The Burden Costs of Insourcing Your Managed IT

What it means for your bottom-line

The primary basis of outsourcing or in-sourcing your Managed IT is economic. This decision should consider the direct costs of the position. Not only that, but also the impact of not having a stable resource.

IT Department Roles/Positions

  1. CIO – Strategic Planning and Direction At the top-level. IT should provide a strategic advantage that also drives effectiveness and efficiency throughout an organization. Accomplishing these goals in a cost-effective manner will not happen by accident. You need to have a well thought out strategy that aligns with executive management’s vision for the company. The holder of the CIO position should plan, define, and communicate this strategy.
  2. IT Director – Tactical Execution an IT director’s primary responsibility is to execute the strategic plan delivered by the CIO. In order to manage the technical processes and operations effectively, an IT director must have knowledge of computer systems. He will have to make decisions, develop plans, and implement changes or new processes.
  3. Network Administration / Systems Engineer Network and computer systems administrators – Are responsible for the day-to-day operation of these networks. They organize, install, and support an organization’s computer systems. That includes local area networks (LANs), wide area networks (WANs), network segments, intranets, and other data communication systems.
  4. Front Line Support – A technical support/helpdesk employee’s role includes monitoring and maintaining the computer systems and networks. If there are issues or changes required (like forgotten passwords, viruses, or email issues) people in this role will be the first-person employees come to.
  5. CISO – An organization’s information and data security is the responsibility of the chief information security officer (CISO). Although the function has historically been relatively defined along those lines, the title is now frequently used interchangeably with CSO and VP of security, reflecting a more expansive responsibility inside the firm.

First, let us discuss the cost of internal staffing for the four types of positions defined above. For purposes of creating an example decision process, I have provided the table of costs below.

Each company may have different hiring requirements and therefore have different costs, but these are reasonable costs to expect.

Salary ranges are according to Zip Recruiter using 25th – 75th percentile for the United States.





CIO $125,000 $199,500 20% $150,000 $239,400
CISO $137,000 $216,500 20% $164,000 $259,800
IT Director $111,991 $178,000 20% $134,389 $213,600
Network Administrator $ 54,000 $75,000 20% $95,400 $186,000
Front Line Support Engineer $44,000 $92,000 20% $52,800 $110,400
Systems Engineer $ 79,500 $155,000 20% $95,400 $186,000


In a smaller company (say less than 100 employees that use computers), the amount of activity that requires CIO skills is very small (but still very important). As such, even if you have the budget for this salary, you probably will not keep a highly qualified person engaged enough to keep them happy.

Similarly, an IT Director activity level in the smaller company is most definitely not a full-time function but also still very important when you need those skills.

When it comes to the Network Administrator and/or Systems Engineer, the amount of activity for the smaller company is in direct proportion to a combination of the complexity of the server infrastructure and the quality of the systems management best practices employed. The more you have mission-critical applications hosted in the cloud by a 3rd party vendor the less complex your internal systems become…so the need can vary from one company to the next.


The Imbalance

In our experience, if the internal systems are professionally managed for companies with under 100 users, then you will experience significant periods of time where the systems engineer/network administrators have very little to do. Other times when maintenance, hardware refresh projects, new technology rollout projects, etc., activity spike you will need multiple systems engineers available. So, no matter how many people with these skill sets that you employ, there will be times where you are over-staffed and other times you are understaffed.

In smaller companies, key people tend to “wear a lot of hats”. Many times, we see management try to hire a single person to cover multiple roles. Usually, this does not turn out well. The reason for the wrong end result is you simply cannot find someone who has the ability and experience to think strategically (CIO), tactically (IT Director) and masters the system engineer knowledge all while performing the daily grind of the front-line end-user help desk. This simply requires gathering too much knowledge and having too many aptitudes in a single person (or in two people).

Typically, you need at least three of the four positions staffed for them to be effective in their job. Since most companies of this smaller size will never justify a $200,000 or higher budget for IT personnel they are left with few choices. The first, is insourcing your managed IT support staff inadequately. Or you can outsource your IT. From a cost-effectiveness standpoint, a full or part hybrid outsource model is the only one that makes economic sense.

Currently, you can find a managed service provider that charges monthly from $20 per seat up to $400 per seat. Sometimes, that includes some hardware at the top end. Given what it takes to staff an IT department properly, with qualified people who stay current on technical training, the low-end of the scale will likely not give you the right result for your company. If you don’t spend the right amount, the cost will be significantly higher than what you are spending on IT. A quality managed service plan that is proactive and founded on a solid foundation of formal best practices. Typically, this will generally run from $125 to $150 per user per month. If you have 50 users, then your monthly cost would range from $75000 to $90,000 per year…which is in the range of a single person above. The difference is that you get a fully staffed team that covers all the roles required.

Company size and the cost of a fully staffed IT Department has many factors you should consider in determining which IT Support Model and the quality of support.

Custom Information Services has the knowledge and expertise to help you effectively manage your IT without chiseling away at your bottom line.  While economic impact is important to consider when deciding whether to outsource or insource your IT needs, security is also a top priority. With mounting cyber-attacks and unprecedented capability of hackers you need to be vigilant with your security as well as your finances. We are happy to be a resource for you. Book some time to talk to a pro today!

Published On: July 29, 2022Categories: Managed IT Services