When you’re a small business, you have to make some serious judgment calls that can have serious consequences on your business – even more so when you’re scaling your business up and trying to offset the inevitable increase in costs as your company grows.

Small businesses in particular need to restrain their costs as much as possible, especially in their early years, but as companies grow, so does their need for top-class IT. And top-class IT requires investment, one way or the other.

As a small business owner, do you hire an internal team to tackle the problem? Or do you outsource to Managed IT Service Providers (MSPs)? Let’s take a look.

What is a “Small Business”?

Defining a small business can be complex, as it involves various factors like revenue, number of employees, and industry type. The best way to define a small business is by the U.S. Small Business Administration (SBA), which provides guidelines to define business sizes.

The SBA defines small businesses by firm revenue (ranging from $1 million to over $40 million) and employment (from 100 to over 1,500 employees), varying widely by industry​.

For instance, a roofing contractor with annual revenues of $16.5 million or less is considered a small business. Which is a bit stunning, as $15m in revenue per year feels like a lot, doesn’t it?

Nonetheless, what’s important is that you keep your IT costs proportional to the size of your business. If you’re a small business, keep your IT costs small – unless IT is an absolutely essential part of your business.

Do Small Businesses Need to Hire IT Professionals?

Do you need to hire an IT pro for your business at all? What if you’re an entrepreneur – just one person with a laptop, making a name for themselves? What if it’s just you and one other person?

Some of the key areas to consider when analyzing your needs and resources include:

  • The complexity of your IT systems
  • Number of employees
  • The importance of IT to your business’s operations
  • Budget and financial resources
  • Geography and location
  • Plans to expand or grow
  • Security needs
  • Client demands

We can’t tell you whether you hire an internal IT team or outsource your IT needs, as every single business is different, with different needs, sizes, and reliance on IT. However, it seems that more and more small businesses are turning to managed IT services to fulfill their IT needs.

Why? Well, in many cases, it’s cheaper to outsource your IT – and given that most businesses don’t need hyper-complex IT systems that require a bespoke team of IT pros to operate and manage it, managed IT appears to be a winner.

Services Provided by IT Professionals to Small Businesses

  • Managed IT Services (MSP): Comprehensive IT services, managing your company’s various IT needs both remotely and on-site.
  • Cybersecurity (MSSP): Often included in managed IT service packages, cybersecurity includes implementing security protocols, managing web-based application risks, and data leak prevention​.
  • Network and Infrastructure Management: IT professionals can help manage local network resources and ensure the smooth functioning of the business’s digital infrastructure​.
  • Compliance and Policy Enforcement: Ensuring that company policies and compliance measures are effectively implemented and followed​.

Hiring Managed IT Services vs. In-House IT Team: Pros and Cons

Small Business Managed IT Services Pros & Cons

  • Pros: Cost-effective, especially for businesses with a limited number of workstations. Managed services are proactive and can prevent IT issues before they occur. They also allow for budget predictability with a flat-rate monthly cost.
  • Cons: If engaging with disreputable IT providers, there’s potential security risks if the service provider is compromised. Frankly, this is pretty unlikely. There might be a disconnect in understanding the company’s objectives and priorities. This is mostly a problem with the big MSPs, as they usually service so many clients that they simply do not have the resources to care.

Small Business In-House IT Team Pros & Cons

  • Pros: Better control over technical operations and immediate response to problems from an internal point of view. In-depth understanding of the company’s infrastructure and immediate needs. Accountability directly to business owners.
  • Cons: Higher costs due to salaries, benefits, and other employee-related expenses – and that’s not including all of the time and energy you might need to spend making sure your IT department is up to snuff.

When Should a Small Business Outsource IT to a Managed Service Provider?

Owners or managers of small businesses should consider outsourcing your IT when you reach a certain scale, such as five or more workstations, or if you grow to open a second location, or hire a new team.

The reality is that only you can know when you need to outsource your IT.

It depends on the complexity of the IT needs, the scale of your operations, and – ultimately – the cost-benefit analysis of outsourcing vs. hiring in-house.

The result of that CBA is almost always managed IT services. In 2024, managed IT can save you loads on IT salaries, while also providing better services, more quickly and more efficiently than any in-house team.

When you consider the time, energy, and money you’ll spend trying to assemble a robust, dependable team of IT professionals, it really doesn’t make much sense for most small businesses to do anything but pick up the phone and call a local MSP to take over your IT services.