Managed Services vs. Outsourcing – Is There a Difference?

Outsourcing and managed services are two phrases often used interchangeably. While both services involve working with a third-party vendor, there are some key differences to consider. However, the real question when considering managed services vs. outsourcing is this: What does your business need?

What is Outsourcing?

IT outsourcing is when companies hire an external resource to perform tasks or functions. While these services may last for months or even years, they are typically one-off solutions that solve specific problems such as:

• Software design, development and deployment.
• Deployment to the cloud from on-premises legacy platforms.
• Consulting and technical support for a particular project.
• Data-related tasks, such as building a data warehouse.

Outsourcing has been around as a service since the 80s, and many companies build their entire offering around a monetized outsourced service. Staffing agencies are even outsourced providers of IT talent, a service that has grown increasingly popular as tech expert shortages increase. Companies select an outside IT services vendor if they:

• Lack in-house expertise to fix an IT problem.
• Need additional help to scale up for a short-term project.
• Have a strategic goal and lack the in-house solutions to achieve it.

How are Managed Services Different from Outsourcing?

The critical difference between managed services and traditional outsourcing, particularly in IT, is the proactive and holistic nature of how they manage your technology tools. Outsourcing is often seen as a one-off and a response to a problem or disruption of services. Managed services are a strategic approach toward handling a critical business function.

The keyword in managed services is “managed.” These services support your IT infrastructure or applications on an ongoing basis. Managed services encompass several types of ongoing services, including:

• Network monitoring and management: A managed service provider can monitor and manage an organization’s network architecture, including firewalls, routers, switches or other network devices.
• Server management for on-premises architectures: Managed service providers can handle servers, including installation, configuration, maintenance and support.
• Help desk end-user support: A managed IT service provider can also offer their clients a 24/7 help desk to troubleshoot the tools employees or customers use.
• Cybersecurity management: Given the increasing lack of available talent, a third-party vendor with cybersecurity skills is essential. Managed services in this area include maintaining an organization’s end-to-end security, including installation and upgrades, and troubleshooting and maintenance.
• Backup and disaster recovery: From data backups, upgrades to full-on recovery of your critical systems, managed service providers have you covered.
• Cloud services management: In addition to on-premises architectures, a managed services provider can handle your cloud infrastructure, including public, private and hybrid environments.
• Applications management: Installation, configuration, maintenance and support of your business applications are all in a day’s work for a managed service provider.
• Mobile device management: When you say, “end-to-end architecture,” you’re talking about digital mobile devices, such as smartphones, tablets, or other mobile devices. A managed service provider can also set up, monitor and upgrade these devices.

These are just a few examples of managed services. Now that you understand the differences between managed services vs. outsourcing, the real question is: What does your business need?

Managed Services vs. Outsourcing: Which Do You Need?

Some key differences between managed services and outsourcing should help you decide which service you need.

First, managed service providers negate risk. Instead of calling a third-party vendor when something goes wrong, you can rely on a managed services provider to keep things running right.

For example, when it comes to cybersecurity, a managed service provider could proactively monitor your networks to prevent a data breach. But an outsourced cybersecurity provider would come in after you’ve experienced a cybersecurity incident. Managed services provider meld into your business model. These partnerships can offer advice and support around key IT strategies. An outsourced IT vendor typically comes in to tackle a specific initiative, whether building a new product or fixing what’s broken.

You would select a managed service provider if you:

• Need a strategic resource to work into your business model.
• Need 24/7 support for a critical IT service.
• Need to scale up your IT infrastructure without accruing the overhead expense.
• Lack the in-house resources you need.
• Want to free up your internal teams to focus on other key initiatives.

Pros and Cons of Managed Services vs. Outsourcing

Some of the pros and cons of both managed services vs. outsourcing include:

Pros:

• Consistent access to specialized expertise and technology.
• Predictable costs.
• More cost-effective than an in-house team.
• Flexible and easily scaled.
• Provides the technology you need.

Cons:

• Reliance on an outside resource.
• Dependence on one or several providers.

Choosing between managed services and outsourcing depends on your business needs and goals. Evaluating the pros and cons of managed services vs. outsourcing is essential.

While there still may be confusion about managed services vs. outsourcing, there is a big difference in the types of service. Managed services may be a better fit if you’re looking for a long-term solution to an IT problem. Outsourcing is a one-off service that is often reactive after a problem occurs.

Red River is a managed services provider offering long-term strategies and solutions to your IT problems. Contact us today to learn how a partnership with our team can help your business.

Q&A:

What is Outsourcing?

Outsourcing is a business practice for contracting out services to a third-party vendor. Outsourcing fills temporary gaps in services or expertise and may save a company the cost of hiring someone in-house. Outsourcing can include various services, from customer service and accounting to IT.

What Are Managed Services?

Managed services are an IT delivery model where a third-party provider proactively manages an organization’s tech infrastructure and systems. This service can include various services, from software installation and updates to network or cybersecurity management.