July 29

Outsourcing VS Managed Services: What Does Your Business Need?

Many organizations use outsourcing and managed services for more effective and efficient business operations. These two strategies also have significant differences that could spell out what a successful business is.

Let’s dive into the advantages and disadvantages of outsourcing and managed services. Then you can find out which of the two is best for your business.

How outsourcing works

Outsourcing is the practice of delegating your business activities to an outside organization. Instead of assigning these activities to an in-house member,  businesses choose a third-party company to reduce labor, overhead, and equipment costs.

Tasks usually outsourced are defined processes—be it a specific role or a whole department—but not broad strategies. That means, if you asked the organization to perform specific work, your provider will complete the tasks and bill you for the work done.

Outsourcing services and functions give you flexibility and scalability advantages. You can simply hire for a particular role when you need it, without worrying about overhead costs. 

You can partner with outsourcing services providers when you need help for your business processes or a specific project.

How managed services work

Managed services, on the other hand, is hiring an outside organization to deliver comprehensive support. Instead of delegating straightforward tasks, managed service providers submit to a subscription-type payment model.

Unlike outsourcing, a managed service provider would assist your organization and manage a whole department—that includes, but not limited to, uncovering improvements, investing in long-term projects, and developing effective solutions to drive your success.  

If you need a specialized job done for your business, outsourcing would be your best bet. However, if your goal is to keep a particular department running smoothly and securely at all times, hiring managed service is the way to go.