Every CTO eventually faces the build vs buy conversation for their IT operations. Do you maintain an in-house team that manages your infrastructure, security, and support? Or do you outsource some or all of that to a managed service provider?

I’ve done both. I’ve led large in-house teams. I’ve managed relationships with MSPs. I’ve also made the wrong call in both directions and paid the price. So here’s my honest take, free from the vendor pitches and the in-house-pride bias that usually dominate this discussion.

The Managed Services Pitch

MSPs will tell you they can provide enterprise-grade IT operations at a fraction of the cost of an in-house team. And in many cases, they’re right. Here’s where the economics genuinely work.

24/7 coverage. An in-house team providing genuine 24/7 support needs at least four to five people just for the roster, before you even think about specialisation. At average Australian IT salaries, that’s $500,000-$700,000 per year in labour costs alone. An MSP spreads that coverage across multiple clients, which means you’re paying a fraction of that cost.

Breadth of expertise. A small in-house team of five people might have strong skills in networking and cloud infrastructure but weak skills in security and database administration. An MSP has specialists across multiple domains. When you have a firewall issue at 2am, the MSP has a firewall expert available. Your in-house team has whoever’s on call, regardless of their specialisation.

Predictable costs. MSP contracts typically provide fixed monthly fees for defined service levels. In-house teams come with variable costs—unexpected hardware failures, emergency contractor engagements, training expenses, and the ever-present risk of key person dependency.

Where the Pitch Falls Apart

Now here’s what the MSP sales team doesn’t emphasise.

Your business isn’t their business. An MSP manages your systems. They don’t understand your business. When a production system goes down at 3am, your in-house team understands the business impact—which customers are affected, what revenue is at risk, which workarounds are available. An MSP engineer sees a ticket with a severity level. The difference in response quality is significant.

Scope creep costs. MSP contracts define a scope of service. Anything outside that scope is charged additionally. What seems like a comprehensive agreement during procurement often reveals gaps during operations. “That’s a project, not included in managed services” is a phrase I’ve heard more times than I can count.

Knowledge drains. When your systems are managed externally, institutional knowledge accumulates at the MSP, not at your organisation. If you change providers or bring services back in-house, you’re starting from scratch. The people who understand your environment don’t work for you.

Transition friction. Moving to an MSP takes longer and costs more than anyone admits. The typical MSP sales cycle promises a 3-month transition. In practice, 6-12 months is more realistic for a mid-market organisation with any complexity.

The Honest Framework

Rather than choosing one side, I think the decision should be made function by function. Some things are genuinely better managed externally. Others shouldn’t leave in-house under any circumstances.

Good candidates for managed services:

• Standard infrastructure monitoring and alerting
• Patch management and routine maintenance
• Service desk (Level 1 and Level 2 support)
• Email and collaboration platform management
• Backup management and disaster recovery testing

These are high-volume, well-defined, repeatable tasks where scale advantages are real and business-specific knowledge is less critical.

Keep in-house:

• Architecture and design decisions
• Security strategy and incident response leadership
• Application integration and business process automation
• Vendor management and procurement
• Anything that requires deep understanding of your business context

I had a useful conversation with Team400 about this exact question in the context of AI capabilities. Their view, which I share, is that strategic decisions about technology should always stay close to the business, while operational execution can often be delegated. The key is knowing which is which.

The Hybrid Reality

Most mid-market organisations end up with a hybrid model whether they plan it or not. You’ve got some managed services, some in-house capability, and some cloud-native services that are effectively managed by the platform provider.

The challenge with hybrid models is governance. Who’s responsible when something breaks? If your managed firewall blocks traffic to your internally managed application because of a change your cloud provider made to their platform, you’ve got three parties pointing at each other while your business is down.

Clear accountability maps matter. For every critical system, someone—a named person, not a team—should be responsible for its availability, performance, and security. That person might coordinate across in-house teams, MSPs, and cloud providers, but the accountability should be singular and clear.

Decision Criteria

If I were advising a mid-market CTO making this decision today, I’d ask five questions.

How complex is your environment? Standard Microsoft or Google environments with common business applications are good MSP candidates. Custom applications, legacy integrations, and unusual architectures need in-house expertise.

What’s your scale? Under 100 employees, a full in-house IT team is hard to justify economically. Over 500, the cost advantage of an MSP diminishes. The 100-500 range is where the decision is genuinely difficult.

How important is IT to your competitive advantage? If technology is your product or a core differentiator, keep it close. If IT is a support function, managed services make more sense.

What’s your risk tolerance? MSPs introduce counterparty risk—if they have a bad day, you have a bad day. In-house teams introduce key person risk—if your best engineer leaves, you’re exposed. Neither option eliminates risk; they change its shape.

What’s your growth trajectory? Managed services scale more easily in the short term. In-house teams scale more efficiently in the long term once you’ve passed the threshold where hiring specialists is cost-effective.

There’s no universally right answer. Anyone who tells you otherwise is selling something. The right answer depends on your specific circumstances, and it’ll probably change as those circumstances evolve.

Make the decision deliberately. Review it annually. Don’t let inertia keep you in a model that no longer serves your organisation.