The IT Dilemma Every Growing Business Faces
As your business grows, so do your technology needs. At some point, every small and medium-sized business owner faces a critical decision: should you hire an in-house IT team or partner with a managed IT service provider (MSP)? The answer isn't always straightforward, but understanding the true costs of each option will help you make an informed decision.
At TechBoss, we work with SMBs across Toronto who are navigating this exact decision. In this article, we'll break down the real costs, both obvious and hidden, of each approach so you can determine which model best fits your business.
The True Cost of In-House IT
Hiring an internal IT team might seem like the most straightforward approach, but the costs add up quickly when you consider everything involved.
Salary and Benefits
In Toronto, the average annual salary for an IT professional ranges significantly based on experience and specialization:
- Help desk technician: $45,000 to $60,000 per year
- Systems administrator: $65,000 to $90,000 per year
- Network engineer: $80,000 to $110,000 per year
- Cybersecurity specialist: $90,000 to $130,000 per year
- IT manager: $95,000 to $140,000 per year
On top of base salary, you need to factor in benefits, which typically add 20% to 30% to the total compensation cost. This includes health insurance, retirement contributions, paid time off, and other standard benefits.
Recruitment and Turnover
Finding qualified IT talent in Toronto's competitive market is expensive and time-consuming. Recruitment costs including job postings, recruiter fees, and interview time can easily run $10,000 to $25,000 per hire. With IT turnover rates averaging around 13% annually, you may be repeating this process frequently.
Training and Professional Development
Technology evolves rapidly, and your IT staff need ongoing training to stay current. Certifications, courses, conferences, and training materials typically cost $3,000 to $10,000 per employee per year. Without this investment, your team's skills quickly become outdated.
Tools, Licensing, and Infrastructure
An in-house team needs tools to do their job effectively. This includes:
- Remote monitoring and management (RMM) software
- Help desk and ticketing systems
- Security tools (antivirus, firewall management, SIEM)
- Backup and disaster recovery solutions
- Networking equipment and diagnostic tools
These tools can easily cost $20,000 to $50,000 per year for an SMB, not including the time required to manage and maintain them.
Coverage Gaps
One or two IT staff members cannot provide 24/7 coverage. What happens when your sole IT person is on vacation, sick, or leaves the company? Coverage gaps leave your business vulnerable and can lead to extended downtime during critical issues.
The Cost of Managed IT Services
Managed IT service providers offer a fundamentally different cost structure that provides predictability and comprehensive coverage.
Predictable Monthly Fees
MSPs typically charge a flat monthly fee based on the number of users or devices they manage. For SMBs in Toronto, managed IT services generally range from $100 to $250 per user per month, depending on the scope of services included.
For a 25-person company, this translates to approximately $2,500 to $6,250 per month, or $30,000 to $75,000 per year. This flat fee typically includes:
- 24/7 monitoring and support
- Help desk services for all employees
- Proactive maintenance and patch management
- Cybersecurity protection and monitoring
- Backup and disaster recovery management
- Vendor management and procurement assistance
- Strategic IT planning and consulting
No Hidden Costs
With a managed IT provider, there are no recruitment costs, no training expenses, no benefit obligations, and no coverage gaps. The MSP handles all of these internally, and the cost is built into your monthly fee.
Side-by-Side Cost Comparison
Let's compare the annual costs for a typical 25-person SMB in Toronto:
In-House IT (Minimum Viable Team of 2)
- Salaries for two IT staff: $130,000 to $180,000
- Benefits (25% of salary): $32,500 to $45,000
- Recruitment costs (amortized): $5,000 to $10,000
- Training and certifications: $6,000 to $20,000
- Tools and software licensing: $20,000 to $50,000
- Total annual cost: $193,500 to $305,000
Managed IT Services
- Monthly fee (25 users at $150 average): $45,000
- Project work and special requests: $5,000 to $15,000
- Total annual cost: $50,000 to $60,000
For most SMBs with 10 to 100 employees, managed IT services deliver the same or better service quality as an in-house team at roughly one-third to one-quarter the cost. The savings become even more dramatic when you account for 24/7 coverage and the breadth of expertise an MSP provides.
Beyond Cost: Other Key Considerations
Breadth of Expertise
A small in-house team can only cover so many specializations. An MSP brings a full team of specialists in networking, cybersecurity, cloud services, compliance, and more. You get access to a depth of knowledge that would be prohibitively expensive to build internally.
Scalability
As your business grows, scaling an in-house team requires significant lead time for hiring and onboarding. With an MSP, scaling up is as simple as adding users to your plan. You can also scale down easily if needed.
Business Continuity
When an in-house IT employee leaves, they take institutional knowledge with them. MSPs maintain documented processes, standardized configurations, and shared knowledge bases that ensure continuity regardless of individual personnel changes.
When In-House IT Makes Sense
There are scenarios where in-house IT is the better choice:
- Your business has highly specialized technology needs requiring dedicated expertise
- Regulatory requirements mandate that certain IT functions remain internal
- You have more than 200 employees and can justify a full IT department
- Your industry requires on-site IT support that cannot be provided remotely
The Hybrid Approach
Many businesses find that a hybrid model works best. You might retain one or two internal IT staff who understand your business intimately, while partnering with an MSP for 24/7 monitoring, cybersecurity, help desk overflow, and specialized projects. This gives you the best of both worlds.
Find the Right IT Model for Your Business
Choosing between in-house IT and managed services is a significant decision that affects your bottom line, your security posture, and your ability to grow. At TechBoss, we offer flexible managed IT solutions designed to meet SMBs where they are, whether that's fully managed services, co-managed support, or project-based assistance.
Reach out to us for a complimentary IT assessment, or request a quote to see how managed IT services can work for your budget.
