitments for response time and resolution time?
  • Who owns your data and credentials if you leave?

Watch for red flags:

  • Long-term contracts (3+ years) with steep early termination fees
  • Vague SLAs without measurable commitments
  • Resistance to sharing admin credentials or documentation
  • No proactive reporting or quarterly business reviews

7. What We See Go Wrong

The most common MSP failures we encounter when clients come to us for help:

  • Neglected patching and updates where the MSP collects monthly fees but does not maintain systems (we have documented cases of firewalls unpatched for 9+ months)
  • No real monitoring where “24/7 monitoring” means automated alerts that nobody actually reviews
  • Vendor lock-in where the MSP controls all admin credentials and makes it difficult to switch providers
  • Scope creep charges where basic tasks that should be included generate additional invoices

These failures are preventable with proper MSP evaluation, contract negotiation, and ongoing accountability.

Making the Right Decision

Whether you choose an MSP, build an internal team, or adopt a hybrid approach, the decision should be based on a clear understanding of your technology requirements, budget, and risk tolerance. We help organizations evaluate their options, select and vet MSPs, negotiate contracts, and establish accountability frameworks that ensure they get what they pay for.

Not sure if your MSP is delivering? Schedule a free assessment and we will audit your current IT management and give you an honest evaluation.