MSP vs In-House IT: The Real Cost Math
Yes, we are an MSP, so you should read this with that in mind. But we will show you the actual numbers, including the sizes and situations where hiring your own IT person is the right call. The math is more interesting than either side's sales pitch.
It is not salary vs invoice. It is coverage vs presence.
The comparison most spreadsheets make is one person's salary against twelve MSP invoices. That framing misses what you are actually buying on each side. An in-house hire gives you a person in the building who knows your business, your people, and your weird label printer. An MSP gives you a team, a security stack, documented processes, and coverage that does not take vacation. If you are new to the model, our plain-language explainer on what an MSP actually does covers the basics.
Below is the full cost of each option in Canadian dollars, worked through at 10, 25, and 50 users, followed by the crossover point where an internal hire starts to make sense and the co-managed option that most growing organisations end up choosing anyway.
What one IT hire really costs in Canada.
The salary is the visible number. It is not the whole number.
| Cost line | Typical annual range (CAD) |
|---|---|
| Salary, generalist sysadmin | $65,000 to $95,000 depending on market and experience |
| Payroll burden (~1.2 to 1.3x) | Adds $13,000 to $29,000: CPP, EI, WorkSafeBC, benefits, vacation |
| Tooling they still need | $10,000 to $25,000: EDR, monitoring, patching, backup, ticketing |
| Training and certification | $2,000 to $5,000 to keep skills current, plus the time off tickets |
| Realistic first-year total | Roughly $90,000 to $140,000, before recruiting costs |
Then there is the line no spreadsheet has: one person is a single point of failure. They get three to four weeks of vacation. They get sick. They work roughly 9 to 5, while ransomware and server failures do not. And they have one person's skill ceiling: a genuinely good generalist still cannot be simultaneously current on security, networking, Microsoft 365, backup, and whatever your industry runs on. When they resign, everything they never wrote down leaves with them, and the average replacement search takes months.
MSP cost at 10, 25, and 50 users.
Managed IT in BC typically runs $100 to $250 per user per month depending on the tier. We publish our own tiers on the pricing page, which most MSPs will not.
| Team size | Monthly (at $100 to $250/user) | Annual |
|---|---|---|
| 10 users | $1,000 to $2,500 | $12,000 to $30,000 |
| 25 users | $2,500 to $6,250 | $30,000 to $75,000 |
| 50 users | $5,000 to $12,500 | $60,000 to $150,000 |
Those fees normally bundle the security and management stack an employee would need you to buy separately: monitoring, EDR, patching, backup licensing, and a helpdesk. So the fair comparison for a 25-user shop is $30,000 to $75,000 all-in against $90,000 to $140,000 all-in for one hire. At 10 users the gap is not close; a full-time hire would sit idle most of the week. If you are weighing hourly support instead, see break-fix vs managed services for that version of the math.
When does the first internal hire make sense?
On raw dollars, the lines cross somewhere between roughly 40 and 90 users: at 50 users the top of the MSP range ($150,000) clears the loaded cost of a hire, while the bottom of the range ($60,000) still undercuts it. But headcount is only half the trigger. The stronger signal is complexity: on-site operational technology, a warehouse or shop floor, industry software that needs daily hands-on attention, or enough internal projects that IT becomes a job rather than a stream of tickets. A sawmill running an ERP at 35 users may justify a hire before a 60-person professional office does.
The honest caveat, and the reason the arithmetic alone misleads: one hire does not replace an MSP. They replace part of one. You get presence and business knowledge, but you give up after-hours coverage, escalation depth, and redundancy, and you take back responsibility for the tool stack. That is why the crossover in practice is later than the crossover on paper, and why the next option exists.
Co-managed: your person in front, an MSP behind them.
Most organisations that outgrow pure outsourcing do not swing to pure in-house. They hire one person for daily support and local knowledge, and keep an MSP behind them for the security stack, monitoring, backup, project muscle, and coverage when that person is on vacation or stuck. The internal hire gets a deep bench to escalate to instead of Googling alone at midnight, and you avoid the single point of failure without paying for a second head.
Co-managed contracts usually price lower per user than full management because the MSP is not fielding every password reset. We have written up how the split typically works in co-managed IT vs a full MSP. From Prince George we run this model for organisations across BC, Alberta, and Yukon, including remote sites where the "IT person" is really an office manager with admin rights, which is its own single point of failure.
Response time, breadth, and accountability, fairly stated.
Response time. In-house wins the hands-on, business-hours incident. Nobody remote beats walking down the hall when a workstation dies mid-payroll. An MSP wins everything outside that window: the 2 a.m. server alert, the week your person is at a lake with no cell signal, and the busy day when they are triple-booked. A staffed helpdesk answers in minutes because answering is its whole job.
Breadth of skills. One generalist knows your environment more deeply than any outsider ever will, and that context is genuinely valuable. But no single person is current on security, cloud, networking, and compliance at once. An MSP spreads those specialties across a team; the trade is that the technician on your ticket may not know that your CFO always means the second monitor.
Accountability. An employee answers to you directly, full stop. That is real and it matters. An MSP answers to a contract and an SLA, which cuts both ways: you can hold response times to a written standard and leave if they miss it, but you can also be one logo on a client list if the provider overextends. Read the SLA and ask who else they serve at your size. And measure your own hire the same way, because "accountable" and "documented" are not the same thing.
Plain-talk verdicts, including against our own interest.
Presence and complexity are the job
You are past roughly 50 to 75 users, or your operation needs daily physical hands, shop-floor systems, warehouse gear, industry software that a remote team cannot babysit. You can afford $90,000 to $140,000 loaded, and you will actually manage, document, and back up that person. At that point, in-house wins. We will tell you so in the assessment.
You are under ~40 users or IT is not core
A full-time hire would be idle half the week, and you would still owe for tooling and carry the vacation, sick-day, and turnover risk alone. At 10 to 40 users, $100 to $250 per user per month buys a full team and stack for less than one loaded salary. This is the clear case for our managed IT service.
You want both, without two salaries
Roughly 30 to 200 users, one internal person handling daily support, an MSP carrying security, monitoring, escalation, and coverage behind them. You get presence and depth without the single point of failure. This is where most growing organisations actually land, and it is usually the cheapest path to real resilience.
Common questions about MSP vs in-house IT.
At what size does in-house IT become cheaper than an MSP?
On raw dollars, MSP fees at $100 to $250 per user per month start to bracket the fully loaded cost of one hire somewhere between roughly 40 and 90 users, depending on the tier you buy. But one hire does not replace an MSP's coverage or breadth, so the honest crossover is later than the arithmetic suggests. Most organisations that hire their first IT person keep an MSP behind them in a co-managed arrangement rather than cutting over completely.
What does one in-house IT person actually cost in Canada?
A generalist sysadmin in Canada typically earns $65,000 to $95,000 in salary. Payroll burden of roughly 1.2 to 1.3 times adds CPP, EI, WorkSafeBC or provincial equivalent, benefits, and vacation, bringing the real employment cost to about $78,000 to $124,000. Add the tooling they still need, monitoring, EDR, backup, ticketing, and ongoing training, and a realistic first-year total is $90,000 to $140,000.
Is an MSP slower to respond than someone down the hall?
For a hands-on problem during business hours, an on-site person is faster. Nobody remote beats walking down the hall. For everything else, an MSP with a staffed helpdesk usually responds faster in practice, because your in-house person is often in a meeting, on another ticket, on vacation, or asleep at 2 a.m. The fair answer is that each side wins a different category of incident.
Can we start with an MSP and move in-house later?
Yes, and a good MSP should make that easy. Insist on documentation as a deliverable, your tenant and licences in your own name, and admin credentials you control. When you hire, a co-managed period where the MSP hands off systems gradually is much lower risk than a hard cutover. If an MSP resists documenting your environment, that is a red flag regardless of which path you choose.
What is co-managed IT and who is it for?
Co-managed IT means your internal person or small team handles day-to-day support and local knowledge, while an MSP provides the security stack, monitoring, backup, escalation depth, and vacation coverage behind them. It fits organisations from roughly 30 to 200 users that want someone in the building but do not want one person carrying everything alone. It is usually cheaper than a second hire.
Do we still pay for software and licences if we hire in-house?
Yes. An employee brings labour, not a toolset. You still need endpoint protection, monitoring, patching tools, backup licensing, a ticketing system, and Microsoft 365 or equivalent. Budget roughly $10,000 to $25,000 per year for a 25 to 50 user environment. MSP pricing usually bundles most of that stack, which is part of why the per-user fee looks higher than raw labour math.
Want the math run on your actual numbers?
Book a free 30-minute assessment. We will look at your headcount, your systems, and your growth plans, then tell you which model fits, even if the answer is hiring someone instead of us. That has happened, and those companies still call us for projects.
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