Oursource or in-house: When to engage an MSP?

At some point, every IT leader faces the same fundamental question: What should we handle ourselves, and what should we outsource? Deciding whether to use a managed services provider (MSP) or keep it in-house is never as simple as it initially looks on paper, though.

You can’t just compare an MSP’s monthly fee to what you’d pay a full-time employee. The real calculation involves hidden costs, capability gaps, and control trade-offs that’ll either save your sanity or completely mess up your IT strategy.

Not surprisingly, most teams don’t go fully in-house or completely outsourced. The smart money’s on strategically blending both.

The real cost equation

According to the 2025 State of IT Report, 27% of IT leaders expect to outsource tasks or services this year. If you’re among them, you’re probably trying to figure out the cost-benefit analysis of picking an MSP versus staying in-house. It’s tempting to oversimplify the math in these cases. You’ll see an MSP charging $15,000 per month for help desk services and think, “I could hire someone for $60,000 a year and save money.” Sounds reasonable on the face of it.

Most successful strategies combine internal and external resources instead of picking just one. The trick is establishing clear boundaries and ownership responsibilities before you start, not after everything goes sideways.

Dig deeper, and you’ll find the reality is more nuanced. That $60,000 salary immediately jumps to $80,000+ once you add benefits, taxes, and overhead. Throw in training costs, software licenses, equipment, and the time you’ll spend managing your new employee, and you’re easily hitting $100,000 annually.

Good IT people have options. Keeping them means providing competitive salaries, professional development, and actual career growth opportunities. MSPs already handle all this recruitment complexity, plus training, certifications, and knowledge transfer.

If your internal help desk person gives two weeks’ notice on a Friday afternoon, you’re suddenly handling support tickets yourself while scrambling to find a replacement. With an MSP, staff turnover becomes their problem, not yours. You can stay on track with your mission-critical projects and manage your IT budget more effectively in an era of shifting tariffs, among other things.

Although MSPs can make your life easier, they aren’t nonprofits. They charge premium rates because they need to make money. If you’ve got consistent workloads and can retain quality IT staff, internal teams often deliver better long-term value. Just be clear-eyed about what the internal approach really costs before you decide one way or the other.

Where in-house makes sense

Some IT roles just belong inside your organization, period. Core business systems that tightly integrate with your operations need people who actually understand your processes and can immediately respond when things break. You can’t outsource institutional knowledge. (This goes double if you’re in a niche sector that the average MSP doesn’t know well. When I was a nonprofit IT director, it was challenging to find MSPs that truly understood nonprofits’ unique processes and priorities.)

Do you have specialized systems? If so, definitely keep them internal. If you’re running proprietary software or heavily customized implementations, you’ll have trouble finding an MSP that can match your in-house team’s expertise. MSPs excel at standardized services, but they can’t economically maintain deep expertise in every niche technology stack.

Control and speed matter, too. When there’s a major disruption and seconds count, you need someone who can immediately access the systems involved. Your internal staff also understands your business priorities and can make judgment calls that align with what actually matters to your company, not just what’s in the SLA.

If your company supports remote and hybrid work, you’ve got additional considerations. Your “internal” team might be working from their kitchen table anyway, which reduces some traditional advantages. But they’re still your people, aligned with your goals, and available when you need them most.

Consider your cloud infrastructure while you’re at it. Many companies successfully outsource routine cloud management, but if you’re designing complex multi-cloud architectures or dealing with specific compliance requirements, you probably need internal cloud architects who understand the business context behind every technical decision.

Where MSPs excel

MSPs really shine where they can leverage economies of scale and specialized expertise. Help desk services are the classic example—routine support tasks that benefit from standardized processes and actual 24/7 coverage. Most small IT teams can’t economically provide round-the-clock support, especially if they’re supporting remote workers scattered across multiple time zones.

Cloud services management now dominates the MSP world. Managing Azure, AWS, or Google Cloud properly requires specialized skills that most companies only occasionally need. MSPs can provide certified cloud architects and engineers without forcing you to maintain these expensive skill sets in-house.

AI and automation tools are rapidly reshaping what MSPs offer. Many now provide AI-powered monitoring and automated remediation that would seriously challenge small IT teams to implement and maintain. MSPs are investing in tools and training that individual organizations simply can’t justify.

MSPs can help with security and business continuity, too. Whether it’s security operations centers, threat monitoring, incident response, backup, or disaster recovery, these functions require specialized expertise plus 24/7 coverage. MSPs naturally combine redundant infrastructure and economies of scale while staying current with evolving threats and recovery techniques.

The hybrid reality

Most successful strategies combine internal and external resources instead of picking just one. The trick is establishing clear boundaries and ownership responsibilities before you start, not after everything goes sideways.

Determine what to keep in-house based on business criticality, response time requirements, and specialized knowledge needs. Hold onto functions that directly impact core operations or require deep institutional understanding. Everything else becomes fair game for outsourcing evaluation.

Communication becomes critical in hybrid setups—more so than you might assume. Internal and external teams must effectively coordinate with each other, especially during incidents that cross organizational boundaries. Establish clear escalation paths and make sure both teams understand their roles during different scenarios.

Oversight is important, but don’t micromanage your MSP relationships, either. You’ll completely kill the outsourcing value if you spend significant internal resources managing external providers. With this in mind, focus on outcomes and service levels, not dictating exactly how they do their jobs.

Your decision framework

Evaluate any IT function using these four questions:

Cost: What do internal delivery and outsourcing actually cost, including all the hidden expenses and opportunity costs?

Capability: Do you currently have (or can you realistically build) the expertise needed to effectively deliver this function?

Control: How much direct oversight and immediate responsiveness does this function actually require?

Criticality: How directly does this function impact core business operations and competitive advantage?

Functions that cost significantly more to deliver internally, require specialized capabilities you don’t have, don’t need immediate control, and don’t support business-critical processes make excellent MSP candidates. Functions you can cost-effectively deliver, leverage existing internal capabilities, require tight control, or directly support critical business processes should stay in-house.

Your next move

The MSP-versus-internal debate isn’t going anywhere, but the landscape keeps evolving. What worked five years ago probably won’t work five years from now. Cloud services will become increasingly sophisticated, AI will automate more functions, and the talent market will keep shifting.

If you’re not sure where to begin, look for the low-hanging fruit. Start with one function that’s clearly draining resources or causing headaches. Test your decision framework on it. If outsourcing makes sense, try it with a short-term contract first. If keeping it internal makes sense, invest in making that team excellent at what they do.

The goal isn’t finding the perfect formula—it’s building an IT team that can adapt as your business grows and technology changes. Sometimes that means bringing things back in-house. Sometimes it means outsourcing more. Most of the time, it means getting really good at managing both.