Co-managed IT is a service model where an internal IT department works side by side with an external Managed Service Provider (MSP). Instead of fully outsourcing technology management, the organization keeps ownership of IT strategy while leveraging the MSP’s specialized tools, expertise, and manpower.
In short: Co-managed IT does not replace the IT team. It reinforces it.
How Co-Managed IT Works
Why Companies Choose Co-Managed IT
- Workload Relief
Reduces burnout by sharing ticketing, patching, and maintenance duties. - Access to Advanced Tools
Many internal teams cannot afford or manage enterprise-grade RMM, monitoring, or cybersecurity systems. MSPs provide these out of the box. - Enhanced Security and Compliance
MSPs bring frameworks, auditing tools, and processes for compliance readiness. - Flexible Cost Model
Pay only for what is needed without adding permanent headcount. - Faster Project Execution
Migrations, upgrades, and security rollouts move faster with shared manpower.
When Co-Managed IT Makes Sense
- The business is growing faster than IT staff can scale.
- IT managers are bogged down with routine requests.
- The company needs cybersecurity or compliance expertise.
- Hiring specialized engineers is costly or slow.
- The organization needs 24/7 monitoring without building a night shift.
Real-World Examples
Evolution of Co-Managed IT
Co-managed IT emerged in the late 2000s to early 2010s as a bridge between traditional outsourcing and in-house management. As cloud complexity, cybersecurity demands, and IT skill shortages grew, businesses needed hybrid partnerships.
By the early 2020s, the model became mainstream, recognized as a scalable way for internal IT to stay strategic while MSPs deliver automation and depth.
Future Trends Driving Co-Managed IT
- AI and Automation-First Operations
Predictive maintenance, automated patching, and proactive alerting will define co-management success. - Security and Compliance as Core Layers
MDR, XDR, and Zero Trust frameworks will be standard MSP offerings. - Hybrid and Multi-Cloud Management
MSPs will extend coverage across cloud, edge, and IoT environments. - Outcome-Based Partnerships
The focus is shifting from ticket closure to measurable outcomes like uptime and risk reduction. - Sustainable and Ethical IT Practices
Co-management will include ESG-conscious infrastructure optimization.
How Common Is Co-Managed IT
Kaseya Global MSP Benchmark 2024
• 68 percent of MSPs offer co-managed IT packages
CompTIA State of the Channel 2024
• Mid-sized firms prefer augmentation over full outsourcing
Gartner 2023
• 60 percent of mid-market CIOs expect to expand co-management partnerships
Co-managed IT is now one of the fastest-growing MSP models, especially among organizations with 50 to 2,000 employees and lean IT departments.
Why Newer MSPs Should Offer Co-Managed IT
Advantages
- Faster onboarding and lower labor overhead
- Internal IT acts as an advocate, not an obstacle
- Projects and automation create high-value differentiation
Pitfalls to Avoid
- Acting like “staff augmentation” instead of a partner
- Overextending into undefined work
- Lacking a platform stack (monitoring, automation, patching)
With a clear scope, co-managed offerings let MSPs scale without adding full helpdesk coverage.
Financial Impact for MSPs
Monthly Revenue
• Traditional MSP: Lower
• Co-Managed MSP: Higher (larger environments)
Support Labor Cost
• Traditional MSP: Higher
• Co-Managed MSP: Lower (internal IT handles users)
Revenue per Technician
• Traditional MSP: Around 150K
• Co-Managed MSP: Around 250K or more
Margins
• Traditional MSP: 30 to 50 percent
• Co-Managed MSP: 45 to 60 percent
Client Retention
• Traditional MSP: Volatile
• Co-Managed MSP: Strong (strategic partnership)
When done right, co-managed IT produces higher margins and better retention due to shared responsibility and aligned outcomes.
How Level Supports Co-Managed IT
Level equips MSPs and internal IT teams with a unified platform for:
- Monitoring and Alerting to detect and respond to issues proactively
- Patch and Endpoint Management to maintain cross-platform security at scale
- Scripting and Automation using PowerShell, Bash, or Python for recurring tasks
- Remote Control and Background Tools to manage devices securely without disrupting users
- Reporting and Documentation to create transparency across shared operations
With Level, MSPs and internal teams can collaborate in real time while maintaining clarity, control, and accountability.
Final Takeaway
Co-managed IT is not a stopgap. It is a smarter operating model for the modern enterprise. By blending internal insight with MSP automation and scalability, businesses gain resilience, agility, and control.
Level provides the platform foundation that makes co-managed IT efficient, transparent, and secure.