Most MSP owners underestimate what a single hire REALLY costs. Here’s a look at how much you’re really paying.
When you’re considering a hiring decision, the conversation always revolves around one vital factor: the salary.
You’ve found the right candidate for the role, agreed on £50,000. What then follows (the paperwork, onboarding, weeks to months before they’re actually making an impact) just feels like operational noise.
But that kind of thinking will wind up being very expensive for a growing MSP. The salary is just the beginning of the true cost of hiring.
This article takes one of the most in-demand and hardest-to-fill roles in UK MSPs right now, i.e. a mid-level Cloud Engineer, and builds the true cost of hiring from ground up.
Why a Cloud Engineer?
Cloud infrastructure roles are at the core of the UK’s technical skills shortage. With MSPs moving clients onto Azure and AWS environments, demand has grown significantly but the candidate pool has not kept pace.
A competent mid-level Cloud Engineer in the UK with 2–5 years of experience will expect a salary anywhere between £55,000 – £75,000. For the purpose of this article, let’s say you’ve agreed on a £50,000 salary.
This is where most MSP owners will stop counting. But here’s what actually gets added on top of that number.
Fixed UK Employer Costs
Before your new hire can resolve a single ticket, the hiring process immediately triggers two unavoidable payroll obligations.
- Employer National Insurance (NI) is charged at 15% on earnings above £5,000. On a £50,000 salary, that’s approximately £6,750 per year, paid directly to HMRC on top of what the engineer earns.
- Employer pension contributions sit at a minimum of 3% of qualifying earnings. On a £50,000 salary, that roughly adds another ~£1,500 annually.
Together, these two statutory costs have already added £8,250 to the payroll that you thought was going to be £50,000.
The Hiring Transaction Costs
Sourcing an experienced Cloud Engineer in the UK isn’t easy. Competition is high, the candidate pool is quite shallow, and the hiring process takes time and money.
- Recruitment agency fees
Agencies typically charge 15–30% of the first-year salary. On a £50,000 salary, that could be anywhere between £7,500–£9,000. This fee is payable the moment your candidate is hired, regardless of how things develop. - Job board advertising
Using platforms like LinkedIn and Indeed, and other specialist MSP focused job boards typically adds another £600–£1,000 to your bill. - Internal hiring time
This cost is rarely considered in monetary terms but only as a time expense (if at all). In reality however, reviewing applications, conducting technical screenings, coordinating interviews, running assessments can take 20–30 hours of senior staff time. Roughly, that’s another £1,000–£1,500 in absorbed management cost.
The sourcing and hiring process alone, before your hire has even started working, can add approximately £9,100–£11,500.
The Capacity Loss: What You’re Paying For Before You Get Value
Once your newly hired Cloud Engineer starts clocking in, the meter is running. However that doesn’t always mean productive output immediately…
- Holiday entitlement
The statutory paid holiday entitlement is 28 days in the UK, including bank holidays. On a £50,000 salary, that represents roughly ~£5,300 in paid non-working time across the year. - Sick leave
Sick leave liabilities will vary between companies, but general industry benchmarks recommend an average between 4–6 days annually. That’s another £770–£1,150 in cost for days not worked. - Onboarding and knowledge transfer
Onboarding a Cloud Engineer into an MSP takes a structured, documentation-heavy approach. They’ll have to learn all of the company’s RMM tooling, PSA, client environments, escalation paths, and all internal processes. None of this will be transferable knowledge from a previous employer. Having to do this typically translates to 2–4 weeks of capacity absorbed from a senior engineer, who will now be mentoring instead of solely focusing on delivery. - Certification and training
Certification and platform training is another investment of £1,500–£2,500 if your new Cloud Engineer needs specific AWS, Microsoft, or security credentials to align with your current client base.
The Time-to-Productivity Gap
One of the most underestimated costs associated with any new hire is the gap between their first day on the job and actual independent productivity.
For a Cloud Engineer in an MSP environment, a realistic trajectory of that ramp up time would look like:
- Weeks 1–4: Orientation, tooling access, shadowing, documentation
- Months 2–3: Assisted delivery (handling tasks with supervision, building familiarity with client environments)
- Months 4–6: Nearing full independent productivity
Based on the above timelines, you’re burdened with a full salary against partial output at least for the first 4 months. On a £50,000 annual salary, that productivity gap is a real cost of ~£12,500–£16,700.
The Risk Premium
Every hire carries a risk that is almost never costed for. Over 27% of UK employers reported being “ghosted” by new hires not showing up on the first day of work. ~41% of employers who recruited candidates in 2024 experienced new employees resigning within the first 12 weeks of work.
If the new hire doesn’t work out — either because they ghosted you on their first day or through underperformance or poor cultural fit — the recruitment and onboarding investment is written off entirely. You have a vacant role again, which could take another 3–6 months to fill.
Even if a hire works out but they leave within 12–18 months, this represents a significant loss. • 81% of UK businesses reported negative impacts from IT and tech skills shortages in 2024, 75% experienced first-year churn because hires weren’t a good fit.
The True Year-One Total
When all costs are added up, the true cost of hiring a mid-level Cloud Engineer for your MSP will typically look like this in the UK.
That’s almost double the £50,000 salary that was approved. Of course, this is also assuming this new hire works out on the first try and doesn’t churn before 18 months.
A Different Way to Scale
When you have a clear view of what the true cost of hiring a mid-level Cloud Engineer is locally, the concept of offshore engineering suddenly doesn’t seem like compromise anymore.
Offshore engineers integrated directly into your MSP’s delivery team will offer faster deployment (within 45 days or less!), no recruitment agency fees, no UK employer NI or pension obligations, and ultimately a far lower true total cost without a drop in technical skill quality. For roles like Cloud Engineer (where the demand in the UK is very high but candidate supply is low), access to a deep global talent pool is a strategic comparative advantage.
How Halexo Fits In?
Halexo connects MSPs with highly skilled offshore engineering talent who are embedded directly into existing tech teams, working within existing tooling and process frameworks and service standards.
Halexo works with MSPs at different stages of growth. If you’d like to understand what the math will look like for your team requirements, we’re happy to walk you through it.
Reach out to the Halexo team and we’ll take it from there.
