In-House IT Department vs. Managed IT Support [Guide]

The relationship between business and information technology (IT) isn’t just critical: the two have become nearly indistinguishable. In the years since the term “information technology” first appeared in a 1958 issue of the Harvard Business Review, IT has evolved from a fringe consideration to an inseparable part of everyday business practices. Businesses succeed and fail based on their ability (and willingness) to embrace information technology (IT) as an integral part of their short- and long-term strategy.

Choosing the best way to nurture this relationship can be tricky. Each business is unique, and there is no “one-size-fits-all” model. Sometimes there’s not even a reliable “one-size-fits-most” option. Finding the right configuration to support your business’s IT needs can be a process of trial and error.

But it doesn’t have to be difficult.

For a business owner with a proactive outlook and some basic information, the process becomes much simpler. In this article, we’ll briefly introduce the in-house IT department model and managed IT support, cover the pros and cons of each, and discuss a few additional considerations.

The basics of an in-house IT department & managed IT support

Pros & Cons: In-house IT department & managed IT support

A third option: co-managed IT support

Conclusion: Next Steps

The basics of an in-house IT department & managed IT support

Managing the financial concerns of a small business is tough enough. According to a recent survey, the top challenges facing small businesses are hiring new employees (50%), increasing profit (46%), managing employee healthcare (44%), growing revenue (39%), and managing cash flow (34%). Mismanaging your IT support can exacerbate these financial concerns and quickly introduce new ones.

Mismanaged IT can have more devastating consequences, as well. Cybercrime is projected to cost the world $10.5 trillion annually by 2025. Even more concerning, 78% of IT security leaders believe their organizations do not have sufficient protections in place against cyberattacks.

Having the right IT support team is an absolute must when it comes to the security, efficiency, and reliability of a business’s IT operations.

IT support comes in two primary forms.

In-House IT Department

An in-house IT department refers to one or more IT professionals who work for a business as traditional, full-time employees. The term “in-house” isn’t literal. They can work remotely, but the common denominator is that an in-house IT department team member is part of your permanent staff. An in-house IT department will handle all of your business’s IT needs and will sometimes be referred to as an “internal” or “on-site” IT support team.

In reality, most companies begin with some form of in-house IT department. As they do with so many other roles, business owners themselves often act as their own de facto IT department. In the beginning, the goal is often to meet initial demand and power daily processes. Some of the basic IT requirements that companies start with include equipment and software, wiring, network configuration and management, antivirus software, and data storage.

Over time, these initial demands evolve. Some of the more advanced requirements a business will develop include data security services, firewall monitoring, backup management, more advanced network security services, system optimization, and cloud computing.

Managed IT Support

Managed IT Support refers to the process of going outside the traditional, in-house hiring and staffing process to facilitate your IT support requirements, often by procuring the services of a Managed Service Provider (MSP).

Organizations of all sizes outsource the management of their IT infrastructure to MSPs. They do so for a variety of reasons, not least of which involves cost-effectiveness.

It’s up to business owners and decision-makers to take stock of their capabilities, requirements, and expectations. The decision comes down to deciding what makes the most sense for your business.

The best place to start is with some basic pros and cons of each model.

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Pros & Cons: In-house IT department & managed IT support

A more nuanced understanding of the benefits and drawbacks of each setup will go a long way as you evaluate which options best serve you and your customers.

In-house IT Department: Pros

Sense of Control: Having at least part of your IT staff on-premises can provide a greater sense of control over day-to-day operations. For some business owners and decision-makers, a “just-down-the-hall” relationship can be important.

Familiarity with Your IT: A full-time, on-site IT team member can develop a direct working knowledge of your business, setup, systems, and personnel.

Reliable Response Times: An on-site IT department is often seen as having the ability to respond more rapidly to problems than an off-site team—although this availability can be restricted to working hours and subject to sick and vacation days.

Sense of Commitment: Hiring in-house employees can create a sense of long-term commitment by both parties.

In-House IT Department: Cons

Prohibitive Cost: Having an on-site presence can be prohibitively expensive. Salary makes up just part of the overhead invested in a full-time employee. There are a variety of miscellaneous expenses to consider, including onboarding, initial training, ongoing training, certifications, supplies, hardware and equipment, vacation and sick days, retirement plans, taxes, insurance, and legal liabilities.

Security Vulnerabilities: With in-house IT, your security posture can become stagnant and out-of-date quickly. There may not be enough hours in the day to stay on top of cybersecurity. Furthermore, your security is often dependent on a key person’s integrity and continued loyalty to the company.

Single Point of Failure: Although an on-site IT team member can develop an intimate knowledge of your processes, this can create a single point of failure. This means that the successful operation of your IT infrastructure depends on one individual and hangs in the balance if they leave their position or are otherwise unable to perform their duties. This also leaves your business vulnerable in the event of negligent or even malicious behavior.

Availability Issues: Although having a team “just down the hall” can be convenient, any potential boost in response times can be limited to working hours and is subject to sick leave and vacation. Proximity doesn’t necessarily lead to increased production or faster response times, and this arrangement is prone to the same efficiency problems as any other.

Lack of Flexibility: An in-house team has finite resources and time, so increasing demand can stretch a team thin and create overflow, causing key tasks to fall by the wayside.

High Turnover: The Bureau of Labor Statistics reports that the turnover rate nationwide is 57.3%, and voluntary turnover accounts for 25% of that total. While the idea of a long-term commitment between you and your IT team member is an appealing one, this relationship is subject to change—and it often does.

Talent Pool Limitations: Building an in-house IT team limits you to the available, actively applying personnel in your immediate area. This process can take time and will need to be repeated as turnover affects your team.

Big Picture Shortcomings: Day-to-day responsibilities can interfere with long-term vision and planning. It can be difficult to gain a clear, objective understanding of potential opportunities for dynamic, long-term growth.

Let's take a look at the potential cons of outsourcing your IT support to an MSP:

Managed IT Support: Cons

Loss of Control: A perceived lack of hands-on control can be a concern. Not having an IT team in the other room might not be the most comfortable arrangement for all business owners and decision-makers, some of whom may desire direct oversight and face-to-face interaction.

Lack of Long-Term Commitment: It can feel like there is a less permanent relationship between you and an MSP, as opposed to the long-term commitment implied by on-site employment.

Unexpected Costs: Some MSPs rely on hidden fees to market a “lower price.” After securing a commitment, they’ll boost their revenue with miscellaneous charges for equipment and labor, as well as unnecessary “upgrades” that carry healthy profit margins for an unscrupulous MSP.

Availability Concerns: With some MSPs, a larger client’s needs may take priority over your business’s. It’s a common concern for small to medium-sized business owners, and in some cases it’s valid. It depends on the MSP’s size, structure, resources, and core values.

While some of the drawbacks to outsourcing have more to do with perception than reality, others are very real concerns that have everything to do with the quality of the MSP you choose to work with.

Managed IT Support: Pros

There is tremendous upside to outsourcing some or all of your IT support to a high-quality MSP.

Cost Savings: MSPs dramatically reduce overhead and provide an economy of scale that’s unobtainable through traditional in-house hiring. The advanced resources of an MSP allow small to medium-sized businesses access to the IT capabilities of a much larger corporation, leveling the playing field and creating a competitive advantage.

Enhanced Security Posture: The primary benefit of outsourcing to an MSP—besides budget—is the dramatic boost to your security profile. The FBI has reported that since the onset of COVID-19, we’ve seen a 300% increase in cybercrime. Hackers attack vulnerabilities at a near-constant rate: one study estimated that an attack occurs every 39 seconds, and a staggering 43% of cyberattacks target small businesses. A quality MSP has the state-of-the-art resources to identify existing threats and anticipate unforeseen dangers.

Clarity of Focus: Eliminating the headaches caused by IT problems, staffing issues, and budget constraints will free you up to focus on your core competencies and invest more time and resources into growing your business.

24/7 Service: An MSP isn’t subject to the availability restrictions (sick, vacation, after-hours calls) that hamper an in-house IT team. A good MSP will have procedures in place for after-hours and emergency issues, and they will respond with the same level of attention and urgency you’d receive during working hours.

Dynamic Expertise: A quality MSP is the versatile sum of many specialized parts—a dynamic collection of talent that works closely with a wide range of clients across multiple industries. An MSP can supply specialized and niche areas of expertise that would otherwise be impractical (and most likely impossible) to acquire through traditional in-house staffing.

Increased Flexibility: The versatility of an MSP’s business model allows you to scale your IT processes to the performance, trends, and changing needs of your business over time.

Next-Level Backup and Disaster Recovery: In the face of mounting cyberattacks ranging from ransomware to denial of service, a formal backup and disaster recovery plan is more important than ever. Having the state-of-the-art resources of a third-party team of experts makes you a much more formidable target for would-be attackers.

Faster Project Delivery: An MSP’s superior resources and experience can lead to faster turnaround times and more consistent results.

Invaluable Experience: The extensive collective experience of an MSP affords a small to medium-sized business access to more nuanced and focused security measures, provides insight into industry-specific developments and trends, and creates opportunities for long-term growth.

Lack of Long-term Commitment: One of the perceived downsides of outsourcing to an MSP is—in reality—one of the arrangement’s greatest strengths. The MSP model incentivizes a constant level of high-quality care. Whereas a salaried employee is subject to complacency and can easily stagnate, an MSP must consistently earn your business and reaffirm the trust you’ve placed in them.

Motivation: Investing in an MSP as a strategic partner who works with you can yield better results than relying on a team that works for you. An MSP has a vested interest in ensuring your security and procedures are cutting-edge.

If you’re set on a dedicated team, whether entirely in-house or entirely outsourced, then even a cursory analysis of the pros and cons of each will suggest that there is more upside to outsourcing your IT.

A dedicated team is the right fit for many small businesses. Consolidating your IT support into one team (again, whether this team is in-house or outsourced) can create a more centralized process and help streamline communication.

There is another approach, however, with great upside for small to medium-sized businesses tackling more nuanced IT requirements.

A Third Option: Co-Managed IT Support

For many small businesses, it makes more sense to outsource all IT operations to an MSP. But that doesn’t mean that in-house IT and outsourced IT are mutually exclusive. Co-managed IT support refers to the practice of outsourcing critical components of your IT infrastructure to an MSP.

Many companies are finding that outsourcing critical tasks like security, cloud operations, backup and data recovery, etc., can provide a valuable shot in the arm to their in-house IT. It allows them to focus on a narrower, more easily manageable scope of responsibility.

The arrangement is growing increasingly common—and for good reason. There is tremendous value in augmenting your existing IT team with the resources and know-how of a high-quality MSP.

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We're big believers in culture fit. Contact Tier 3 Technology Solutions for a commitment-free conversation about your business's IT Support needs.

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Conclusion: Next Steps

The “debate” between in-house IT and outsourced IT isn’t much of a “debate.” It’s better thought of as a choice. Unfortunately, there’s no hard-and-fast answer, and there’s no one-size-fits-all solution. You should build your IT support team according to your IT budget, needs, and expectations.

We’ve covered the basics of each model, the pros and cons of each, and a few points to consider throughout the process. The next step is reaching out to a reputable MSP for a consultation or free assessment of your IT.

Most MSPs will be happy to have a conversation with you about your IT needs, which can be a great resource when it comes to navigating what can seem like uneven terrain. Most MSPs also offer vCIO services, which can be an important consulting resource.

Each decision-maker must come to their own conclusion about which configuration best serves their business. Whether you’re keeping your IT in-house, outsourcing, or striking an efficient balance between the two, your success relies on your ongoing commitment to sustainable quality.