This is Part 4 of our 6-Part series detailing our State of MSP Security Maturity Report 2025 and the strategies MSPs can use to break through the plateau.
Building your own security operations center sounds appealing. Complete control over security operations, direct client relationships, and the ability to customize everything to your exact specifications.
But there's a reason why most MSPs rely on MDR providers or hybrid approaches—and it goes far beyond just cost savings.
The hidden expenses and operational complexity of building truly effective security operations have fundamentally changed the economics of MSP security delivery. The question isn't whether to build or buy—it's how to strategically combine internal expertise with external capabilities to maximize client value while building a sustainable business.
Before exploring why most MSPs choose external partnerships, let's be honest about scenarios where internal capabilities provide genuine strategic value.
The Scale Economics Reality
At sufficient scale, the per-client economics of internal security operations can become attractive. The break-even point typically occurs when you can spread fixed costs across a large volume of managed endpoints or when serving clients who pay premium rates for dedicated resources.
This usually means 200+ employees with significant security-focused revenue, not the typical 50-person MSP hoping to expand into security.
The Vertical Specialization
Advantage MSPs focusing on specific industries may benefit from developing expertise that generic providers can't match:
The Strategic Differentiation Play
Some MSPs position internal operations as a competitive differentiator for large enterprise clients who value dedicated, named security resources rather than shared monitoring services.
This works when you can command significant pricing premiums that justify the additional complexity and investment required.
For MSPs considering the in-house route, the actual costs extend far beyond initial estimates. Most dramatically underestimate the total investment required for professional-grade capabilities.
Effective 24/7/365 monitoring requires a minimum of 8-10 full-time security professionals to maintain proper coverage. These aren't general IT people who can "add security to their duties"—they need specialized cybersecurity skills, continuous training, and command premium salaries.
Current market reality:
Personnel costs alone easily exceed $750,000-$1,200,000 annually for basic coverage. And that's before you achieve the advanced features clients increasingly expect.
Beyond direct staffing, effective operations generate substantial indirect expenses:
Total operational costs typically approach $1.5-$2.5 million annually for basic capabilities.
Building effective security operations requires expertise that's increasingly difficult to find, hire, and retain in today's competitive market.
The 24/7 Operations Reality
True security operations require round-the-clock monitoring with skilled analysts who can distinguish genuine threats from false positives, make rapid response decisions, and coordinate complex incident management.
Maintaining this expertise across multiple shifts while providing career development and backup coverage represents a significant challenge that most MSPs underestimate.
The Compliance Complexity
Regulatory requirements continue expanding for MSPs serving healthcare, finance, government, and other regulated industries. Requirements like CMMC may require specific personnel clearances and operational procedures that are difficult for individual MSPs to maintain cost-effectively.
Professional MDR providers often maintain compliance expertise across multiple frameworks, enabling you to serve regulated clients without massive internal investment.
The build-versus-buy decision significantly impacts your business model, client relationships, and growth strategy.
Revenue and Margin Optimization
MDR integration enables predictable security pricing with known cost structures. This supports the standardized packages that breakthrough MSPs use to command premium pricing.
Internal operations often involve unpredictable costs for incident response, staff overtime, technology scaling, and skills development—making consistent pricing and margin management difficult.
Client Acquisition and Competitive Positioning
Clients increasingly expect enterprise-grade capabilities regardless of your size. MDR partnerships enable smaller MSPs to compete effectively for larger clients while maintaining service quality that would be difficult to achieve independently.
The professional capabilities, compliance expertise, and proven track records that established providers bring also enhance client confidence, particularly for organizations with regulatory requirements.
Smart MSPs evaluate build-versus-buy using a structured framework that considers long-term strategy rather than just operational costs.
Financial Analysis Components:
Strategic Business Considerations:
Risk Assessment:
MSPs choosing MDR partnerships must invest in integration, oversight, and client relationship management to maximize value.
Vendor Selection Criteria
Look beyond basic monitoring capabilities to evaluate:
Success Metrics and Management
Establish clear expectations and measurement:
The Hybrid Approach Reality
The most successful MSPs don't choose purely build or buy—they optimize the combination of internal and external capabilities.
Keep Internal:
Outsource Strategically:
This hybrid approach provides client relationship control while leveraging external expertise and economies of scale.
MSPs who make smart build-versus-buy decisions gain significant competitive advantages over those struggling with suboptimal models.
The Strategic Partnership Positioning
The ability to deliver enterprise-grade capabilities while maintaining sustainable economics enables premium pricing, stronger retention, and advisory relationships that extend beyond traditional MSP services.
More importantly, the right model frees your leadership to focus on strategic client relationships and business development rather than managing complex internal operations.
The Market Differentiation Reality
MSPs with optimized security operations can focus differentiation on client advisory capabilities, industry expertise, and strategic business value rather than competing on operational efficiency that clients increasingly view as commodity services.
The security operations landscape has shifted toward strategic partnerships and hybrid models that combine internal expertise with external capabilities for optimal client value.
The question isn't whether you need sophisticated security operations—your clients already expect them. The question is whether you'll build them cost-effectively while managing business risk and focusing internal resources on activities that provide sustainable competitive advantage.
Smart MSPs recognize that becoming a security service provider doesn't require building everything internally. It requires strategically combining internal expertise with external capabilities to deliver maximum client value while building sustainable, profitable practices.
Making Your Decision
Ask yourself these critical questions:
If you answered "no" to most of these questions, strategic partnerships likely provide better business outcomes than internal development.
MSPs who optimize their security operations approach capture market share, command premium pricing, and build more valuable businesses. Those who make suboptimal decisions struggle with unsustainable costs, operational complexity, and client dissatisfaction.
The breakthrough MSPs understand this reality. They've moved beyond the build-versus-buy debate to focus on optimizing their approach for exceptional client satisfaction and sustainable business success.
Want to learn more? Watch our On Demand webinar on Breaking Through the Security Maturity Plateau for first hand insights.
