Affording top talent: Can your wallet handle it?

| By:
Brad Schow

Getting the right people to fill key roles in a managed service provider (MSP) business is essential for success. As companies continue to rely more on technology to run their operations, MSPs have become an integral part of ensuring the smooth functioning of their IT infrastructure. However, to deliver exceptional service, MSPs don’t always need to hire the most expensive talent. You can hire, train and grow in-house talent to become your top talent. 

Hiring the right talent brings valuable experience, insight, and knowledge to the table—all of which can be critical when it comes to providing high-level services that meet customer needs and expectations. But as an MSP, do you know much you should be paying your employees? This blog will explore how MSPs can attract, develop, and retain talent in today’s competitive job market.

The benefits of hiring top talent

When an MSP hires top talent, it gains access to skilled and experienced professionals who often possess specialized skills. These employees understand how their role fits into the larger organization and have valuable insights into industry trends and emerging technologies. A talented workforce can help a company in several ways, including:

  • Elevated productivity: Skilled and experienced employees know how to manage their time well, prioritize tasks, and work effectively with minimal supervision. This is even more important with a dispersed workforce who may be working fully or partially remotely.
  • Improved customer satisfaction: Top talent understands customer preferences and wants and can provide superior service and support, leading to higher customer satisfaction and loyalty.
  • Increased revenue: When MSPs provide high-quality services, they can charge higher prices and win new business, improving their profit margins while fostering repeat business, referrals, and positive reviews to further boost revenue.

The cost of hiring top talent

Hiring top talent can be costly. According to a Glassdoor study, the average cost of hiring an employee is around $4,000.

Expenses related to recruiting, onboarding, training, and retention can quickly add up, in addition to compensation and benefits. The base salary for top talent is generally higher than average due to their extensive experience and performance history.

While all of this is true, what are the best-in-class (BIC) MSPs really paying to hire and retain talent? There is a widespread belief that because an MSP is more profitable and financially successful, they pay their employees more, but the data proves the exact opposite is true. According to the Service Leadership Index® 2023 IT Solution Provider Compensation Report™ (published April 2023), the more profitable MSPs tend to pay less, on average, for both staff and non-owner manager positions than less profitable MSPs. In addition, the BIC tie about twice as much pay to incentives, and in 2022, the least profitable MSPs gave the largest increases and are planning to do the same in 2023.

A fundamental way the BIC accomplish this is to narrow their range of technologies marketed and sold by sales, implemented by professional services, and supported by managed services. They narrow offerings and support by limiting the range of customer sizes (by user headcount) that they will sell to; this is called a target customer profile. These disciplines materially reduce the number, range, and cost of skills needed and therefore allow the BIC to hire less experienced and skilled talent. This provides the opportunity for lower-cost staff to succeed and grow within the company.

Strategies for affording top talent

While offering competitive salaries and benefits packages can be effective, more is needed to differentiate an MSP from its competitors. Additionally, providing high compensation packages may only sometimes be feasible or the right financial strategy for MSPs.

Therefore, MSPs must adopt strategies that can help them attract and retain top talent without breaking the bank, such as:

  • Developing an incentive compensation strategy

Contrary to popular belief, you don’t have to offer the highest base salary to score top talent. In fact, according to the Service Leadership Index 2023 IT Solution Provider Compensation Report the most profitable firms pay less for both staff and management positions and tie more pay to incentives. High-performing employees are attracted to companies that provide an opportunity for the most productive employees to make extra money.

  • Creating a strong work culture

According to WTW’s 2022 Global Benefits Attitude Survey, 20% of workers would leave their current jobs. And it’s not a desire for pay increases motivating them—they are seeking upgrades in work culture as well as benefits. A strong company culture champions diversity, encourages collaboration and communication, and offers employees the chance to grow professionally—improving overall satisfaction.

  • Offering flexible work arrangements

Many top performers value work-life balance and flexibility. Offering flexible work arrangements such as remote work or flexible schedules can be a cost-effective way to attract and retain talent. Remote work can attract talent from different regions, enabling MSPs to cast a wider net in their search for top talent. By allowing employees to work from home, you can also save on the cost of office space, utilities, and other overhead expenses.

Developing top talent

Top talent has to start somewhere. It’s worth looking within your organization instead of always looking to hire from outside the organization.

Investing in employees' professional development is a great way to ensure they remain engaged and motivated. By investing in the growth and development of your employees, you not only help them improve their skills and knowledge but also show that you are committed to their long-term success. This can improve morale, increase job satisfaction, and decrease turnover rates. In addition, employees who are “grown from within” have a better knowledge of customers, other employees, systems, and company culture. 

This is also a winning financial strategy. Focus on investing in building the rising stars within your company who have proven themselves in their current roles and reward those employees with promotions instead of spending the big bucks to hire the next high-dollar candidate outside the company. While that higher-dollar hire may be occasionally needed, for most MSPs, those hires are few and far between.

Outsourcing vs. in-house hiring

MSPs often face a difficult decision when it comes to filling the talent gap—hire in-house or outsource? While both have their advantages and disadvantages, it’s crucial to evaluate these two options before making a decision.

One of the major benefits of outsourcing is that it provides access to a wide pool of skilled professionals from around the world and allows for flexibility in hiring on a project-by-project basis, but it can be challenging to maintain quality control and communication with remote workers, which can impact project efficiency.

Outsourcing more specialized roles, such as NOC and SOC services, can also provide MSPs with the expertise and resources they need to provide round-the-clock network and cybersecurity monitoring without the expense of building those teams and services in-house. This can be especially beneficial for small and midsized MSPs who may not have the budget or resources to hire and train a dedicated team for these services. But even for larger MSPs, this may still be advantageous. By outsourcing these services, MSPs can give time back to their teams to focus on high-priority work and client issues and leave these operations to a trusted partner.

In-house hiring provides more control over the hiring process and allows companies to cultivate a team culture that aligns with their values and goals. In-house employees are more invested in the company's success and provide valuable insights and ideas for improvement. But finding and hiring the right talent can be time-consuming and expensive, and in-house employees require resources such as office space, equipment, and benefits.

In terms of cost, MSP outsourcing can be more cost-effective in the short term, as businesses only pay for services they need on a project-by-project basis. And MSPs can quickly add security and other specialized offerings for their customers. 

The risks of not investing in top talent

Hiring, training, and retaining highly motivated and skilled employees is crucial for operational maturity. It ensures MSPs can provide excellent customer service, while growing their customer base. If employees lack the necessary skills and willingness to improve, the quality of service can suffer, leading to poor customer satisfaction and potential damage to the reputation of the MSP.

Moreover, investing in talent can positively impact productivity, as experienced and well-trained employees can complete tasks more quickly and efficiently. In contrast, employees without the proper training or expertise may struggle with tasks, leading to delays and missed deadlines, which has a domino effect on customer satisfaction, revenue, and profitability.


As companies increasingly rely on technology, MSPs have become even more essential. However, to deliver excellent managed services, MSPs need a team of employees with the right mix of skills, training, and expertise.

Therefore, it's crucial that MSPs understand how to both develop and compensate talent to ensure the long-term success of an MSP. Finding the right balance can help your MSP stay competitive and profitable. Moreover, investing in employee training and development can help retain talent and improve overall company performance. By doing so, you can ensure your MSP has the necessary resources to deliver excellent service while setting yourself up for long-term success.

Want to know if you’re paying your employees the right amount? The Service Leadership Index®2023 Annual IT Solution Provider Compensation Report™ can give you the answers. Get your copy here >>