Internal vs. External IT Team: Which is right for you?

Navigating the tech maze of the 21st century? You're not alone. One of the key decisions every business faces is choosing between an internal and external IT team. It's a pivotal choice, affecting everything from your day-to-day operations to your bottom line. 

In this comprehensive guide, we'll break down the pros and cons, compare costs, and even explore a blended approach. Get ready to make an informed, savvy decision that could elevate your business to the next level.

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Understanding Internal IT Teams

An internal IT team, also known as an ‘in-house team’, can be a lot of work and cost to maintain, but it has many benefits. Let’s take a closer look at the pros and cons of having an in-house IT team.

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Pros

Having an internal IT team means you have people who are deeply ingrained in your company's culture and objectives. They understand the unique challenges and needs your organization faces, often leading to quicker decision-making processes. Additionally, the direct line of communication between your internal team and other departments can result in more efficient problem-solving.

• Deep Company Knowledge: Understands the unique challenges and needs of the business.
• Quick Response Time: A direct line of communication enables efficient problem-solving.
• Alignment with Business Goals: Better tuned to organizational objectives and can adapt quickly.

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Cons

However, the convenience of an in-house IT team comes with its drawbacks. For instance, your in-house staff may not have as broad a range of expertise as an external team. The overhead costs — including salaries, benefits, and office space — can also add up, making it a more expensive option in some cases. Plus, your internal team might be less equipped to stay up-to-date with the rapidly changing tech landscape.

• Limited Skill Set: May not offer as broad a range of expertise as an external team.
• Higher Overhead Costs: Salaries, benefits, and office space can be expensive.
• Challenges in Keeping Up: May struggle to stay updated with rapidly changing technology.

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What You Should Know About External IT Teams

More and more companies are switching to using external IT teams, or MSPs, for their business. It offers many pros and also cons, that one must consider. 

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Pros

Opting for a Managed Service Provider often means you're getting specialists with a wide range of skills and cutting-edge knowledge. These teams are usually more scalable, allowing you to expand or contract the level of service as your business needs change. Since they work with multiple clients, they bring a diverse experience that can be beneficial for solving complex challenges.

• Specialized Skills: Offers a wide range of specialized, up-to-date skills.
• Scalability: Easier to expand or contract service levels and capacity as needs change.
• Diverse Experience: Working with multiple clients provides a broader perspective.

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Cons

On the flip side, an external IT team may not have the intimate understanding of your business that an internal team would. This can sometimes lead to longer response times and a less cohesive approach to problem-solving. Furthermore, the costs can be unpredictable, varying with the level of service and expertise required.

• Less Business Familiarity: May lack an intimate understanding of your specific business needs.
• Longer Response Times: Indirect communication can result in delays.
• Variable Costs: Expenses can be unpredictable and may vary with the level of service.

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Comparing Costs of In-House IT and Outsourcing

The financial aspects can't be ignored when choosing between an in-house team and an MSP. While an internal team has fixed costs like salaries and benefits, an external team comes with variable costs that can change based on the specific services rendered. Be sure to do a comprehensive cost analysis to understand what you're really spending in both scenarios.

By looking at costs from these multiple angles, you'll gain a more comprehensive understanding of the financial implications of your decision, making it easier to select the option that provides the best value for your investment.

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Initial Setup Costs

First, let's talk about the cost of getting started. An internal team will require an initial investment in infrastructure — this includes hardware, software, and networking resources. You may also have recruiting and training costs. 

Depending on your contract, partnering with an MSP may cover their own setup costs or charge a one-time onboarding fee to integrate their systems with yours.

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Salaries and Benefits

The most obvious expense with an in-house IT team is salary, and don't forget to add extras like health benefits, retirement plans, and potential bonuses. This can quickly inflate the total cost. 

External IT services usually charge a fixed monthly or yearly fee, or they may bill based on the services rendered. It's crucial to calculate the total yearly cost for each model to make a fair comparison.

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Overhead Costs

An in-house IT team will use physical space in your office, consume electricity, require office supplies, and so forth. These overhead costs can be considerable. 

With an MSP, the overhead is generally part of the package—you're not directly billed for the electricity they use or the space they occupy.

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Skill Diversification Costs

If your internal team lacks certain skills, you may need to spend on training programs or hire additional staff. 

When working with an external team, you usually have access to a broader range of skills without having to invest in training. However, specialized services could come at a premium price.

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Maintenance Costs

Both internal and external teams require ongoing maintenance, but the costs may differ. Your internal team will need continuous training to stay updated with the latest technologies, and you'll have to replace outdated equipment periodically. 

External teams generally maintain their own training and equipment but may pass on incremental costs in the form of service fees.

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Scalability Costs

With an internal team, scaling up could mean recruiting more staff, putting in place managers and department leaders, buying more hardware, and so on. 

External teams often offer scalable plans, allowing you to adjust your package based on your current requirements, which could be more cost-effective in the long run.

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The Blended Approach (AKA Co-Managed IT Services)

For those who find themselves torn between these two options, consider a blended approach. This combines the strengths of both internal and external IT resources. Your internal team can focus on core business functions while you can outsource an IT team for specialized tasks that require niche skills. This way, you get the best of both worlds.

Your in-house IT staff can focus on strategic business objectives that require an in-depth understanding of your company culture, workflow, and long-term goals. In parallel, the external IT team can take over specialized tasks such as cybersecurity, cloud management, or data analytics. This ensures that highly specialized tasks are executed by experts in the field while keeping strategic alignment in-house.

The blended approach can also offer a middle ground in terms of cost. Instead of maintaining a large internal team with specialized skill sets that you may only need occasionally, you can have a smaller in-house team for day-to-day operations. The external team can be brought in for project-based work or specific tasks that require their specialized skills, effectively controlling your overhead costs.

At Velo IT Group, we refer to this blended approach as Co-Managed IT Services. Simply meaning, we provide Managed IT Services in conjunction with your internal IT person or team. This allows the deep integration of an internal resource with the broad subject matter expertise of an external Managed IT Services team, giving you the best of both worlds. 

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Final Thoughts

Choosing between an internal and external IT team is no small feat — it's a decision that carries significant operational and financial implications. From understanding the intricacies of your business to offering specialized services, each has its pros and cons. And let's not forget the allure of a blended approach that aims to give you the best of both. 

For whatever path you choose, you must seek expert advice, a quick chat with Velo IT Group can shed a lot of light on your particular situation. Reach out to Velo today for a no-stress, no-pressure consultation to learn more about these options and how they would apply to your business.