Outsource IT or Hire In-House? A Practical Guide for London Businesses

The decision to outsource IT or build an in-house team is one of the most consequential technology choices a business leader can make. Get it right and you gain access to broad expertise, predictable costs, and a proactive service that supports your growth. Get it wrong and you face skills gaps, rising overheads, and an IT environment that needs to be rebuilt from scratch.

This guide, drawn from the Wavex whitepaper authored by CEO Gavin Russell, provides an unbiased review of both models - covering skills, costs, governance, and the practical realities that most comparisons overlook. Whether you are a growing SME considering your first IT hire, or an established business reviewing whether outsourced IT services still make sense, the framework here applies.

The Three Components Every Business Needs from IT

Before comparing in-house and outsourced models, it helps to understand what an IT function actually needs to deliver. There are three distinct layers, and every organisation - regardless of size - needs all three covered.

• Strategic: Someone defines the IT strategy. This may be straightforward (keep systems running) or sophisticated (support M&A activity, reduce risk profile, achieve GDPR compliance). Strategy sets the direction for all IT investment.
• Managerial: Someone is responsible for IT within the business. This does not need to be a technical expert - but it does need to be someone with the authority to approve decisions and hold the IT function accountable.
• Operational: The functions that deliver the actual IT service - end-user support, infrastructure management, security, and project delivery.

The challenge is that no single person can competently perform all three functions. Businesses therefore either hire multiple people or outsource to a managed service provider that can cover all three layers under one contract.

What IT Model Works at Each Business Size?

The right IT model is not fixed - it changes as your organisation grows. The table below summarises the typical successful model for businesses of different sizes, based on real-world patterns across hundreds of organisations.

For the majority of businesses under 500 users, the decision is not whether to outsource, but what to outsource. Even at 500+ users, most organisations outsource specific components - security operations, project delivery, or specialist consultancy - rather than running a fully self-sufficient IT department.

The Skills Problem with In-House IT

Even a straightforward Microsoft 365 environment requires a range of skills: networking, security, Active Directory, desktop technologies, and cloud administration. A single in-house engineer cannot realistically maintain competency across all of these areas, particularly as technology evolves.

This creates a structural problem. Smaller businesses often lack the in-house IT knowledge to properly assess candidates during recruitment. The result is that the successful hire may have insufficient knowledge in critical areas - and neither the business nor the candidate is aware of the gap. As the whitepaper notes: 'you don't know what you don't know' is particularly true of junior engineers who overestimate how broadly their skills apply.

The downstream consequence is that systems are rarely set up using best-practice principles - change management, capacity planning, risk assessments. Over time, instability and security risks accumulate, and the business ends up with an IT environment that needs to be rebuilt rather than maintained. This is one of the most common scenarios Wavex encounters when onboarding new clients from in-house IT arrangements.

The Real Cost of In-House IT

Cost comparisons between in-house and outsourced IT are frequently misleading because they focus only on salary. For a 50-user organisation, the true picture looks quite different.

The true cost of in-house IT staff is often double the basic salary figure once overheads are factored in. For a 50-user business, this means the in-house model can cost three to four times more than a well-structured outsourced IT services arrangement - before accounting for the skills limitations described above.

Addressing the 'Hidden Extras' Concern with Outsourcing

A common concern about outsourcing is that the initial price looks attractive but the provider will push for expensive technology investments or charge for every additional activity. This is a legitimate risk, and the whitepaper addresses it directly.

The solution is a robust IT roadmap - a 12 to 24 month plan that sets out all the activities required to maintain and improve the IT environment, with costs attached. A good managed IT services provider will produce this roadmap as part of the engagement, allowing the business to review overall IT spend, push back on timing, and align activities to budget cycles.

A 50-user organisation should expect to spend around £50,000 per year on project activity, in addition to the managed service fee. This is not a hidden cost - it reflects the genuine investment required to keep IT current, secure, and aligned with business needs. The difference is that with a roadmap, it is planned and predictable rather than reactive and disruptive.

Head-to-Head: Internal IT vs Outsourced

The overview table below summarises the key differences across the dimensions that matter most to business leaders.

The Hybrid Model

The choice is not binary. Many businesses successfully operate a hybrid model, retaining some IT skills in-house while outsourcing others. A common arrangement is an internal IT manager or IT director who owns the relationship with the business, combined with an outsourced managed IT support provider handling operational delivery, security, and projects.

For this model to work, responsibilities need to be clearly defined and both parties need to collaborate effectively. The risk is that accountability becomes blurred - particularly around security incidents or project failures. A well-structured hybrid arrangement with clear service boundaries and regular governance meetings can avoid this.

When Does In-House IT Make Sense?

As businesses grow towards 500+ users, the internal systems often become more complex and unique to that specific organisation. At this point, the case for in-house IT strengthens because specialist staff can be trained on the organisation's own systems and processes in a way that a generalist outsourced provider cannot replicate.

Even at this scale, however, most organisations continue to outsource specific components - cybersecurity and compliance, specialist cloud projects, or out-of-hours support desk coverage. The question shifts from 'outsource or hire' to 'what should we outsource and what should we retain.'

Frequently Asked Questions

Download the Full Guide

The full Wavex whitepaper includes the complete cost comparison tables, the business size model, and practical guidance on evaluating IT providers. Download it using the button above, or contact the Wavex team to discuss how we can help assess whether outsourced IT is the right fit for your organisation.