The False Economy of Cheap MSPs
Many Australian businesses choose MSPs because they're "cheaper than hiring IT staff." But are they? Let's do the math.
The Real Cost of an MSP
Average MSP contract for a 200-person company: $15,000-$25,000/month
What you get: - 24/7 monitoring (often automated) - Helpdesk (often outsourced offshore) - Patch management - Basic security - "Strategic advice" (often sales-driven)
What you don't get: - Dedicated expertise for your environment - Institutional knowledge - Alignment with your business goals - Accountability for outcomes
The Real Cost of In-House IT
A 200-person company needs: - 1x Senior Systems Engineer: $120,000-$150,000 - 1x Helpdesk/Support: $70,000-$90,000 - Tools & licensing: $30,000-$50,000/year - Training: $10,000-$15,000/year - Total: $230,000-$305,000/year
The Comparison Matrix
| Factor | MSP | In-House |
|---|---|---|
| Monthly cost | $15-25K | $19-25K |
| Response time | SLA-dependent | Immediate |
| Institutional knowledge | Low | High |
| Scalability | Easy | Hiring required |
| Accountability | Contract-based | Direct |
| Strategic alignment | Low | High |
| Offshore risk | High | None |
| Knowledge transfer | None | Continuous |
When an MSP Makes Sense
- Very small business (<50 people)
- No critical IT systems
- Budget is the primary constraint
- Short-term or project-based needs
When In-House IT Makes Sense
- 100+ people
- Critical systems (healthcare, finance, education)
- Compliance requirements (HIPAA, PCI, Essential 8)
- Strategic IT is a competitive advantage
- You've been burned by MSPs before
The Hybrid Model
Most smart organizations do both: - 1x internal IT lead (strategic, relationships, oversight) - MSP for overflow, after-hours, and commodity work
This gives you the best of both worlds: strategic alignment + cost efficiency.
The Bottom Line
The question isn't "MSP or in-house?" It's "What's the right mix for my organization?"
Start with your business goals, then design your IT delivery model around them.
Related Guides
- MSP Contract Checklist — Review your contract
- Essential 8 — Compliance framework
- MSP Cost Calculator — Calculate your true IT spend
- How to Choose an MSP — The due diligence checklist
- Why Businesses Choose MSPs — The corporate math
- The Lose-Lose Model — How the MSP model fails both ends
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