Mid-market businesses in healthcare, manufacturing, professional services and beyond often face a dilemma when managing IT. Internal IT teams can only stretch so far, and the demands of modern technology–from cybersecurity to compliance–keep growing. This post explores two common approaches: fully outsourced IT with a Managed Services Provider (MSP) versus co-managed IT services (a hybrid model with both internal and external IT). We’ll candidly break down the pros and cons of each, share real-world scenarios (like a fast-growing healthcare group and a strapped-for-resources law firm), and help you figure out what’s right for your organization.
The Mid-Market IT Dilemma: Bandwidth, Budgets, and Backlogs
Mid-market companies rely on technology to stay competitive, but many have small IT teams that are overwhelmed. These teams handle everything from network upkeep to user support, often with limited manpower. As a result, projects pile up, response times slow, and critical tasks can slip through the cracks. In fact, even the best in-house IT departments have limits – they may lack specialized expertise or simply the bandwidth to keep up with ever-evolving cyber threats and user demands.
Real-world pain points frequently heard from IT managers include:
- Staff bandwidth limitations: Internal IT staff are juggling daily fire-fighting with strategic projects. It’s hard to innovate when you’re resetting passwords and fixing printers all day.
- Budget constraints: Hiring and retaining a full bench of IT specialists (security pros, cloud architects, compliance experts, etc.) is expensive. Many mid-market firms can’t justify an enterprise-sized IT headcount, yet they need similar skills.
- Cybersecurity coverage: Threats like ransomware and phishing are growing, but 24/7 monitoring and incident response require tools and expertise that overstretched teams might not have. Overwhelmed internal teams often lack the time to proactively stay ahead of sophisticated attacks.
- Compliance requirements: Industries like healthcare and finance have strict regulations (HIPAA, PCI DSS, etc.). Meeting these standards demands constant vigilance and up-to-date knowledge. A small IT team can struggle to maintain compliance while also keeping the lights on.
- Project backlog: Important IT projects (cloud migrations, new software rollouts, infrastructure upgrades) get delayed because the team is busy with day-to-day support. The backlog grows, which can stall business growth and innovation.
These challenges drive many businesses to seek outside help. The question becomes: do you fully outsource IT to an MSP, or do you co-manage by partnering your internal team with MSP experts? The right choice depends on your situation, so let’s define each model and then weigh its advantages and drawbacks.
Ready to Strengthen Your IT Strategy?
Fully Outsourced IT (Fully Managed Services)–Complete Hands-Off Support
In a fully managed IT services model, you outsource your entire IT environment to an MSP. The provider takes full responsibility for all IT functions – from everyday help desk support to long-term strategy and cybersecurity. It’s essentially a turnkey IT department staffed by the MSP. If your company has little or no internal IT staff (or you want to offload IT entirely), this model can be a great fit.
How it works: With a fully outsourced MSP, the external team handles everything – network monitoring, hardware management, software updates, cybersecurity defenses, data backups, user support, compliance, you name it. Your in-house employees can focus on their core jobs while the MSP keeps the tech running smoothly. It’s like hiring an expert pit crew so you can drive the race without worrying about the mechanics.
Pros of Fully Outsourced IT:
- Comprehensive 24/7 support: A good MSP will monitor systems around the clock and respond to issues before they escalate. You gain proactive support and minimize downtime without needing to build a 24/7 in-house shift .
- Access to broad expertise: MSPs employ specialists across many disciplines (cloud, cybersecurity, compliance, etc.). As a client, you tap into this deep bench of IT talent without hiring multiple full-time experts yourself. This is invaluable for mid-market firms that can’t staff every niche role.
- Predictable costs: Fully managed services typically charge a fixed monthly fee. This means predictable IT spending with no surprise break-fix costs. In fact, 83% of businesses report that fully managed IT lowered their overall IT costs by improving efficiency. You avoid large capital expenditures on infrastructure and benefit from the MSP’s economies of scale.
- Focus on core business: With IT off your plate, your team (and any internal IT leaders you do have) can concentrate on strategic projects and business goals instead of day-to-day troubleshooting. The MSP handles the “keeping the lights on” tasks, freeing up your time and energy.
Cons of Fully Outsourced IT:
- Less direct control: Handing over IT entirely means you give up some control over daily IT decisions and priorities. A reputable MSP will align with your business objectives, but you might feel a little distanced from the tactical IT operations. For some, that loss of control (and the trust required) is a bit uncomfortable.
- High dependency on provider: If the MSP has an outage or service issue, your operations could be impacted since they’re managing everything. Your business becomes highly dependent on that one provider’s reliability. This makes it critical to choose an MSP with a strong track record and perhaps an out-clause or backup plan in your contract.
- One-size-fits-all concerns: A fully outsourced model may be less personalized if the provider uses a standardized approach. Mid-market firms sometimes worry that an MSP won’t understand the nuances of their business or industry as well as an internal team. Communication is key to ensure your MSP becomes a true partner rather than a distant landlord of your IT. (That said, many MSPs pride themselves on tailoring services – it’s just an area to manage carefully.)
When it makes sense: Fully outsourcing is ideal if you don’t have (or can’t maintain) an internal IT team, or if you’re facing serious challenges hiring and retaining IT talent. It’s also attractive for companies that want to focus on their core competencies and leave IT to the experts. For example, consider a financial services firm that must meet SOX and PCI compliance but has no internal IT staff. They might sign a fully managed services contract to get a turnkey IT solution with built-in regulatory expertise, 24/7 monitoring, help desk, and strategic guidance – all while avoiding the need to recruit an entire IT department themselves. Fully managed IT can give mid-sized businesses enterprise-grade IT capabilities in one package.
Co-Managed IT Services – The Best of Both Worlds?
Co-managed IT services offer a hybrid approach: your internal IT team and an external MSP collaborate to handle IT operations. In this model, you keep your in-house IT staff (so you maintain institutional knowledge and on-site presence) but fill in the gaps by outsourcing specific tasks or projects to the MSP. It’s like having a partner or co-pilot for your IT department. You decide which responsibilities to retain and which to hand off, creating a custom support arrangement that supplements your team’s strengths and shores up their weaknesses.
How it works: With co-managed IT, both parties share the workload according to a game plan you define together. For instance, you might let the MSP handle all your cybersecurity operations (patch management, threat monitoring, incident response, compliance reporting, etc.) while your internal staff continues doing on-site user support and day-to-day ticket handling. Meanwhile, the MSP can be on standby to assist your help desk with any complex issues that require escalation. In another scenario, an internal team could manage business applications and strategic planning, and lean on the MSP for backend infrastructure maintenance and 24/7 network monitoring. Flexibility is the name of the game – the division of labor is tailored to your needs and can evolve over time. The key is that you retain control of your IT direction, but you’re augmented by outside expertise and manpower where you need it.
Pros of Co-Managed IT Services:
- Augmenting (not replacing) your team: Co-managed IT is a collaborative partnership. Your internal IT folks aren’t sidelined – instead, they get extra hands and expert help. This can significantly lighten the load on an overworked team and prevent burnout, while boosting morale by letting them focus on high-value tasks instead of every tedious ticket. Think of it as giving your team a “relief valve” when they’re stretched thin.
- Targeted expertise and coverage: With an MSP as a co-pilot, you instantly fill knowledge gaps. If you lack a cybersecurity specialist, you can have the MSP take on that role. If cloud or compliance is new to your team, your MSP can provide seasoned experts. Over 63% of businesses use co-managed services specifically to enhance security without overburdening their staff. It’s a practical way to get specialized skills (and modern tools) on deck only when needed, rather than hiring full-time. Plus, your MSP partner can implement best practices and new technologies faster, keeping your environment current.
- Scalability and flexibility: Co-managed agreements are typically flexible month-to-month, making it easy to adjust services as your needs change . You can scale up support during a major project or a busy season, then scale down after. This elastic approach means you pay for what you need, when you need it – whether that’s extra help desk technicians during a merger, or additional security monitoring during a cyber scare . If your business is growing rapidly, co-managed IT can help your IT capabilities grow in step, without the lag of hiring and training new staff for each spike in demand.
- Cost efficiency: Because you’re leveraging external help only in certain areas, co-managed IT can be cost-effective compared to both hiring full-time staff for every role and fully outsourcing everything. One analysis noted that using an MSP’s expertise as needed can reduce overall IT costs by up to 30%. You avoid the salary, benefits, and overhead of additional in-house hires, and you typically get a predictable billing structure for the outsourced portion. Additionally, co-managed models let you reallocate your budget to the most critical areas – e.g. invest in one or two strategic internal IT roles, and outsource the rest – rather than spreading resources too thin.
- Maintain control and institutional knowledge: Unlike fully outsourcing, co-managing means your internal team stays in the driver’s seat on daily IT operations and decision-making. You retain valuable institutional knowledge of your business systems. The MSP is there to complement your team, not override them. If keeping a tight hold on IT strategy or having on-site personnel is important to you, co-management offers that comfort. You essentially get to “call the shots” and define how the partnership works. This can be very attractive to companies that have built a strong IT culture or have unique internal systems that an outside firm would need guidance on.
Cons of Co-Managed IT Services:
- Requires a capable internal team: Co-management assumes you have some internal IT staff in place with the skills to collaborate. If your team is very limited or inexperienced, the co-managed model could struggle. For example, if you have zero IT people, co-managed isn’t really feasible – you’d lean toward fully managed in that case. Or if your one IT person is junior and lacking experience, they might not be able to effectively share responsibilities. A baseline level of internal IT competency is needed to get value from co-managed services.
- Communication and coordination are vital: When two teams (your internal folks and the MSP’s technicians) share duties, communication must be seamless. If roles and processes aren’t clearly defined, things can slip through cracks – e.g. a server patch not applied because each thought the other was doing it. Miscommunication can also lead to duplicated work or security gaps . To avoid this, you’ll need to invest time in governance: regular check-ins with the MSP, clear documentation of who handles what, and a culture of teamwork. Not every MSP is great at co-managed arrangements (it requires flexibility), so choosing the right partner is key.
- Potential internal resistance: Let’s be honest – sometimes internal IT staff can feel threatened by the introduction of an external partner. There might be fears of being replaced or doubts about the outsiders understanding the environment. A co-managed strategy can fail if your team isn’t on board. It’s important to set the tone that the MSP is there to support and empower the internal team, not replace them. When executed well, co-managed IT should actually make your employees’ jobs saner and more secure (no more being on call 24/7 alone!). But this cultural aspect is a consideration; leadership needs to handle it candidly. As one mid-market IT expert noted, bringing in co-managed support can protect the company if a key IT person leaves or retires, ensuring continuity instead of all eggs in one basket. Framed correctly, it’s a win-win for the internal team and the business.
When it makes sense: Co-managed IT services are ideal if you already have an IT department (even a small one) that’s struggling to meet all the demands. It shines for growing companies with complex needs – for instance, a healthcare group expanding rapidly. They have a competent internal IT director and maybe a few technicians, but they’re swamped onboarding new clinics, handling electronic health record (EHR) systems, and managing HIPAA compliance. By partnering with an MSP in a co-managed setup, they can offload specialized tasks like round-the-clock security monitoring and compliance auditing to the MSP, while the in-house team handles daily onsite support. This ensures the organization stays secure and HIPAA-compliant without overworking their staff. On the flip side, a resource-constrained professional services firm (like a law firm) with one IT administrator might use co-managed IT to fill critical gaps – the MSP could take over advanced cybersecurity and cloud management, areas the lone IT person can’t cover, effectively giving the small firm enterprise-level IT capabilities without breaking their budget. In short, if you can retain your internal IT talent but need to extend your bench and skills, co-management is a powerful model.
Figure: A small law firm can benefit from co-managed IT services by having an MSP cover areas like cybersecurity and compliance, while the internal team (or even a one-person IT staff) handles daily support. For example, a resource-constrained law practice with one in-house IT specialist might use an MSP for 24/7 threat monitoring, data backups, and regulatory updates, ensuring client data stays protected and compliant. This hybrid model lets the firm gain enterprise-grade security tools and expertise at a fraction of the cost of building a full IT department.
Scenario 1: The Fast-Scaling Healthcare Group
BrightHealth Clinics (hypothetical example) is a mid-sized healthcare group that has grown from 3 locations to 10 within two years. Their challenge? Growing pains in IT. They have a small internal IT team – one IT manager and two support techs – who are running ragged. Setting up new clinic locations, managing EHR systems, handling a deluge of help desk tickets from doctors and staff, and ensuring HIPAA compliance for patient data has become overwhelming. Recently, a server outage at one clinic went unnoticed for hours because the team was busy elsewhere, and a compliance audit revealed some security patches were behind schedule. The IT manager is worried that, with their limited bandwidth, cybersecurity vulnerabilities could slip in and compliance requirements might not be consistently met.
Fully Outsourced Option: BrightHealth could decide to fully outsource IT to an MSP, essentially handing over all IT operations. The MSP would provide onsite and remote support to all clinics, manage the EHR servers, ensure data encryption and HIPAA compliance measures are in place, and monitor everything 24/7. This would immediately give BrightHealth access to a larger IT team, including security experts and compliance consultants. It would also free the clinic leadership from day-to-day IT headaches – a boon, since their focus is on patient care. However, BrightHealth’s leadership worries about losing the personal touch and healthcare-specific knowledge that their internal IT team provides. Healthcare has unique applications and urgency (when a doctor needs something, it’s critical), and they value that their internal folks understand the clinical environment. Fully outsourcing might introduce a learning curve for the MSP to get up to speed on BrightHealth’s systems, and the clinic’s IT manager is reluctant to completely give up control over the IT roadmap.
Co-Managed Option: Alternatively, BrightHealth can adopt a co-managed IT services model. They choose to keep their internal IT team in place, but partner with a healthcare-savvy MSP to augment their capabilities. After assessing gaps, they decide the MSP will take over network monitoring, cybersecurity, and high-level infrastructure management, plus provide an after-hours help desk. The internal team will continue handling on-site support during work hours and liaising with clinic staff (since they have good relationships and knowledge of the EHR workflows). Now BrightHealth gets the best of both worlds: The MSP’s security operations center watches over their systems all night, patching and protecting against threats (no more worry that an attack will go unnoticed) . Compliance reporting is handled through the MSP’s tools, so HIPAA audits become much less stressful. Meanwhile, the internal team is no longer firefighting 24/7 – they can actually plan improvements (like that new telemedicine platform the clinics want) and respond faster to day-to-day requests since some burdens are lifted. The project backlog (like rolling out new patient portal features) starts shrinking as the MSP resources assist on projects too. Co-management allows BrightHealth to scale up confidently, knowing IT will support their growth rather than hinder it. In this scenario, co-managed IT services clearly address the bandwidth and security pain points – BrightHealth keeps control over healthcare-specific IT decisions but gains the support to prevent issues and stay compliant.
Curious About Co-Managed IT?
Scenario 2: The Resource-Constrained Law Firm
Now consider Smith & Jones LLP, a 100-person law firm specializing in corporate and tax law. They have one “accidental techie” on staff – Michael, who handles IT in addition to other operations duties – and an external on-call consultant for occasional support. The firm faces increasing cybersecurity risks (law firms are juicy targets for hackers due to sensitive client data) and needs to comply with client-imposed security requirements and data privacy laws. Michael is drowning in daily tech support issues from attorneys and staff (password resets, printer problems, onboarding new employees’ laptops, etc.). Strategic IT initiatives like improving their document management system or implementing better email encryption keep getting pushed off – there’s simply no time or expertise. The firm’s partners worry that a serious data breach or tech meltdown could occur, given their limited IT resources. Budget-wise, they can’t justify hiring a full IT department, but doing nothing is getting risky.
Fully Outsourced Option: Smith & Jones could engage a fully managed IT provider to take over all IT operations. This MSP would become their de facto IT department: providing a 24/7 help desk for the staff, managing all workstations and servers, implementing robust cybersecurity tools, and guiding IT strategy (e.g. moving them to a better cloud suite, ensuring backups, etc.). For the law firm, this offers peace of mind – they’d get expertise in protecting legal data and meeting compliance standards (like data retention policies or client confidentiality requirements) without having to build it themselves. Fully outsourcing would also relieve Michael from his unofficial IT burden so he can focus on his other role in operations. The trade-off? Cost and control. The monthly fee for fully managed services is significant, though likely still less than hiring a couple of full-time IT employees with benefits. More importantly, the partners worry about responsiveness and understanding – will an outside team truly grasp the urgency when an attorney’s laptop crashes an hour before a court filing deadline? They fear losing the personal touch and the immediate availability of “someone down the hall” for IT needs, even though Michael is overextended.
Co-Managed Option: The firm might choose a co-managed route instead: keep Michael as the internal point person (he knows the firm’s people and processes well), but bring in an MSP to bolster everything around him. In this model, the MSP could handle all the heavy lifting on cybersecurity – deploying advanced threat protection, monitoring for breaches, ensuring secure remote access for attorneys, and regularly updating firewalls. They could also take over routine maintenance like software updates, cloud backups, and after-hours support. Michael remains the on-site presence for immediate needs and coordinates with the MSP on bigger issues. Co-management here effectively transforms Michael’s one-man show into a team effort: he’s no longer alone in managing IT risk. The firm benefits from enterprise-grade security and reliability (the MSP might, for example, implement encryption and intrusion detection that the firm never had before), and they still have a familiar face internally who understands the idiosyncrasies of their practice. This approach is often touted as ideal for organizations that have at least one internal IT resource but not enough capacity to do it all . Financially, co-managed services for Smith & Jones can be structured to fit their budget – maybe a smaller fixed retainer for core services, with optional projects as needed. The flexibility to scale support up or down is valuable if the firm has seasonal busy periods (e.g. tax season) – they can have the MSP handle more during crunch time and scale back after. In this scenario, co-managed IT would likely be the right fit: it fortifies the firm’s IT and cybersecurity posture without completely outsourcing institutional knowledge or breaking the bank.
Making the Right Choice for Your Business
As these examples show, both models have merit – it truly depends on your organization’s needs, existing resources, and comfort level. Here are some key considerations to help guide your decision:
- Do you have an internal IT team? If you don’t have any IT staff or your team is extremely limited, a fully outsourced MSP might be the most straightforward solution. It’s perfect for companies that need comprehensive IT coverage delivered turn-key. On the other hand, if you do have a capable IT crew that’s just overstretched or missing a few skills, co-managed IT services can empower your team by filling those gaps. It lets you keep your team (and their hard-earned internal knowledge) while eliminating the pain points that come from being understaffed or lacking certain expertise.
- Where are your biggest pain points? Identify if your primary challenges are around daily operational support or around high-level expertise and strategy. Fully managed is like a worry-free package – ideal if you want all aspects of IT handled because you can’t address them internally (e.g. you need security, compliance, help desk, infrastructure, everything taken care of). Co-managed is great for targeting specific problem areas – maybe you handle day-to-day fine, but you need help with cybersecurity and compliance (a common scenario, as security threats have gotten very sophisticated ). Or vice versa: your small team might handle the business apps well but struggles with 24/7 support and projects. Co-management lets you offload the functions that bog you down or require outside knowledge .
- How much control do you want? Be honest about your company culture and preferences. Some businesses are comfortable outsourcing outcomes as long as SLAs are met; others prefer to have hands-on involvement. If you’re in the latter camp, co-managed will likely feel better – you’ll retain direct control over IT decision-making and can steer the ship, with the MSP as an enhancement. If you’re fine focusing elsewhere and just want IT “handled,” fully managed offers that relief, acknowledging you’ll be trusting a partner for a lot. Remember, outsourcing doesn’t mean abdicating all say – you should still set goals and strategy with a good MSP – but day-to-day control is different between the models.
- Budget and ROI: Fully outsourcing might come with a higher monthly price tag since it’s all-inclusive, but it could replace the cost of multiple hires and potentially reduce downtime costs (which have their own ROI). Co-managed agreements are often more à la carte and flexible cost-wise – you pay for specific services or hours. If you have a limited budget, co-managed can be a way to get critical support without paying for components you don’t need. For instance, you might not need to pay an MSP for on-site visits if your internal team can handle those; instead, spend on an MSP-managed cloud backup solution and virtual CIO consulting a few times a year. Run the numbers for both models, including “soft” savings like risk reduction. Many businesses find fully managed services lower their overall IT costs through efficiency, but others find a hybrid approach stretches their dollars further by allocating resources where they’re most needed.
In many cases, the decision isn’t binary forever. You might start fully outsourced and later transition to co-managed as you hire internal staff, or vice versa. The good news is that reputable MSPs will often customize their offering to your situation – the line between “fully” and “co-” can be adjusted. For example, you could begin co-managed with an MSP handling 80% of IT and your team 20%, and if your team grows, shift that balance over time.
See It in Action
Key Takeaways
- Co-managed IT services involve partnering your internal IT team with an MSP to share responsibilities, whereas fully outsourced IT means the MSP handles everything while you maintain minimal in-house IT. There’s no one-size-fits-all answer – it depends on your internal capabilities and business needs .
- Fully outsourced MSP model advantages: all-inclusive expertise (covering security, support, strategy), 24/7 coverage, predictable costs, and letting your staff focus on core business . It’s ideal for organizations without a strong internal IT presence or those who want to offload IT completely. Downsides include reduced direct control and high reliance on the provider .
- Co-managed IT advantages: you keep control and institutional knowledge in-house while gaining on-demand access to specialized skills and extra manpower. It’s highly flexible and can address specific pain points like cybersecurity or project overload . This model assumes you have an internal team to collaborate with the MSP, and it requires good coordination to avoid miscommunication .
- Real-world scenarios: A rapidly growing healthcare group might choose co-management to ensure compliance (e.g. HIPAA) and security are handled by experts, allowing their small IT staff to keep up with expansion . A law firm with limited IT resources could start with co-managed services to strengthen cybersecurity and client data protection, or even opt for full outsourcing if they lack any internal IT – gaining a virtual IT department to meet their needs.
- Decision factors: Audit your situation – team size and skill, pain points, desire for control, and budget. If IT is a bottleneck holding your business back (frequent outages, security worries, slow tech adoption), some form of MSP partnership is likely worth it. Whether that’s full outsourcing or co-managed support will hinge on how much of a role your internal team can and should play going forward.
- Expert tip: Whichever route you consider, choose an MSP that has experience with your industry and company size. Mid-market firms in healthcare, manufacturing, or professional services have unique needs (compliance, legacy systems, etc.). The right partner – whether co-managing or fully managing – will understand your world and speak your language. As Meriplex advised, not all providers are equal, so do your homework to find one with the tools, flexibility, and cultural fit for your business .
In the end, co-managed IT services vs. fully outsourced MSPs isn’t a battle with a single winner – it’s about finding the model that aligns best with your organization’s strategy and constraints. An honest assessment of your IT pain points and goals will illuminate the right path. You might even find that a blended approach gets you to the finish line: start co-managed to support your existing team, and if someday you decide to streamline further, you’re already partnered with an MSP who can take on more. Or vice versa, start fully managed to stabilize things, then bring back certain functions in-house as you grow. The ultimate goal is to leverage the option that solves your real-world problems – be it bandwidth limitations, budget pressures, security fears, compliance headaches, or project backlogs – so that IT becomes a driver of your success rather than a hurdle. With the right approach (and the right partner), your mid-market business can enjoy reliable, expert IT support tailored exactly to your needs. Now that’s a winning strategy, no hard sell required.
