Microsoft SOC: Build In-House or Use Managed Services? 

Security Operations Centers are often discussed as a capability you either have or do not. In practice, a SOC is not a binary decision. It is an operating model that must be built, staffed, governed, and sustained over time. For organizations running primarily on Microsoft 365, Azure, and identity-driven workloads, the question is not whether security tools are available, but whether the organization can realistically operate them at the level required to reduce risk. 

There are three primary approaches organizations can take: building an in-house Security Operations Center (SOC), engaging outsourced services, or a hybrid approach. It is common for organizations utilizing the Microsoft suite to outsource their SOC to a third-party security service provider. However, this doesn’t restrict the operational model. Some organizations choose a hybrid approach, developing their own monitoring and response capabilities while maintaining control within their internal SOC. 

In this article, we explore the implications of an in-house SOC versus an outsourced one, as well as a hybrid SOC that intersects with managed services. 

What an Internal SOC Requires  

A SOC is an operational system that brings together people, processes and technology to sustain day-to-day security operations. At a minimum, it must support each of these items: 

• Log collection and aggregation 
• Threat monitoring and detection 
• Triage and investigation 
• Incident response 
• Threat hunting 
• Vulnerability management 
• Continuous tuning 
• Reporting and compliance support 
• Integrations across cloud, identity, endpoint, network and SaaS environments 

The technology stack behind these functions is equally extensive. It includes: 

• SIEM (Microsoft Sentinel) 
• XDR (Microsoft Defender XDR) 
• SOAR (security orchestration, automation and response) 
• Threat intelligence platforms 
• Log management pipelines 
• EDR (endpoint detection and response)  
• NDR (network detection and response)  
• Cloud security analytics 
• Identity monitoring through Entra ID logs and conditional access events 

A well-run SOC also needs the right staffing model. This usually includes Tier 1 analysts for 24/7 triage, Tier 2 and Tier 3 investigators, threat hunters, detection engineers, a SOC manager, a platform engineer for Sentinel and Defender, and a governance and reporting analyst. 

Coverage must extend beyond business hours and weekends. Shift rotations need clear escalation paths and defined SLAs, and response quality depends heavily on the effectiveness of those handoffs. 

Running an internal SOC carries real operational costs. Organizations must train and certify personnel on a continual basis, manage turnover, budget for SIEM storage and data ingestion, and keep detections tuned as cloud log volumes grow. The Microsoft ecosystem adds further demands, from Sentinel log ingestion and Defender XDR coverage strategies to identity logs from Entra ID and integrations with Purview, Intune, Teams, and Azure workloads. 

Operational governance adds another layer. Runbooks, incident categorization, severity scoring and change management must be documented and enforced. Alerts require regular tuning, often weekly, to keep noise low and visibility high. 

To function as a mature operational system, a SOC needs strength across detection engineering, incident response readiness, cloud visibility and identity monitoring. This is where many SMBs struggle. They may assemble part of a team, but sustaining expertise, managing turnover, and keeping operations current becomes difficult over time. 

What Managed SOC Services Provide 

A managed Security Operations Center is a comprehensive operational program, not merely a detection service. The distinction matters: some providers deliver their own platform, while others operate on infrastructure you already own. 

The core function of a managed SOC centers on monitoring, detection, investigation, response guidance, reporting, and tuning. What it does not cover is equally important. MSSPs do not fix security misconfigurations, perform IT administration, enforce endpoint compliance, manage patches, design security architecture, or handle business continuity planning. These remain internal responsibilities. 

Where managed SOCs deliver value is in their operational maturity and scale. They bring rapid onboarding, cloud-native visibility, and flexible log ingestion across hybrid identities, multi-cloud environments, and expanding SaaS estates. Global coverage means monitoring continues around the clock without the burden of internal shift management. 

Behind the scenes, the provider manages what most organizations struggle to sustain: analyst handoffs across tiers, internal escalation paths, runbook automation, detection engineering cycles, and regular tuning cadences. Weekly reporting becomes structured and consistent. 

The boundaries of responsibility are typically defined through service-level agreements, RACI models, and shared responsibility matrices. These documents clarify response times, escalation thresholds, and where MSSP ownership ends and client ownership begins. 

Total Cost of Ownership (TCO): Build vs Buy SOC 

Building an internal SOC in a Microsoft environment carries far more operational and financial overhead than most teams anticipate. Microsoft Sentinel, Defender XDR, Entra ID, Intune, Purview and Azure all produce a large and continuously growing volume of security signals. Turning those signals into meaningful visibility requires infrastructure, staffing, tuning and governance, each of which introduces ongoing costs. 

Evaluating the financial trade-offs between building and buying a SOC means understanding the true costs of each approach. From a Microsoft-focused perspective, here is what it all entails: 

Direct Costs of Building an Internal SOC 

Running a SOC on top of Microsoft Sentinel and Defender XDR requires investment across multiple categories: 

1. Sentinel Log Ingestion and Storage 

For most organizations, Sentinel is the single largest cost driver. Log ingestion costs scale with: 

• Entra ID sign-in and audit events 
• Microsoft 365 Unified Audit Logs 
• Intune device compliance events 
• Azure Activity Logs and resource-specific logs 
• Defender for Endpoint, Identity, Office, and Cloud Apps alerts 

As workloads expand, ingestion grows quickly. Storage costs rise in parallel, especially if you retain logs beyond the default retention window. 

2. Staffing and Expertise 

A functional Microsoft SOC requires: 

• 24/7 Tier 1 monitoring 
• A SOC manager to run operations 
• Tier 2 and Tier 3 incident investigators 
• Optional SOAR expertise for automation and playbooks 
• A detection engineer with deep KQL (Kusto Query Language) expertise 

Annual staffing costs often exceed the cost of a managed SOC service, even before accounting for turnover or additional training. 

3. Training and Certification 

Maintaining competency across the Microsoft security stack requires ongoing certification: 

• SC-200 (Security Operations Analyst) 
• SC-300 (Identity and Access Administrator) 
• SC-100 (Cybersecurity Architect) 
• MD-102 (Endpoint Administrator) 
• AZ-500 (Security Engineer) 

Training and continuous learning add to the material cost, especially as Microsoft updates its security tools. 

4. Additional Tooling 

Most internal SOCs may still need threat intelligence subscriptions, vulnerability management platforms and tools for email threat simulation.  

Indirect Costs Often Overlooked 

Internal SOCs experience cost creep from operational inefficiencies and maturity gaps. These include:  

1. False Positives and Alert Tuning 

Sentinel produces excessive noise without ongoing tuning. Defender XDR correlates signals effectively, but still requires manual triage and refinement of incident logic. Analysts spend a significant amount of their time suppressing noisy rules, adjusting thresholds, duplicating alerts and updating watchlists with automated logic.  

This operating overhead impacts productivity and increases burnout. 

2. Turnover and Talent Gaps 

Microsoft SOC skills, especially KQL (Kusto Query Language) and Sentinel-based detection engineering, are in high demand. Losing a key engineer or analyst can set a SOC back months and add substantial rehiring and onboarding costs. 

3. Analyst Fatigue 

Without mature processes and well-tuned detections, SOC teams experience alert fatigue, which impacts mean time to respond, investigation consistency, and incident response quality.  

These hidden performance costs directly affect risk posture and operational continuity. 

4. Scaling Azure and Microsoft 365 Workloads 

As Microsoft 365 and Azure usage expand, Microsoft Sentinel must ingest more logs to maintain visibility. Even small architectural changes such as deploying a new workload, enabling a new security feature, or onboarding new teams introduce new data sources and increased costs. 

Long-term Point of Cost Crossover 

For most Microsoft-native organizations with fewer than 5,000 seats, a managed SOC is cost-effective over 3-5 years. Internal SOCs tend to become more expensive due to rising ingestion and storage needs, talent acquisition and retention, continuous tuning and detection engineering, the expansion of Microsoft workloads, and incident response demands that scale with increasing volumes.  

Managed SOCs achieve economies of scale that internal teams cannot replicate without significant headcount.  

Internal SOC vs Managed SOC: Direct Comparison 

Choosing between an internal SOC and a managed SOC ultimately comes down to operational capacity, time-to-maturity, and the extent to which your organization relies on Microsoft 365, Azure, and identity-driven workloads. Both models can deliver robust security outcomes, but the differences in cost, speed, and scalability become more apparent when evaluated against the Microsoft security ecosystem. 

The following comparison illustrates where each model diverges in practice: 

Speed of Deployment 

Setting up an internal SOC on top of Microsoft Sentinel and Defender XDR requires significant time. Each data source – Entra ID logs, Microsoft 365 audit logs, Intune compliance signals, Defender alerts, Azure resource logs – must be connected, normalized, and validated. Your team must also build analytics from scratch, write KQL queries, design incident workflows, and test automation logic before the SOC can deliver reliable detection and response. Reaching operational maturity typically takes several months, even for organizations with an existing security stack.  

A managed SOC accelerates this. Microsoft-focused providers offer prebuilt Sentinel rules, tested KQL queries, standardized playbooks, and automated response logic, all already tuned across multiple tenants. Instead of engineering your SOC from the ground up, you inherit a fully operational set of capabilities optimized for Microsoft 365 and Azure environments. This reduces the time-to-value from months to weeks. 

Cost and Operational Load 

Operating an internal Microsoft SOC extends far beyond licensing Sentinel or Defender XDR. You must sustain continuous log ingestion and storage growth, maintain 24/7 staffing rotations, keep detection rules up to date, and ensure analysts are trained on new Microsoft features. The overhead grows as your Microsoft footprint expands and as identity-driven threats become more sophisticated. Salaries, turnover, tuning cycles, and cloud storage costs also contribute to the total cost.  

Managed SOC services shift this heavy operational load onto a provider that already maintains expertise across the Microsoft security stack. Instead of hiring six to twelve specialized roles, you pay a predictable monthly fee that covers detection engineering, tuning, monitoring, response, and ongoing platform optimization. This model typically lowers the total cost of ownership for small and mid-market organizations that cannot justify continuous staffing growth. 

Visibility, Control and Customization 

An internal SOC gives you complete control over Sentinel analytics, KQL queries, log ingestion strategies, response workflows, and automation. You can extend detections to support niche business use cases, integrate custom data sources, and design governance workflows that align with internal compliance requirements. This level of customization is valuable for organizations with unique environments or highly regulated operational processes. 

Managed SOCs provide strong visibility but operate with standardized workflows to protect consistency across customers. While tuning and customization are available, they may be limited to maintain operational stability or meet predefined SLAs. Organizations that require deep, custom configurations or need to build proprietary detection logic may find internal SOC models better aligned with their governance and operational expectations. 

Detection Quality and Threat Coverage 

Detection quality in an internal SOC depends entirely on your team’s ability to engineer, test, and maintain Microsoft-based analytics. This requires ongoing familiarity with Defender XDR correlation, Sentinel analytics rules, Entra ID risk events, Azure control-plane logs, and Purview alerts. Without continuous refinement, false positives grow, critical detections degrade, and analysts lose visibility into identity-driven attack paths. 

Managed SOCs benefit from economies of scale. Providers continuously tune analytics across multiple Microsoft tenants and rapidly update detection rules for emerging threats. Their detection logic typically reflects real-world incidents observed across varied environments, improving coverage for identity compromise, cloud misconfigurations, insider activity, and endpoint threats. As a result, managed SOCs often deliver stronger detection fidelity with lower false-positive rates. 

Response Times and Operational Consistency 

Internal SOC response times vary depending on staffing maturity and shift coverage. Nights, weekends, and holidays often introduce gaps or reduced capacity unless additional analysts are hired. Escalations may be inconsistent, and incident response quality can depend on which analyst is on duty. These operational fluctuations create measurable differences in Mean Time to Detect (MTTD) and Mean Time to Respond (MTTR). 

Managed SOCs eliminate this variability by providing 24/7 incident investigation and response backed by defined SLAs. Alerts are triaged around the clock, escalations follow a predictable sequence, and automation in Defender XDR accelerates containment actions such as device isolation or account suspension. This leads to consistent, measurable response outcomes that most internal teams struggle to match without significant investment. 

Scalability and Future-Proofing 

An internal SOC scales linearly with headcount and ingestion volume. As your organization introduces new Microsoft workloads or expands Azure adoption, Sentinel must ingest additional logs, and analysts must learn new signals. Scaling requires additional hiring, increased storage budgets, continuous training, and ongoing development of detection capabilities.  

Managed SOCs scale elastically. Providers are already prepared to support new Microsoft features, onboard additional workloads, optimize log ingestion, and expand detection coverage without requiring new internal hires. As Microsoft evolves its security capabilities, you benefit from immediate operational uplift without re-engineering your SOC. 

Which Model Fits Your Organization? A Decision Framework 

The choice between an internal SOC and a managed SOC requires operational clarity around your team’s maturity, your regulatory environment, and the depth of your Microsoft ecosystem footprint. It often depends less on the tools you already own and more on the structure required to operate them effectively. 

A managed SOC is typically the right fit if: 

• You operate in a regulated industry such as healthcare, finance, the public sector, or critical infrastructure. 
• You lack in-house Microsoft security maturity, especially when newly adopting Sentinel or transitioning to Microsoft Defender XDR. 
• You already have Sentinel or Microsoft Defender but lack an operations team to run them consistently. 
• Rapid deployment is essential due to immediate threats, upcoming audits, mergers and acquisitions, rapid cloud expansion, or newly discovered security gaps that require immediate attention. 

Hybrid SOC: The Model Most Organizations Choose 

Most organizations end up choosing a hybrid SOC because it delivers strong coverage without the cost and operational burden of building everything in-house. In this model, the managed SOC provides 24/7 monitoring, triage, investigation, and tuning across Microsoft Sentinel and Defender XDR, while the internal team manages governance, sensitive investigations, and decisions that require business context. 

The Microsoft ecosystem naturally supports this structure. Sentinel’s role-based access models, Microsoft Defender XDR’s incident workflows, and automation boundaries allow internal and external teams to operate together without overlap. The provider manages broad detection, reduces alert noise, and handles frontline incident response. The internal team takes ownership of escalations related to privileged identities, regulatory concerns, sensitive data, and insider risk. 

Conclusion: Build, Buy or Hybrid 

Choosing between an internal SOC and a managed SOC depends on your organization’s operational maturity, budget, and ability to sustain continuous monitoring across the Microsoft ecosystem. 

Managed SOC services deliver near-immediate maturity, predictable costs, and continuous detection and response, making them the most practical option for SMBs and most mid-market organizations. For some, a hybrid model offers the best balance by leveraging the provider’s operational depth while preserving internal oversight of sensitive workflows and governance. 

Evaluating where to go next? Our SOC was built for organizations that run on Microsoft 365 and Azure. 

By aligning with Microsoft’s security ecosystem—identity, cloud, data, and tooling—we deliver stronger visibility, greater resilience, and protection that adapts as threats evolve. Learn more about our Managed Security Services here or complete the form to talk to one of our Microsoft Security experts.