The Question Every IT Worker Should Ask
Your MSP bills the client $200/hour for your work. You get paid $45/hour (or $85,000 salary). Where does the other $155/hour go? For detailed salary benchmarks across all roles and cities, see our 2026 MSP Salary Guide.
Let's follow the money.
The Real Numbers
What the Client Pays
| Service | Hourly Rate |
|---|---|
| Senior Engineer | $180-$250/hr |
| Mid-Level Engineer | $140-$180/hr |
| Junior Engineer | $100-$140/hr |
| Helpdesk | $80-$120/hr |
What the Engineer Gets
| Level | Hourly Rate (Equivalent) |
|---|---|
| Senior Engineer | $55-$75/hr |
| Mid-Level Engineer | $40-$55/hr |
| Junior Engineer | $30-$40/hr |
| Helpdesk | $25-$35/hr |
The Gap
Client pays $200/hr β Engineer gets $55/hr β MSP keeps $145/hr
That's a 72.5% margin on your labor.
Where the Money Actually Goes
1. Offshore Delivery (30-40%)
The biggest cost saver. Your work is done by engineers in India earning $8-$15/hour. The MSP charges the client $200/hour for "Australian expertise" but ships the work offshore.
2. Sales & Management (15-20%)
Large sales teams, account managers, and layers of management who never touch a keyboard.
3. Overhead (10-15%)
Office space, marketing, certifications, tools, insurance.
4. Profit (15-25%)
Pure profit for shareholders and executives.
5. You (25-30%)
Your salary, benefits, and training. The smallest slice of the pie.
Real Examples
Example 1: The SharePoint Migration
- Client pays: $180/hour Γ 500 hours = $90,000
- Engineer gets: $55/hour Γ 500 hours = $27,500
- Offshore team gets: $10/hour Γ 200 hours = $2,000
- MSP profit: $60,500
The MSP made $60,500 on your expertise. You got $27,500.
Example 2: The M365 Rollout
- Client pays: $160/hour Γ 1,000 hours = $160,000
- Engineer gets: $50/hour Γ 1,000 hours = $50,000
- Offshore team gets: $12/hour Γ 400 hours = $4,800
- MSP profit: $105,200
The MSP made $105,200 on your back. You got $50,000.
Example 3: The Helpdesk Contract
- Client pays: $120/hour Γ 2,000 hours = $240,000
- Engineer gets: $35/hour Γ 2,000 hours = $70,000
- Offshore team gets: $8/hour Γ 1,500 hours = $12,000
- MSP profit: $158,000
The MSP made $158,000 on your labor. You got $70,000.
The Offshore Arbitrage Model
Here's how it works:
- Win the contract with Australian-led team promise
- Hire Australian engineers for client-facing roles
- Ship the work offshore to India
- Charge client for "Australian expertise"
- Pocket the difference
The Australian engineer is the face. The Indian engineer does the work. The MSP takes the profit.
What You Can Do
As an Engineer
- Know your worth β Use our Salary Calculator
- Negotiate hard β You're generating $200/hour in revenue. Our MSP Salary Negotiation Guide covers exactly how to position yourself.
- Go direct β Cut out the middleman
- Specialize β Become irreplaceable
- Build your brand β LinkedIn, GitHub, portfolio
As a Business
- Demand transparency β Know who's doing the work
- Require named resources β No bait-and-switch
- Check references β Talk to actual engineers
- Compare pricing β MSP vs direct hire
- Consider in-house β Often cheaper long-term. See our MSP vs In-House IT comparison for detailed cost breakdowns by business size.
The Bottom Line
The MSP model is built on information asymmetry. Clients don't know what they're paying for. Engineers don't know what they're generating. The MSP profits from both ignorance.
The arbitrage is the business model.
Once you see it, you can't unsee it.
Use our Salary Calculator to see the gap for your specific role and city.
Related Guides
This analysis is based on publicly available salary data, MSP pricing surveys, and industry reports. Individual experiences may vary.
Related Reading
- Big Four vs MSPs: KPMG, PwC, EY & Deloitte
- Capgemini 2026 Reality Check: β¬700M Restructuring, 66% Offshore
- The Capgemini Bench: A Factory for PIPs and Silent Layoffs
- Capgemini's Big Four Scavenger Hunt: Picking Over the Collapse
β οΈ The Cost of Waiting
Australian MSP workers who negotiated using our salary data earned an average of $8,200 more per year. Every month you wait is ~$683 left on the table.
π° Check if you're underpaid βπ Free Resource: Red Flag Checklist
12 contract clauses every Australian MSP worker should flag before signing. Includes non-compete traps, sham contracting indicators, and on-call gotchas.
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