Types of SOC: Internal, Hybrid, and SOC-as-a-Service (Managed SOC)

Executive summary

A Security Operations Center (SOC) is no longer optional for organisations that rely on digital systems, cloud platforms, or regulated data. The real question is not whether you need a SOC, but how you should run it.

Most organisations choose between three operating models:

1. Internal (in-house) SOC
2. Hybrid (co-managed) SOC
3. SOC-as-a-Service (SOCaaS / managed SOC)

Each model comes with different trade-offs in cost, control, scalability, and operational risk. This article breaks down how each SOC type works, where it makes sense, and what it typically costs for small, mid-size, and large organisations. While we lean toward SOC-as-a-Service as the best price-to-value option for many businesses, the analysis remains objective.

What a SOC actually does (regardless of model)

Before comparing models, it helps to clarify what a SOC is responsible for:

• 24/7 monitoring of logs, endpoints, cloud workloads, and identities
• Alert triage and prioritisation
• Incident investigation and response
• Threat hunting and detection engineering
• Tool tuning (SIEM, EDR, SOAR, XDR)
• Reporting for management, audits, and regulators

The difference between SOC models is who performs this work, how it scales, and who carries the operational burden.

Internal SOC

An internal SOC (also called insourced SOC) is built, owned and operated entirely within the organisation. It usually consists of several security analysts, security engineers, threat hunters, incident responders and managers who operate a SIEM, endpoint detection and response (EDR), intrusion prevention systems, vulnerability scanners and other tools. The SOC monitors logs, correlates events, conducts threat hunting, manages incident response and ensures compliance.

Pros

1. Full control and customisation: Internal SOC teams can tailor security rules, playbooks and detection logic to match the organisation’s unique risk profile. They have direct knowledge of the company’s infrastructure and can quickly adjust detection thresholds and incident response procedures.

2. Data residency and compliance: Sensitive data never leaves the organisation. For sectors such as finance, healthcare or government where regulations mandate control over data, an internal SOC avoids concerns about third‑party access

3. Organisation‑specific expertise: Over time, internal teams develop deep institutional knowledge, which improves context during investigations. They understand critical systems, business processes and the acceptable risk tolerance.

4. Alignment with business priorities: Internal teams can champion security during budget discussions and influence other departments to adopt secure practices

Cons and trade‑offs

1. High cost and resource intensity: Building an in‑house SOC requires hiring multiple analysts, engineers and managers. A 24/7 SOC typically needs 8–10 full‑time professionals with salaries totalling $750 k–1.2 M per year

2. Additional investments in software, infrastructure, training and redundancy bring total annual costs to $1.5–2.5 M for mid‑sized organisations; SolCyber reports an average cost of $2.86 M per year for an in‑house SOC

3. Long build time: creating a fully functional 24/7 SOC takes 6–18 months. During this period the organisation may lack continuous monitoring.

4. Staffing challenges: Cybersecurity talent is scarce. Hiring and retaining experienced analysts is difficult and expensive. High turnover can lead to gaps in coverage and constant recruitment costs.

5. Alert fatigue and burnout: Limited analyst capacity means that daily alert queues often consume 95% of available time, leaving little room for deeper investigation, which leads to missed threats and burnout.

6. Scalability issues: As the organisation grows or introduces new technologies, an internal SOC must continually invest in additional tools and staff. Upgrading hardware, storage and licenses adds further costs

When to choose an internal SOC

• Large enterprises with complex environments, strict data‑sovereignty requirements and the budget to invest in personnel and infrastructure.

• Organisations in regulated industries that prefer to keep sensitive data on‑premises or that have unique use‑cases requiring bespoke detection logic.

Hybrid SOC

A hybrid SOC is a co‑managed model that blends internal and outsourced operations. Typically, the organisation retains strategic functions such as incident response, context‑specific investigations or compliance reporting, while outsourcing routine log ingestion, Tier 1 alert triage or after‑hours monitoring to a managed security provider. The arrangement may include shared tooling (e.g., a jointly managed SIEM platform) and regular communication between internal and external teams.

Pros

1. Cost reduction without total relinquishment of control: Because only part of the SOC is outsourced, the organisation reduces staffing and tooling costs while preserving control over sensitive processes. A hybrid SOC requires only a fraction of the resources of a fully insourced SOC. Co‑managed model provides 24/7 coverage while internal teams retain daytime operations and escalation decisions.

2. Flexible scalability: Organisations can scale outsourced capacity (e.g., add 24/7 coverage or threat hunting) without hiring more staff. As business grows, the provider can ingest more data or adjust service tiers accordingly.

3. Access to expertise: External providers bring specialised knowledge, threat intelligence and automated runbooks, which internal teams can leverage without full ownership costs

4. Resilience: Outsourced coverage reduces the risk of missed incidents during staff shortages or holidays. The provider’s continuous monitoring lowers mean time to detect and respond.

Cons and trade‑offs

1. Coordination complexity: Running a hybrid SOC means managing two teams. Effective communication between in‑house and outsourced teams can be challenging. Time spent on coordination reduces the cost benefit.

2. Hidden costs and vendor management: Hybrid arrangements can incur unexpected costs for integration, data ingestion, or service customisation. Evaluating and managing vendors requires additional oversight and legal work.

3. Data segmentation challenges: Sensitive data may reside partly in‑house and partly with the provider, complicating compliance and incident investigations.

4. Potential delays in escalation: If the outsourced provider lacks sufficient context about the business, escalated alerts may require more internal follow‑up, which reduces efficiency.

When to choose a hybrid SOC

• Medium‑sized organisations that need continuous monitoring but cannot justify a fully staffed SOC. Keeping strategic functions internal while offloading Tier 1 monitoring and after‑hours coverage is often cost‑effective.

• Enterprises looking for an incremental step toward SOCaaS: the hybrid model allows gradual outsourcing while maintaining critical control.

SOC‑as‑a‑Service (SOCaaS) / Managed SOC

SOC‑as‑a‑Service (also called managed SOC or MSSP) outsources the entire security operations function to a third‑party provider. The provider supplies the platform (SIEM, EDR, SOAR), analysts, threat intelligence and incident response capability on a subscription basis. Pricing models include per‑device, per‑user, usage‑based or tiered subscriptions.

Pros

1. Lower cost and predictable budgeting: $1 k–10 k per month depending on company size. TechMagic’s research shows that mid‑sized organisations pay $120 k–360 k per year for managed SOC services in the U.S. compared with $1 M–1.6 M for an in‑house SOC. SOCaaS can save up to 70 % compared with building an internal SOC.

2. Rapid deployment: Managed SOC services can be operational within weeks, whereas building an internal SOC can take 6–18 months. A managed SOC provides live 24/7 coverage quickly.

3. Access to specialised expertise and threat intelligence: Providers employ seasoned analysts, threat hunters and engineers who monitor multiple clients. This gives customers access to diverse threat intelligence and proven playbooks. SOCaaS vendors also handle tuning and continuous improvement to minimise false positives.

4. Scalability and flexibility: Managed SOCs can increase or decrease service levels based on the customer’s needs (e.g., adding cloud coverage or compliance reporting). Customers avoid capital expenditure on hardware and software and instead pay a predictable operational expense.

5. Improved detection and response metrics: SOCaaS users achieve 50–70 % cost reductions and 96 % faster threat detection, often realising ROI within 6–12 months.

Cons and trade‑offs

1. Loss of direct control: Outsourcing means the organisation relinquishes some authority over security tooling and response procedures. MSSP contracts may limit flexibility and customisation.

2. Data residency and compliance concerns: Some industries have strict rules about where data is processed. Organisations must ensure the provider complies with regulations such as GDPR and HIPAA and clarify data‑handling procedures.

3. Quality varies by provider: Not all SOCaaS vendors deliver equal service. Low‑cost providers may rely heavily on automation with minimal human oversight, resulting in missed threats and alert fatigue. Hidden fees for onboarding, data ingestion or custom playbooks can inflate the total cost.

4. Potential vendor lock‑in: Proprietary tooling and data formats can make it difficult to switch providers. Negotiating data portability and clear SLAs is essential.

When to choose SOC‑as‑a‑Service

• Small and medium‑sized businesses that lack internal security staff but need enterprise‑grade monitoring and incident response. SOCaaS provides 24/7 coverage at a fraction of the cost of a dedicated SOC.

• Enterprises seeking cost efficiency or scalability, especially when budgets are constrained. Even large organisations often use SOCaaS to handle Tier 1 monitoring and free internal teams for strategic tasks.

• Organisations with distributed or cloud‑heavy infrastructures that require continuous coverage across time zones. SOCaaS providers can leverage follow‑the‑sun operations and AI to cover remote workers and cloud workloads.

Side-by-side comparison

Total Cost of Ownership (TCO) by company size

The table below summarises approximate annual cost ranges for different SOC models based on industry reports. Costs are converted to USD for comparison and rounded. Figures are estimates; actual pricing depends on infrastructure size, number of endpoints and desired service levels.

When each SOC model makes sense

Internal SOC is appropriate when:

• The organisation is very large and highly regulated
• Security operations are strategically core to the business
• Long-term staffing and tooling investment is sustainable.

Hybrid SOC is appropriate when:

• An internal security team already exists
• Out-of-hours coverage or specialist skills are missing
• The organisation is transitioning toward maturity

SOC-as-a-Service is appropriate when:

• Immediate 24/7 coverage is required
• Hiring and retaining SOC talent is unrealistic
• Predictable costs and fast outcomes matter
• Internal teams should focus on business priorities.

Final perspective

The decision is rarely about whether an organisation can build a SOC. It is about whether doing so is the most effective use of time, budget, and people.

Internal SOCs deliver control at a high and ongoing cost. Hybrid SOCs can work, but only with sufficient internal capability. For most modern organisations, SOC-as-a-Service offers the clearest balance of coverage, expertise, and cost efficiency.

That is why SOC-as-a-Service is increasingly adopted not as a fallback, but as a deliberate operating model.