Many businesses think that having an internal IT team is a cost-effective way to manage technology needs. However, the reality is that all costs involved are often not considered. While an in-house IT department offers direct control over operations, the hidden expenses of maintaining such a team can significantly impact a company’s bottom line. Let’s break down the true costs of having an internal IT team and compare them to alternative solutions like managed IT services.
Salaries and Benefits
The most obvious cost of an internal IT team is employee compensation. IT professionals command competitive salaries, and as technology becomes more complex, experienced personnel come at a premium. According to Glassdoor, salaries can range widely:
• Help Desk Technician: $53,000 – $77,000 per year
• Systems Administrator: $82,000 – $124,000 per year
• IT Manager: $116,000 – $181,000 per year
• Security Specialist: $58,000 – $103,000 per year
• Chief Information Officer (CIO): $293,000 – $520,000 per year
Beyond salaries, companies must also factor in benefits like health insurance, retirement plans, paid time off, and payroll taxes, which typically add 20-30% to the base salary.
Recruiting and Training Costs
Hiring and retaining IT talent should also be factored into the cost of having an experienced IT staff in house. Time spent interviewing candidates. Once hired, new employees need onboarding and ongoing training to stay updated on emerging technologies, cybersecurity threats, and compliance regulations.
Continuous training is essential, especially in fields like cybersecurity, where outdated knowledge can lead to major vulnerabilities. Certifications such as Microsoft, Cisco, AWS, or CompTIA can cost thousands of dollars per employee.
Software and Tools
An internal IT team requires access to various software, tools, and licenses to perform their jobs effectively. These include:
• IT Management Tools: Remote monitoring & management (RMM) software, ticketing systems, and network monitoring tools.
• Cybersecurity Software: Firewalls, antivirus programs, endpoint detection & response (EDR), security information & event management (SIEM) solutions.
• Backup and Disaster Recovery Solutions: Cloud-based backup services, business continuity solutions, and redundant storage infrastructure.
• Productivity and Collaboration Tools: Microsoft 365, Google Workspace, or other business applications.
These costs can quickly add up, often exceeding $10,000 – $50,000 annually, depending on the size of the organization.
Hardware and Infrastructure
Beyond software, an internal IT team needs physical infrastructure to support company operations, such as:
• Servers and Networking Equipment: On-premise servers, switches, firewalls, and wireless access points.
• Workstations and Laptops: IT professionals need high-performance machines, often requiring frequent upgrades.
• Data Centers or Cloud Hosting: Companies with internal IT may still need hybrid cloud solutions or colocation services.
Downtime and Productivity Loss
One of the most overlooked costs of an internal IT team is downtime and inefficiency. Even with a strong IT department, internal teams may not always have the expertise to resolve complex issues quickly. System outages, slow network speeds, and unresolved technical problems can lead to lost productivity, frustrated employees, and dissatisfied customers.
A 2014 study by Gartner estimates that IT downtime costs businesses an average of $5,600 per minute or over $300,000 per hour, depending on the company’s size and industry. More recently, 44% of firms indicate that hourly downtime costs exceed $1 million to over $5 million, not including any legal fees, fines, or penalties.
Cybersecurity Risks and Compliance Challenges
Internal IT teams often struggle with keeping up with cybersecurity best practices and compliance regulations (such as HIPAA, CMMC, or WISP). A small team may lack the bandwidth or specialized knowledge to proactively monitor threats and patch vulnerabilities.
The cost of a data breach can be devastating, with the average breach costing $4.88 million in 2024, according to IBM’s Cost of a Data Breach Report. Investing in cybersecurity tools and experts is necessary, but it adds yet another layer of cost.
Turnover and Knowledge Gaps
IT professionals often change jobs frequently, leading to staff turnover issues. When an IT employee leaves, they take critical institutional knowledge with them, leaving gaps in the company’s IT strategy. The process of hiring and training a replacement adds even more cost and risks operational disruptions.
Comparing Internal IT to Managed IT Services
Given the substantial costs associated with an internal IT team, many companies are turning to Managed IT Services Providers (MSPs) as a more predictable and scalable solution. MSPs provide:
• Flat-rate pricing for IT support, reducing unpredictable costs.
• Access to a team of specialists rather than relying on a few in-house IT staff.
• 24/7 monitoring and proactive maintenance, reducing downtime.
• Cybersecurity expertise to keep data protected and compliant with regulations.
• Scalability, allowing businesses to adjust IT support levels based on needs.
By outsourcing IT services, companies can reduce operational expenses while benefiting from enterprise-grade technology solutions without the overhead and investment of resources into recruiting, hiring, and managing staff.
While an internal IT team can provide dedicated support, the hidden costs make it an expensive and sometimes inefficient option. Salaries, software, hardware, training, and the risks associated with downtime and security breaches all add up. For many businesses, partnering with a Managed IT Services Provider offers a more cost-effective, scalable, and secure approach to IT management.
Thinking about reducing your IT costs while improving efficiency? Reach out to talk with a member of our team today!