Managed Services VS Outsourcing: What’s The Difference?

Small to medium-sized businesses often turn to a managed services provider (MSP) or outsourcing to maximize the quality of the services they get or save money. But depending on the business challenge you face, it can be difficult to figure out which to go with. There often seems to be a lot of overlap between the choice of a managed service vs. outsourcing. However, the decision between a managed services provider vs. outsourcing is relatively simple once you understand their differences and unique benefits.

Managed Services vs. Outsourcing: Are They the Same?

No, managed services and outsourcing are different. This is primarily because managed services often provide a longer-term, more comprehensive arrangement of functions, while outsourcing tends to involve getting a company to handle a specific function, often for a limited time.

When choosing between managed service vs. outsourcing, it’s important to know what to expect from each offering. Here’s a breakdown of what each involves so you can decide which best fits your business’s situation.

What Are Managed Services?

Managed services address a wide range of a company’s business requirements, often in a specific vertical [1]. They typically involve delivering a complete, end-to-end arrangement of services around a major business function.

Here are some of the most common ways companies use managed services:

• Application development and maintenance
• Monitoring and managing networks
• Providing user support or help desk services
• Managing cybersecurity
• Providing disaster recovery and backup support
• Managing cloud services
• Providing support and security services for mobile devices

One of the most compelling reasons people go with an MSP while debating getting a managed service vs. outsourcing is the range of services an MSP offers.

For example, suppose you wanted to hire a managed services provider to take care of your application development. Your MSP wouldn’t merely design and build a single app. They would also:

• Meet with you to decide which functions to include.
• Test several early iterations.
• Execute alpha and beta testing of the final product.
• Maintain the application.
• Update the app when necessary.
• Put systems in place to evaluate effectiveness over time and make improvements when needed.

In addition, your MSP would handle your app development over an extended time, doing all of the above and more for several apps as the years pass.

When to Choose Managed Services

By going with a managed service vs. outsourcing, you can gain a strategic advantage and save money because you get higher quality services in less time. Here are some examples of situations where it would be good to opt for a managed service provider vs. outsourcing:

• You lack the in-house staff or resources to perform business-critical functions, such as building applications.
• You need to scale your IT infrastructure without investing in hiring new staff and purchasing new computers or networking equipment.
• Your internal teams are busy handling IT tasks, and you want to free them up to help your business grow.
• You need 24/7/365 support for an important IT function and don’t want to go through the process of hiring remote staff who live in different time zones.

If you have one or more of the above needs, the managed services vs. outsourcing decision is relatively simple: You need an MSP.

For organizations with needs that aren’t as diverse, choosing managed IT services vs. outsourcing comes down to figuring out whether an outsourcing provider specializes in the areas where the company has a service gap. Here’s a deeper dive into outsourcing, so you can decide if that’s the way to go.

What Is Outsourcing?

Outsourcing is when you hire an external individual or company to handle a specific function or task [2]. Organizations often veer in this direction when considering a managed service vs. outsourcing if they have very specific business problems.

For instance, suppose your dev team built an app, but they lack the resources to test it in a real-life environment. In that case, you may outsource the testing of your app instead of setting up and running a series of in-depth tests on your own.

When to Choose Outsourcing

Outsourcing may be the best option when you:

• Don’t have the in-house expertise to address a specific IT challenge.
• Need relatively short-term help with a specific project.
• Have to meet a goal but don’t have the staff, knowledge, or other resources to reach it efficiently.

Managed Services vs. Outsourcing: Key Similarities

Both managed services and outsourcing involve working with a third-party vendor. And, in many cases, they both involve:

• Hiring a company that specializes in a particular area of expertise.
• Choosing a provider that does tasks you’d rather your internal staff didn’t have to manage.
• Hiring an external entity because they have years of experience handling an area your staff isn’t comfortable managing.

Outsourcing vs. Managed Services: Key Differences

In the realm of IT, the biggest difference between an MSP and an outsourcing solution is that an MSP provides an all-around, in-depth arrangement of services in a specific area, often over an extended period of time. On the other hand, when you outsource, you often have a short-term goal in mind.

For example, let’s say your organization suffers a breach, and you need to upgrade your cybersecurity by installing new firewalls. You may choose to outsource this project to a cybersecurity company. They would select the best firewalls for your network, taking into consideration your digital environment, throughput requirements, and current vulnerabilities [3]. The project may last three months, and then the engagement ends.

Managed services are different in that companies tend to use them on a continuing basis. Returning to the cybersecurity example, your company may use an MSP to implement firewalls in your cloud infrastructure, as well as an incident monitoring system and detection and response solution. The MSP would then continually monitor your cloud environment for issues and automatically deal with any that arise. In addition, the engagement may continue for several years, instead of a few months.

Finding the Right MSP Provider

Finding the best MSP for your company comes down to your business goals and the gaps you need to fill to meet them. To identify the best fit, you should:

1. Identify departmental or company-wide goals you need to achieve.
2. Assess the strengths and weaknesses of your staff and resources in terms of helping you meet your goals.
3. Determine the scope of your MSP engagement. For example, do you need a full development team for a variety of apps, or just a team to build mobile solutions?
4. Assess the efficiency and budgetary benefits of hiring an MSP, which will help when discussing it with other decision-makers.
5. Identify an MSP that provides the scope of services you need and discuss details such as costs, scaling, and whether they have the people and systems to provide additional services down the road if needed.

Are you ready to explore IT managed services? LANSA’s team of development experts can build and maintain your apps, ensuring you get the functionality you need to meet your goals. Learn how by connecting with LANSA today.

Resources

1. A. S. Gillis and J. Moore, “Managed service provider (MSP),” IT Channel, Aug. 09, 2021. https://www.techtarget.com/searchitchannel/definition/managed-service-provider#:~:text=A+managed+service+provider+(MSP)+is+a+third%2Dparty,%2Dto%2Dday+management+services.
2. B. Lutkevich, “Outsourcing,” CIO, Jan. 31, 2023. https://www.techtarget.com/searchcio/definition/outsourcing#:~:text=Outsourcing+is+a+business+practice,provide+services+for+the+company.
3. “How does a firewall work? | Fortinet,” Fortinet. https://www.fortinet.com/resources/cyberglossary/how-does-a-firewall-work