When a finance director compares "our IT person costs £55,000/year" to "a managed IT partnership costs £1,800/month", the answer looks obvious. Except the comparison is wrong.
In-house IT does not cost £55,000/year. When you account for all the real costs - including the ones that never appear on a job advert - the number is usually £85,000–£140,000 per year. And that is before you count what you are not getting.
This article breaks down the real cost of each model, so you can make the comparison honestly.
The True Cost of an In-House IT Employee
1. Total Employment Cost (Not Just Salary)
A mid-level IT systems administrator in London earning £55,000 base costs significantly more to employ:
| Cost Item | Annual Amount |
|---|---|
| Base salary | £55,000 |
| Employer NI (13.8% above threshold) | £6,500 |
| Employer pension contribution (5%) | £2,750 |
| Private health insurance (if offered) | £1,800 |
| Annual leave cover (5.6 weeks, 28 days) | £5,900 |
| Sick leave (average 7 days/year) | £1,500 |
| Training & certification (MCSE, AWS, CISSP) | £2,500 |
| IT equipment (laptop, peripherals, desk) | £1,500 |
| Recruitment (agency fee ~15–20% of salary) | £9,000 (amortised over 2-year avg tenure) |
| Total employment cost | ~£86,450/year |
This is a conservative estimate. Senior engineers, or hires in highly competitive specialisms (cloud, security, DevOps), can push this to £100,000–£140,000 per year.
2. The Single Point of Failure Problem
Your in-house IT person has one brain. One set of skills. One calendar. When they:
- Go on holiday (28 days by law, plus bank holidays)
- Get sick (average 7 days/year)
- Resign (typical UK IT tenure: 18–24 months)
- Are busy on another project
...who handles incidents?
The answer is usually: nobody does, or the CEO does.
A managed IT partnership provides an always-on team with documented runbooks, out-of-hours escalation, and continuity that survives individual turnover.
3. Breadth of Expertise
A single IT hire cannot be an expert in:
- Microsoft 365 / Azure
- AWS / GCP
- Email deliverability (DMARC, DKIM, BIMI)
- Network security and firewall management
- Compliance (GDPR, ISO 27001, Cyber Essentials)
- Identity and access management
- Backup and disaster recovery
- AI and automation tooling
They will be good at 2–3 of these. For everything else, you will either hire additional specialists, buy expensive consultants ad-hoc, or go without.
4. Tool and Licensing Overhead
Your in-house IT person also needs tools to do their job: RMM software, ticketing system, monitoring platform, backup software, security tooling. These are often not budgeted in the initial hiring decision and can add £8,000–£20,000/year to the real cost.
The Real Cost of a Managed IT Partnership
A retained managed IT partnership - like the one HUK SONS IT offers from £1,500/month ($1,800/month USD equivalent) - includes:
| Included | Value |
|---|---|
| 24/7 critical incident monitoring and response | £15,000+ equivalent |
| Dedicated principal engineer for your account | £60,000+ equivalent |
| Patch and update management | £8,000+ equivalent |
| Monthly infrastructure review | £6,000+ equivalent |
| Vendor management (Microsoft, AWS, etc.) | £4,000+ equivalent |
| Priority access to 8 specialisms (migrations, email, cloud, GRC, AI, etc.) | £30,000+ equivalent |
| No recruitment risk, no holiday cover gaps | Priceless |
| Annual partnership cost | £18,000/year |
Estimated equivalent value: £120,000+ per year
Side-by-Side Comparison
| Factor | In-House IT (1 hire) | Managed IT Partnership |
|---|---|---|
| Annual cost (all-in) | £86K–£140K | £18K–£36K |
| Availability | Business hours (+ on-call if negotiated) | 24/7 monitoring, rapid response |
| Specialisms covered | 2–3 (their background) | 8+ (full team) |
| Continuity risk | High (resignation, sick leave) | Low (documented, team-based) |
| Scaling | Slow (new hire = months) | Instant (scope change in days) |
| Compliance expertise | Depends on background | Included (GDPR, ISO 27001, Cyber Essentials) |
| Tool cost | Additional £8K–£20K/year | Included |
| Accountability | Individual | Contractual |
When Does In-House IT Win?
In-house IT makes sense when:
- You have >150 users and enough volume to justify a dedicated team (2–3 people minimum, otherwise single-point-of-failure risk remains)
- Your compliance environment mandates it (some classified government work, certain healthcare contexts)
- Your IT is a core differentiator - if your technology is central to your product, not just infrastructure
- You need deep institutional knowledge in a very specific, niche internal system
For most SMEs and growing businesses under 200 employees, managed IT provides better coverage, more expertise, and better economics than a single in-house hire.
The Hybrid Model
Many of our clients operate a hybrid model: one internal IT coordinator who handles day-to-day user support (password resets, new starters, printer issues) while we handle infrastructure, cloud, security, email, and compliance.
This gives you:
- Faster response on low-level helpdesk tickets (on-site person is faster for hands-on issues)
- Expert-level coverage for everything that matters to business continuity
- Combined cost of ~£60K/year vs £140K+ for two in-house hires with equivalent breadth
Make the Right Decision
Before making a hiring or partnership decision, ask:
- What is the total employment cost of this hire - salary, NI, pension, tools, recruitment?
- What happens when they are unavailable - who covers?
- Do we need 8 specialisms or 2?
- Can we afford the 12–24 month ramp-up while they learn our environment?
If you want to run the numbers for your specific situation, use our ROI Calculator - it models the economics of managed IT vs in-house for your headcount and current environment.
Or book a free discovery call and we will walk through the comparison with your actual costs.