What is the Difference Between Managed Services And Outsourcing?

What is the Difference Between Managed Services And Outsourcing?

In today's complex business landscape, companies are constantly looking for ways to improve efficiency, reduce costs, and focus on their core competencies. Two popular strategies are managed services and outsourcing. But what exactly is the difference between these approaches? Understanding the distinction can help you determine the best strategy for your organization.

Managed services involve partnering with an external provider to manage and assume responsibility for your company’s IT operations. The managed service provider (MSP) delivers proactive monitoring, maintenance, and support to ensure optimal performance and minimize problems. Common managed IT services include help desk support, infrastructure hosting, security, backup and disaster recovery, and more.

Outsourcing, on the other hand, focuses on delegating specific business processes or functions to an external vendor. The outsourcing provider takes over responsibility for that particular task, allowing your staff to focus on high-value activities. Typical outsourced functions include payroll, accounting, manufacturing, call centers, human resources, and other peripheral activities.

Key differences of managed services and outsourcing

Ownership and Management

With managed services, the MSP owns and manages your technology infrastructure and systems. They handle all hardware, software, and network components. With outsourcing, you retain ownership and management oversight, while delegating only select processes to the vendor.

On-Site vs. Off-Site

Most managed service providers work remotely, monitoring and managing your on-premise IT infrastructure from their own facilities. Outsourced processes can be handled at the vendor’s off-site facilities or on your premises, depending on the type of function.

Skill Focus

MSPs possess specialized IT skills and focus exclusively on managing complex infrastructure and systems. Outsourcing providers have expertise in the specific business process being outsourced, whether finance, manufacturing, HR, or other domains.


Managed service contracts are typically long-term (1-3 years) and encompass the full breadth of IT operations. Outsourcing contracts can be short or long-term, covering ad hoc projects or specific functions.

Cost Structure

Managed services involve a flat monthly fee that covers proactive monitoring, maintenance, and support. Outsourcing pricing varies based on the project scope, deliverables timeline, and resources required.

Access and Control

You grant the MSP full access and control over your technology environment so they can provide comprehensive management. With outsourcing, you retain control over the process and closely manage the vendor relationship.

Now that we’ve explored the key differences, let’s discuss the potential benefits of each model:

Benefits of Managed Services

  • Increased efficiency - MSPs handle time-consuming IT tasks, freeing up your staff. Proactive maintenance also boosts uptime and productivity.
  • Predictable costs - Flat monthly fees provide cost visibility and make budgeting easier. No large capital investments needed for new hardware/software.
  • Improved security - MSPs regularly patch, update, and monitor systems to protect against viruses, hackers, and vulnerabilities.
  • Enhanced compliance - MSPs ensure your environment adheres to industry regulations and best practices.
  • Access to expertise - MSP technicians are highly trained and seasoned in managing complex infrastructure.
  • 24/7 monitoring - Sophisticated remote monitoring tools watch systems around the clock.
  • Scalability - MSPs make it easy to scale infrastructure up or down as your needs evolve.

Benefits of Outsourcing

  • Cost savings - Avoid large investments in operational resources to handle peripheral functions.
  • Focus on core competencies - Redirect your staff’s energy toward critical business activities.
  • Access to talent - Tap into skills, innovations, and expertise from anywhere in the world.
  • Flexibility and scalability - Add or reduce outsourced resources to match demand.
  • Risk mitigation - Transfer responsibility for complex regulatory and compliance burdens.
  • Improved quality - Experienced outsourcing providers specialize in particular processes.

Clearly, both managed services and outsourcing offer important benefits. To determine the best fit for your organization, consider these factors:

When Managed Services Make Sense

  • You need to stabilize and optimize complex, mission-critical IT systems and infrastructure.
  • Your staff lacks specialized expertise in-house to manage IT operations effectively.
  • You want to offload day-to-day technology maintenance and upkeep.
  • Your budget needs a predictable monthly expense structure.
  • You require robust security, backup, and disaster recovery capabilities.

When Outsourcing Makes Sense

  • You seek to reduce costs associated with non-essential business processes.
  • You need temporary or variable resources to handle specialized projects.
  • You want to leverage third-party capabilities or expertise for peripheral activities.
  • You need to expand or scale specific functions in alignment with business needs.
  • You require flexibility in resource allocation and project timelines.

In today’s fast-paced business climate, companies must focus energy on their core competencies to stay competitive. Strategic use of managed services and outsourcing enables organizations to concentrate on what they do best. Assessing your internal capabilities and capacity will help determine where these approaches make the most sense. With the right strategy, you can boost efficiency, reduce costs, and drive business growth.

The Best of Both Worlds

For many companies, the optimal solution is to leverage both managed services and outsourcing as needed. Managed IT services maintain behind-the-scenes infrastructure and systems, while outsourcing handles front-office business processes. This balanced approach provides efficiency, expertise, flexibility, and scale.

At Kumo Cloud Solutions, we provide both managed IT services and strategic outsourcing to help Southern California businesses thrive. Our managed IT services in Irvine keep critical infrastructure running smoothly. We also offer outsourcing services like virtual assistants, telemarketing, and more to offload time-consuming tasks. Contact us to learn more about our comprehensive cloud computing solutions or call (949) 333-1080 to speak with one of our experts. Partnering with Kumo gives you the best of both worlds - managed IT and outsourcing - for optimized operations.

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