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Internal vs Co-Managed IT: Which is Best for My Business?

As organizations grow, they often wrestle with the “right” staffing model for their IT management. Unfortunately, most businesses choose the wrong model. They greatly overspend and settle for mediocre results. This article will briefly outline an IT staffing strategy for organizations with more than 150 employees and offer some pros and cons of each approach.


Fundamentally, there are three ways to build your IT team: All internal staff, All external staff, or a “co-managed” model. If you have fewer than 150 employees and IT is not part of your core revenue model, don’t even consider hiring an internal IT staff. Outsourcing to a qualified, high-maturity Managed Service Provider is always the right move.

Related Blog: 4 Reasons Managed Services Are Essential for Small Businesses

Internal IT Management

Most organizations make the mistake of building an internal IT staff too early, increasing risk and handcuffing their continued growth and maturity. They often hire a jack-of-all-trades “IT Manager” once they reach 50-75 users. They expect this person to handle support requests, manage the network, secure the environment, master your line-of-business applications, and help you think strategically about future growth. In reality, the person is either over-skilled for mundane requests or incapable of rising above the noise to be a strategic partner. 

In our experience, we typically see internal IT staff in healthy organizations once companies reach 250 users. In those cases, these staff are either: 

  1. Strategic resources that help you fully leverage your line-of-business applications via reporting, data analytics, process enablement, etc., or
  2. Entry-level resources that handle some basic help desk tasks to lower the cost associated with your external support team.

A good rule of thumb is to hire one internal IT resource for every 250-300 users. Once you cross the 500-user threshold, you can consider building an internal team.


Assuming your organization has the right size and scale, internal IT resources are a great way to leverage your existing IT investment. If your first internal IT resource is a strategic hire, they should focus on helping you maximize the usage of your primary business application. In that case, you should be able to calculate a clear return on investment. You should experience improved productivity numbers across the organization, more precise business insights via better analytics, or more timely management metrics like KPIs (key performance indicators). 

Internal staff also have the advantage of literally being a part of your team. They have shared ownership around organizational mission, culture, and bottom-line results. 


There is considerable business risk associated with small internal IT teams. It’s a function of too much knowledge concentrated on too few resources. They become either a bottleneck in growing organizations or a continuity risk should they leave. No one on your team knows how to train their replacement. On the other hand, business leaders sometimes feel trapped and unable to fire an underperforming IT employee for fear of how to replace them. 

Hiring internal IT staff also means that you must manage them. Many leaders feel unqualified to provide supervision for their IT staff. They claim to “delegate” IT management to their team, but in reality, they “abdicate” their leadership responsibilities. If you have internal staff, you need to know how to hold them accountable. How do you define what “good” IT looks like? What metrics will you track? (Note: EpiOn’s Measurably Better IT Whitepaper can help you define KPI’s for your IT team.) It’s also not uncommon to ask your co-managed MSP partner to assume responsibility for the day-to-day oversight of your internal team members.

Co-Managed IT

Even if you hire internal IT staff, it’s common to continue working with an outside provider in a “co-managed” model.  With co-managed IT, a managed service provider (MSP) accepts responsibility for the management and security of your IT infrastructure. They ensure your on-premises and cloud environments align with industry best practices and compliance requirements. They facilitate strategic IT conversations to align technology to your business goals and budgets. They also provide a turnkey suite of IT security and management tools to meet user needs and compliance requirements. 

Assuming you have several hundred users, to save money, organizations like yours might hire an internal, tier-one technician. They become your end users' first line of support and then escalate more advanced issues to the MSPs support team.

As you grow to more than 500 users, additional responsibilities might be shifted from the MSP to additional internal resources.


The co-managed IT model leads to a team with far more skill at a fraction of the cost of an all-internal team. MSPs provide these services on a per-user subscription basis – meaning your costs scale linearly with your growth. Through this subscription, you can access an entire team of IT pros with various skill levels and experiences that can improve your overall business. 

Improved security is another significant advantage of the co-managed model. The cyber threat landscape changes quickly. It’s difficult for your limited internal resources to stay abreast of the latest threats and defense practices. Your co-managed provider should bring an entire team of cybersecurity professionals to the relationship. They will align your IT environment with a cyber security framework, stay abreast of the latest threats, and continuously evolve your defense posture.

Last, once you hire internal IT staff, your IT environment becomes their only frame of reference. They aren’t exposed to best practices from other companies. They seldom have the time to experiment with new solutions. In short, it’s tough for them to innovate. That’s where a co-managed partner can help. They will challenge you to consider emerging technologies and to experiment with convergent technologies (solutions already common in the marketplace). They will help you identify ways to remain agile in response to market conditions. 


Like any external vendor relationship, there can be drawbacks to the co-managed model. Ultimately, you share these external resources with other companies and have less control. That means you sometimes must wait for a response or reexplain deeper nuances within your business. 

Regarding control, when you partner with an MSP, they assume responsibility for hiring decisions, security configurations, and IT tool selection. They deliver their service as a turnkey IT offering with limited ability for you to customize the resources within the service. Depending on their decisions (or your desire to help make those decisions), this could be a positive or a negative for you.

Last, all MSPs are not created equal. Since you are a more significant business in terms of size, you must work with a “high-maturity” MSP. One that is highly structured regarding business processes, security maturity, and staff responsibilities. Make sure they have a track record of co-managed support and experience in sharing responsibilities with an internal IT team. Working with a low-maturity MSP can lead to chaotic results. 

Which is Best for My Business?

The choice between internal and co-managed IT services hinges on your business's unique requirements and constraints. Internal IT management offers the comfort of in-house data control, dedicated attention, and streamlined operations, but it comes with higher costs and staffing challenges. On the other hand, co-managed IT provides a cost-effective solution with access to a diverse range of skills and technology, with less direct control and potential limitations in customization. Each has its merits and drawbacks, and the best decision will align with your company's operational priorities, budgetary considerations, and the strategic importance of IT in your growth trajectory. 

At EpiOn, we are a high-maturity Managed Service Provider serving Nashville, Knoxville, Chattanooga, and points in between. Our approach is built around the Measurably Better ITTM Framework that empowers innovative business leaders with simple metrics to help reduce risk, increase security, improve productivity, and fully leverage their IT investment. We believe that IT should be all about helping you achieve an Outcome with clear metrics and a shared definition of success. We specialize in full-service outsourced IT as well as co-managed IT. We also excel in cyber security, cloud solutions, and voice-over-IP for an additional layer of security. Our customer-focused framework strives to understand the unique needs and challenges of each client in order to provide the solution that’s best for them. Our framework and commitment are why we consistently rank among the top IT firms in the world.