A single in-house IT hire costs an Australian SMB $115,000 to $175,000 a year once salary, super, leave, training and tools are counted. The same budget buys fully managed IT support for a team of 40 to 80 people. That is the comparison this guide works through properly: where the breakeven actually sits, what each model quietly leaves out, and why the answer for most businesses between 20 and 200 staff is not the one either camp wants to hear.
The advertised salary is the smallest part of the number. A mid-level IT systems administrator in Perth earns roughly $90,000 to $120,000. Add 12 per cent superannuation, leave loading, workers compensation, payroll tax, recruitment costs amortised over tenure, training and certifications, and the software tooling one person needs to do the job (RMM, EDR, backup, documentation platforms that MSPs buy at scale and individuals buy at retail). The loaded cost lands between $115,000 and $175,000 a year, a range that industry pricing guides consistently confirm.
Then come the costs that never appear on a spreadsheet. One person cannot be on leave and on call at the same time. One person has one skill set, and modern IT spans networking, Microsoft 365, security, cloud and now AI governance. One person is a single point of failure with your passwords, your tribal knowledge and your vendor relationships, and the average tenure in IT roles is under three years. When they resign, you are not replacing a salary. You are replacing an undocumented system.
Managed IT support in Australia runs $100 to $250 per user per month for most businesses, with security-heavy agreements for regulated industries reaching $350. We published the full tier-by-tier breakdown, Perth against Sydney against Brisbane, in our guide to how much IT support costs in 2026, so this post will not repeat it. The short version: the per-user fee buys a team, not a person. Helpdesk depth, senior escalation, security specialists, after-hours coverage and no leave gaps.
The honest downsides, since the MSP industry rarely volunteers them: you share the team with other clients, so a provider with weak processes will make you feel like a number. Response times are governed by an SLA rather than by walking over to someone’s desk. And scope creep cuts both ways, because anything outside the agreement gets quoted. A cheap agreement with a narrow scope is how businesses end up paying $130 per user and still receiving surprise invoices.
| Headcount | In-house (1 loaded FTE) | Managed at $150/user/month | Cheaper option |
|---|---|---|---|
| 20 staff | $115,000+ | $36,000/yr | Managed, by a wide margin |
| 50 staff | $115,000+ | $90,000/yr | Managed, still clearly |
| 80 staff | $115,000+ (and one person cannot support 80) | $144,000/yr | Line crosses on paper, not in practice |
| 150 staff | $230,000+ (two FTEs minimum) | $270,000/yr | Hybrid territory |
Notice what happens at 80 users. On paper the costs cross. In practice they do not, because a single administrator supporting 80 people is drowning, and you are now hiring a second person, which resets the comparison. This is the trap in most in-house versus outsourced analysis: it compares one salary against the MSP fee and ignores that internal capability comes in expensive, indivisible units of one whole human.
The comparison also assumes the two options deliver the same thing, and they do not. The loaded FTE figure buys business-hours coverage from a generalist. The managed figure buys a security stack, 24/7 monitoring and specialist depth that would take four or five internal hires to replicate. If your insurer or your largest client asks who watches your environment overnight, “Dave, when he’s not on leave” is not an answer that survives a due diligence questionnaire.
We run an MSP, so discount this section accordingly, but the honest cases exist. If your business runs proprietary line-of-business systems that need daily hands-on development, an internal person who lives in that system beats any external team. If you are past 150 to 200 staff, an internal IT manager who owns strategy while a provider handles the operational layer is usually the strongest structure. And if physical presence matters constantly, a warehouse floor, a manufacturing line, a site office, walking-distance support has real value no SLA replaces.
What in-house almost never wins on is security depth, after-hours coverage, or cost per unit of capability below 100 staff. We covered the operational side of this decision, when an internal service desk starts making sense, in when does an SMB need its own IT service desk.
The in-house versus outsourced framing is a false binary for anyone above about 80 staff. The structure that actually works is co-managed: an internal IT coordinator or manager who knows the business, backed by a managed services provider that supplies the helpdesk depth, the security stack and the specialist escalation. The internal person stops firefighting password resets and starts doing the work only an insider can do. The provider carries the 2am problem.
Priced honestly, co-managed agreements sit below fully managed rates because the internal person absorbs first-line volume. It is the arrangement we recommend most often to businesses in the 80-to-200 band, including in cases where it means a smaller agreement for us.
Calculate your true loaded cost. Take every internal IT salary, add 30 to 40 per cent for on-costs and tooling, and add the contractor spend that fills the gaps. That number, not the salary line, is what you are comparing against.
Get the per-user comparison in writing. Ask any provider for a scoped quote with inclusions and exclusions listed, then compare capability for capability, not headline rate for salary. Our 2026 pricing guide shows what each tier should include.
Test the numbers against your business. Our free IT assessment maps your current IT spend, in-house and external, against what the same budget buys under each model. Contact us on 1300 EPIC IT to book it.
Below about 80 staff, outsourcing is clearly cheaper: one loaded in-house IT salary costs $115,000 to $175,000 a year, while managed support for a 50-person business costs around $90,000 a year and delivers a full team. Above 80 staff the raw numbers converge, but the comparison shifts to capability rather than cost, and most businesses land on a co-managed structure.
Between $115,000 and $175,000 a year once you load a $90,000 to $120,000 salary with superannuation, leave, payroll tax, recruitment, training and the professional tooling one person needs. The figure excludes the cost of coverage gaps when that person is on leave, sick or between jobs.
Co-managed IT pairs your internal IT staff with a managed services provider: your people handle first-line support and business-specific systems, the provider supplies helpdesk depth, security operations and specialist escalation. It suits businesses from roughly 80 to 250 staff, where one or two internal people exist but cannot cover the full breadth of modern IT alone.
Most businesses do not need a dedicated internal IT hire until they pass 100 to 150 staff, and even then the strongest first hire is usually an IT manager or coordinator working alongside a provider, not a hands-on technician replacing one. The exceptions are businesses with proprietary systems needing daily development or sites where constant physical presence matters.
