AWS Managed Services vs DIY: Total Cost of Ownership

“We’ll just have our developers manage AWS” is one of the most expensive decisions an engineering leader can make — not because the developers are incapable, but because the true cost of that decision is invisible until it compounds.

This article breaks down the total cost of ownership for managing AWS infrastructure, comparing in-house (DIY) operations against a managed services provider. The numbers are based on our experience working with organizations ranging from 10 to 500 engineers.

What “Managing AWS” Actually Involves

Before comparing costs, it helps to understand the full scope of AWS operations. Most organizations underestimate this because the work is distributed across multiple people and happens reactively.

Day-to-Day Operations

• Monitoring and alerting — CloudWatch dashboards, custom alarms, log analysis, anomaly detection
• Incident response — Investigating alerts, diagnosing root causes, restoring service, writing post-mortems
• Patching — OS security patches, runtime updates, container base image rebuilds, managed service version upgrades
• Backup management — Configuring AWS Backup policies, verifying backup completion, testing restores

Weekly and Monthly Operations

• Security operations — Reviewing GuardDuty findings, triaging Security Hub alerts, managing WAF rules, conducting access reviews
• Cost optimization — Analyzing Cost Explorer data, right-sizing instances, managing Reserved Instances and Savings Plans, eliminating waste
• Change management — Planning infrastructure changes, testing in staging, deploying with rollback plans
• Documentation — Maintaining runbooks, architecture diagrams, and operational procedures

Quarterly and Annual Operations

• Disaster recovery testing — Validating backup restoration, testing failover procedures, measuring actual RTO/RPO
• Compliance audits — Preparing evidence for SOC 2, HIPAA, or PCI DSS audits
• Architecture reviews — Evaluating current architecture against AWS best practices
• Capacity planning — Forecasting growth and ensuring infrastructure can handle projected load

This is not optional work. Skipping it does not save money — it creates technical debt that eventually surfaces as outages, security incidents, or runaway costs.

The True Cost of DIY

Staffing: The Largest Cost

To operate AWS infrastructure with reasonable coverage, you need engineers with expertise in networking, security, databases, containers, serverless, monitoring, and cost management. No single engineer covers all of these areas well.

Minimum viable team for production AWS operations:

Add 25-35% for benefits, payroll taxes, equipment, and training:

Fully loaded cost: $430,000-$600,000 per year

This team provides business-hours coverage only. For 24/7 coverage — which production systems typically require — you need at least one additional engineer for on-call rotation, plus on-call compensation:

With 24/7 coverage: $560,000-$780,000 per year

Tooling Costs

Your team needs tools to operate effectively:

Some organizations use free or AWS-native tools (CloudWatch, Security Hub, Cost Explorer) to reduce this line item. The trade-off is that native tools require more engineering time to configure and maintain, shifting cost from tooling to staffing.

Hidden Costs

These costs rarely appear in budget planning but consistently show up:

Hiring time and cost — Finding qualified AWS engineers takes 3-6 months. Recruiter fees run 20-25% of first-year salary. During the hiring period, existing engineers absorb operational work, reducing their productivity on product development.

Ramp-up time — A new engineer needs 2-4 months to understand your specific AWS environment, applications, and operational procedures. During this period, they are consuming salary but not operating at full capacity.

Knowledge concentration risk — When your senior DevOps engineer leaves (and eventually they will), they take institutional knowledge with them. Rebuilding that context takes months and creates operational risk during the transition.

Opportunity cost — Every hour your engineers spend managing infrastructure is an hour not spent building product features. For a startup or mid-market company, this is often the most significant cost — but it never appears on a balance sheet.

Training and certification — AWS releases hundreds of new features annually. Keeping your team current requires ongoing investment in training, conference attendance, and certification renewals: $5,000-$15,000 per engineer per year.

Total DIY Cost

This is the cost to operate — not to build or improve. Building new infrastructure, migrating workloads, and implementing new services are additional project costs on top of ongoing operations.

The Cost of Managed Services

A managed services provider charges a predictable monthly fee that covers the full scope of operational activities. Pricing varies by provider, environment complexity, and service tier.

Typical managed services pricing:

What is included:

• 24/7 monitoring and incident response
• Monthly patching and security updates
• Security operations (GuardDuty, Security Hub, WAF)
• Cost optimization with monthly reviews
• Backup management and DR testing
• Infrastructure change management
• Monthly operational reports

What is typically not included (project-based):

• New infrastructure builds
• Major migrations
• Architecture redesigns
• Application-level troubleshooting

Side-by-Side Comparison

For a mid-size environment (50-100 AWS resources, multi-account, compliance requirements):

The math is clear for most organizations: Managed services cost 15-25% of an equivalent internal team while providing broader expertise and better coverage.

When DIY Makes Sense

Managed services are not right for every organization. DIY operations make sense when:

You have 100+ engineers — At this scale, a dedicated platform team is a strategic investment. The cost per developer decreases as the team serves more engineers, and the platform team can build tooling specific to your organization’s needs.

Your infrastructure IS your product — If you are a cloud services company, infrastructure management is your core competency. Outsourcing it would be outsourcing your competitive advantage.

You have extreme compliance requirements — Some regulated industries (defense, certain government contracts) require all operational personnel to hold specific clearances or citizenships that managed services providers may not meet.

You need deep application-level integration — If your operations team needs to understand application internals to operate effectively (common in ML platforms, trading systems, or real-time systems), the context-switching cost of an external provider may exceed the savings.

When Managed Services Make Sense

Startups and scale-ups (10-50 engineers) — You cannot justify 2-3 dedicated infrastructure engineers, but you need production-grade operations. Managed services provide enterprise-level operations from day one at a fraction of the internal team cost.

Mid-market companies (50-200 engineers) — You have some AWS skills internally but lack the depth or 24/7 coverage for production operations. Managed services fill the gap while your engineers focus on building product.

Post-migration organizations — You just migrated to AWS and need ongoing operational support without building a new team.

Companies with compliance requirements — Meeting SOC 2, HIPAA, or PCI DSS requirements requires operational discipline (change control, access reviews, audit logging) that managed services providers already have built into their processes.

The Hybrid Model

Many organizations find that a hybrid approach works best:

• Managed services handle operational baseline — Monitoring, patching, security operations, cost optimization, backup management
• Internal engineers handle application-specific work — CI/CD pipelines, application deployment, performance tuning, feature-specific infrastructure
• Strategic projects are handled as engagements — Migrations, architecture redesigns, new platform builds

This model gives you the cost efficiency and coverage of managed services for routine operations while keeping application-specific knowledge internal.

Evaluating a Managed Services Provider

If you decide managed services are the right approach, evaluate providers on:

AWS expertise — Look for AWS Partner Network membership. An AWS Select Tier Partner or above has validated expertise and access to AWS technical resources.

Operational maturity — Ask about their monitoring stack, incident response procedures, change management process, and how they handle after-hours emergencies.

Transparency — You should retain full access to your AWS accounts. All actions should be logged in CloudTrail. You should receive regular operational reports with clear metrics.

Flexibility — Avoid long-term contracts that lock you in. A good provider earns continued business through operational excellence, not contractual obligation.

Security posture — The provider will have access to your infrastructure. Evaluate their own security practices, background checks, access controls, and data handling procedures.

Making the Decision

The total cost of ownership for AWS operations is rarely just “AWS engineer salaries.” When you account for tooling, hiring costs, knowledge risk, opportunity cost, and the breadth of expertise required, the true cost of DIY operations is 3-5x what most organizations initially estimate.

Managed services are not about capability — your engineers are certainly capable of managing AWS. The question is whether managing infrastructure is the highest-value use of their time. For most organizations, the answer is no.

For details on what our managed services include and how we work, see our AWS Managed Services offering.

Contact us to discuss managed services for your AWS environment →