Your IT Department Is Costing More Than You Think—Here’s the Breakdown

When business leaders evaluate their IT spend, they often look only at line items like hardware, software licenses, or a few salaries. But the real cost of running an internal IT department is far more complex—and in many cases, far higher than expected. 

From staffing and training to turnover, tools, and compliance, internal IT costs quietly pile up. If you're a COO, CFO, or business owner making decisions about IT investment, understanding the full picture is essential. 

Here’s a detailed breakdown of what your internal IT department is really costing you—and what alternatives might make more financial (and operational) sense. 

The True Cost of Internal IT: By the Numbers

1. Staffing and Salaries

An average IT department requires multiple roles to be effective: 

• Help desk technician: $55,000/year 

• Network administrator: $75,000/year 

• Cybersecurity analyst: $95,000/year 

• IT manager/director: $115,000/year 

Total annual salary burden: $340,000+ (not including benefits and overhead) 

Add 20–30% for benefits, taxes, and insurance, and you're looking at well over $400,000/year for a modest IT team. 

2. Tools, Software, and Licensing

In-house teams need a full stack of enterprise tools to operate effectively: 

• Endpoint protection & antivirus 

• Patch management 

• Backup and disaster recovery 

• Network monitoring 

• Password and identity management 

• Email security 

• Ticketing/help desk systems 

Estimated monthly software/tooling cost: $2,500–$5,000 

 Annual cost: $30,000–$60,000 

3. Training and Certifications

Technology evolves quickly—and your internal team needs to keep up: 

• Ongoing training (cybersecurity, compliance, cloud) 

• Vendor certifications (Microsoft, Cisco, AWS, etc.) 

• Security awareness programs for staff 

Estimated annual training budget per employee: $3,000–$7,000 

 For a team of four: $12,000–$28,000/year 

4. Turnover and Downtime Costs

IT has one of the highest turnover rates in business functions. Replacing a skilled IT staff member can cost 50–200% of their annual salary. 

Plus, every time a role is vacated, you risk: 

• Delays in support response 

• Loss of institutional knowledge 

• Gaps in cybersecurity posture 

• Missed upgrades or compliance deadlines 

One unexpected resignation can set a small business back by 3–6 months of IT performance. 

5. Compliance and Risk Exposure

Are you covered for HIPAA, SOC 2, PCI, or SEC tech regulations? If not, you're gambling with potential fines, reputational damage, or lost business. 

In-house compliance efforts often fall short due to: 

• Infrequent audits 

• Outdated documentation 

• Missed policy enforcement 

• Limited internal expertise 

Cost of non-compliance or breach fines: $10,000 to $1M+ depending on industry 

Total Estimated Annual Cost of Internal IT 

What About Outsourcing IT? 

Many mid-sized firms turn to Managed IT Service Providers (MSPs) for a better balance of cost and capability. A reliable MSP can deliver: 

• 24/7 support and monitoring 

• Cybersecurity tools and compliance expertise 

• Scalable infrastructure 

• Strategic IT planning 

Typical annual cost for outsourced IT services: 

$75,000–$150,000 depending on company size and scope 

That’s 60–80% less than internal IT, with more specialized tools and support. 

Final Thoughts: Rethink Your IT Investment 

Your internal IT team may be doing their best—but the financial and operational burden of maintaining an in-house department is more than most businesses realize. Between overhead, burnout, tool gaps, and missed compliance, the costs go far beyond just payroll. 

Consider this your call to audit your IT spend. What’s truly serving your business—and what’s just draining your budget?