Managed Services vs. Outsourcing: How to leverage the differences between the two for your business

What are managed services?

Managed Services allow a business to offload operations (IT or otherwise) to a service provider, known as a Managed Services Provider. The managed service provider assumes an ongoing responsibility for 24×7 monitoring, managing, and/or problem resolution for the IT systems or operations within a business.

Just like giant companies, small businesses need technology to operate efficiently and to compete effectively. But as reliance on IT grows, the resources needed to support this increasingly complex IT environment. In many small businesses, IT resources are limited and can be quickly overwhelmed.

If you fall behind in keeping up with things such as backups, patches, and security, the odds greatly increase that you’ll face an IT outage or another problem down the road that will negatively impact your business.

For instance, if your customer relationship management system, financial application, or network goes down, you will likely face substantial productivity and revenue losses as a result.

In IT, Managed Services refer to a third-party IT provider or Managed Services Provider (MSP), managing some or all of a business’s IT needs.

As with most business solutions, there is no “one size fits all” answer in Managed Services. A company can outsource to an MSP for one IT need, say Software as a Service, or they could outsource for all their IT needs, with Managed Packages that are designed to act as a full tech team.

How are managed services different from outsourcing?

In that time, the IT and wider technology industry have evolved to include a range of more sophisticated services where shared responsibility, deeper understanding of the business, direct consultation, and transparency are the key value propositions.

Chief among them is what we now understand as ‘managed service’.

It might sound like outsourcing, but the reality is that Managed Service Providers (MSPs) perform a function that is quite different, and depending on who you talk to, superior to outsourcing in many important ways.

Outsourcing is typically associated with larger organizations. For example, call centers and help desk teams running out of Asia, or big HR/payroll functions being outsourced by the government and other large organizations.

This is great if that’s what an organization wants, however with managed services, it’s often the case that a company wants to hand over most of the responsibility for one or more functions, but retain some control and visibility of the way things are operating all at the same time.

MSP has the requisite expertise, tools, and technologies to manage some aspects of your business better than you can. This approach differs from traditional outsourcing, which may allow you to carry out specific business functions less expensively or more efficiently than you could in-house, but doesn’t provide a consultative function.

When considering the differences between outsourcing and managed services, it’s important to understand each fulfills a specific need and one is not necessarily better than the other. It’s also correct to informally use the term “outsourcing” when referring to managed services provided by a third party.

Finding the right managed services provider

The global managed services market is forecast to reach more than 200 billion U.S. dollars in size in 2020. Over the next few years, revenue from the managed services market is set to grow to more than 300 billion U.S. dollars.  Source: Statista

Hiring the perfect managed services provider for your company is very beneficial. It can be hard sometimes to run a business and make big decisions on who’s going to be protecting its success. Managed service providers manage, monitor, and maintain your information technology.

They even stop problems before they cause any downtime within your company, which is crucial. You need an MSP who believes strongly in IT security, business continuity, and all the other aspects that are vital to operating efficiently.

The perfect MSP grows alongside your business in order to help you meet all of your goals and objectives. Here are the things you need to keep in mind while finding your perfect Managed Services Provider:

Does the managed service provider have a proven track record?

You can find this out by looking up case studies or testimonials and getting in touch with their clients. Ensure the company stays true to its word and maintains a client-focused approach.

Do they set plans to meet your budget?

A great MSP will personalize its services to suit your business needs, along with your budget. They must ask you several questions regarding your business to show that they are determined to find the perfect fit.

Is IT security one of their top priorities?

IT security should be one of the main focuses MSPs have. All of your important information and customer data are in your systems so you need to make sure that is well taken care of and always accessible.

Do they offer remote and onsite support?

Your MSP should be able to offer their support as needed. If something disastrous happens to your network and you can’t get your MSP working on it promptly; you can suffer some serious downtime. And, downtime equals a loss of profit.

Do they understand your industry?

Your MSP must understand the industry-specific regulations of your business, to maximize your potential. If they aren’t sure of how things are done in your industry/business or what rules to follow, this can cause some legal trouble.

Is your managed service provider customer-focused?

It’s important to hire an MSP who is all about you and your needs. Hiring an MSP who tries to shape and form your business to fit their services just won’t do. They also need to figure out the spaces to grow and the ability to step up on the competition in that.

Hiring the perfect MSP allows your business to cut costs, boost productivity, and overall improve your day-to-day operations. Spade Technology is client-focused and takes strategic steps to get your business ahead of the competition.

Assessing the need for outsourcing for your business

Outsourcing is a business concept having many ramifications. Some people love it; others hate it. It seems as though nothing divides a room full of business professionals faster than the idea of sending some services out of the house. Although some people will argue against it until they’re blue in the face. Outsourcing is incredibly important for every business today.

According to a recent survey, 49% of businesses have accepted, freeing up resources to focus on core business is the most widely cited reason for outsourcing IT functions.

Outsourcing will save you time and money. It’s often the first thing mentioned when someone suggests you should outsource this function or service. Some businesses send their HR functions to an outside company, while others will seek outside help for everything from customer service to marketing to PR to strategic planning and consulting. There’s no shortage of services and functions to outsource.

The major reason firms opt to outsource is that it does save time and money. Take customer service for example: By contracting with a third-party provider, you get instant access to a team of highly qualified customer service reps who interact with your customers using the latest technology and techniques. Your customers get better care, your reps resolve issues faster, and you don’t need to deal with high turnover or infrastructure costs. Everybody wins!

The Needed Expertise

A move to outsource is akin to asking for a helping hand. Plenty of smaller firms outsource not because they want to cut their overhead or they can’t find qualified staff, but because they simply don’t have the in-house expertise. In growth situations, they don’t have time to develop it either. In that case, seeking out a third-party provider is perhaps the smartest move a firm can make.

Supporting Growth

Managing growth is often difficult, and your firm might struggle to keep up with demand. Teaming up with a third-party provider is the best thing you can do.

Again, look at customer service as an example: You might have some great reps already in place, but they’re suddenly overwhelmed by the volume, and you just keep growing.

Your customer service provider adds a team of highly trained customer service reps to supplement your existing team. You’re not going to be able to hire and train a team overnight, but outsourcing gives you instant access to the growing support you need.

Access to Technology

Infrastructure cost is another major concern when it comes to in-house services. Businesses that outsource HR might choose to do so because implementing a new payroll system is expensive. A firm that sends customer service out of the house might be looking at the total cost of implementing the technology needed to run the most up-to-date contact center and provide customers with the best service possible.

Your third-party provider has already invested in the technology needed to deliver the services you seek—and reps are already trained to use it.

Also, outsourcing can help you develop or promote your firm’s brand. Partnering with a third-party provider raises your brand profile by improving your customer service. When hidden benefits like this become obvious, it’s clear just how important outsourcing is for any company.

Leveraging a blend of managed services & outsourcing for greater growth

Computers and technology are growing increasingly complex, while also becoming necessary for nearly all businesses. With needs ranging from maintaining security across several devices to managing a complex network of printers, any number of issues can arise in a given day. For many companies, maintaining an in-house IT team is not a practical solution.

The blend of managed services and outsourcing helps your business run more efficiently. By helping you redesign workflows, automate tasks, and upgrade equipment, you can have state-of-the-art technology to help you run more efficiently and keep up with your peers and competitors.

An in-house IT team only sees the problems that have already arisen in your business. When you use IT outsourcing, you are hiring experts that see a wide variety of IT problems every day. This means when a new problem arises, they already know how to fix it for you quickly and at lower costs. The IT professionals at a managed service provider are constantly undergoing training in the latest technology to provide you with the best service available.

Today, many industries have compliance standards that must be met. Without additional support, it can be easy to fall out of compliance, which can cost your business significantly. IT outsourcing lets you focus on doing the work, while your managed service provider helps you implement strategies to maintain compliance with your industry regulations.

If you have a small- or medium-sized business, you simply do not have the same range of resources that larger corporations enjoy. However, IT outsourcing lets you have the same level of expertise, equipment, and support as these larger companies. This allows you to keep up with the bigger companies while providing the excellent customer experience your clients expect.

IT outsourcing can help grow your business, save you money, and keep up with the latest technology. It’s important to choose the right managed service provider, so be sure to know what to look for in an IT consulting business.