Outsourcing vs in-house IT.

IT outsourcing saves money when external contracts beat fully-burdened internal cost. Internal cost includes salary, employer NI (~13%), pension (5-10%), benefits (10-15%), and overhead (10-20%) - typically 30%+ on top of salary. So a 50k salaried IT engineer really costs 65k+. A 60k outsourcing contract for equivalent service already saves money.

5 IT staff × 50k average salary × 1.3 burdened = 325,000 internal cost. Outsourcing contract 200k/year + 30k one-off transition = 230k first year. Savings 95k first year, rising to 125k year 2+ (no transition cost). Reasonable case for mid-market companies with standard IT needs.

Outsourcing failures: loss of institutional knowledge, slower response for urgent issues, vendor lock-in, reduced internal IT capability for future projects. Works best for commodity infrastructure (helpdesk, email, basic networks). Strategic IT (product engineering, security, data) should usually stay internal even when expensive.

A worked example

Try the defaults: it headcount of 5, avg it salary of 50,000, outsourcing annual contract of 200,000, transition one-off of 30,000. The tool returns 95,000.00. You can adjust any input and the result updates as you type — no submit button, no reload. That's the real power here: seeing how sensitive the output is to one or two assumptions.

What moves the number most

The result responds to IT Headcount, Avg IT Salary, Outsourcing Annual Contract, and Transition One-off. Frequency and unit price pull the total in different directions. The biggest surprise for most people is how small recurring amounts compound into large annual figures — that's where this calculation earns its keep.

The formula behind this

Internal cost = headcount × salary × 1.3 burden. Outsourcing first year = contract + transition. Savings = internal - outsourcing. Everything the calculator does is shown in the formula box below, so you can check the math against your own spreadsheet if you want.

What the score tells you

Headline financial numbers — income, savings, debt — each tell part of the story. This calculation stitches several together into a single read you can track over time. The value is in the direction, not the absolute number.

What this doesn't capture

The score is a composite of the inputs you provide. Life context — job security, family obligations, health, housing — doesn't appear in the math but shapes the real picture. Use the number as a prompt, not a verdict.