Managed Services vs Outsourcing, What Are The Differences?

Managed Services vs Outsourcing, What Are The Differences?

As your business expands, your IT sector could easily become overburdened, increasing the risk of your company’s data being hacked and exposed.

That overburden and risk can be easily avoided however through careful implementation of either managed IT solutions or outsourcing services.

But what makes the two different from one another and what solution will work the best for your business?

This is the million-dollar question.

If you’re looking for managed IT services Perth businesses rely on, then get on a free call with our experts at GPK. If you’d like to take a deeper dive into your outsourcing options and read how the two solutions compare, then this guide is for you.

Managed Services vs Outsourcing

Managed Services vs. Outsourcing

Outsourcing companies specialise in managing specific business operations or projects, typically on a smaller scale.

In layman’s terms, outsourcing involves hiring a third party to successfully run selected business operations, including help desk support, tailored IT solutions, staff coordination, file preparation, and data management.

Outsourcing, when done correctly is quite effective, as seen in the rising number of jobs being outsourced every year—around 300,000 jobs according to one study.

Managed services, in comparison, provide more systematic solutions to technical support with a spectrum of choices.

Here, you won’t have to search for specific third-party IT solutions, since managed services will offer almost everything—from starting and finishing a complex project to various types of technical support and services.

If a company, say, has an overburdened IT sector, managed services do a splendid job of coming and picking up the slack and then some, covering a business’s IT aspects.

An outstanding managed service has a broad staff of qualified IT specialists, all with a wide array of experience in different fields.

On a global scale, in 2021 alone, managed services were valued at around $161 billion, with a prediction that, by 2027, this value will double. The numbers speak for themselves—these services are extremely effective and valued.

Related: What are the benefits of Managed IT Support for small business?

Managed Services vs Outsourcing: The Differences

Generally speaking, outsourcing means that you’ll get more specific and not generic problem-solving from a third party, whereas with managed services, you will receive all-encompassing IT solutions within the company, or through a designated ERP system.

In our experience, we have found several larger differences between managed services and outsourcing. They are as follows:

Managed Services are a Long-Term Investment

It can be argued that if you opt for outsourcing, then you’re opting for a more short-term option. This typically indicates that you are doing so because you only need these services when a particular issue or business need arises.

Companies that are in favour of long-term and safe solutions, however, will usually resort to incorporating managed services since, here, IT specialists work interchangeably with your staff and ensure your business runs flawlessly day to day.

This is in stark contrast with outsourcing—a business will typically collaborate with a single IT specialist who only works on resolving or improving one particular issue.

Upfront Prices vs Paying After the Job is Done

The most significant distinction between outsourcing and managed services has to do with the payment method each uses.

Despite being a recurrent solution or service—with managed services you’ll often have a fixed amount to pay upfront, more along the lines of a retainer or subscription model.
Your managed services billing may also be customised to meet your predetermined selected services.

Paying for outsourcing, however, is rather different.

It is more likely you will agree on a fixed, one-off payment—sometimes held in escrow—that will be released once the job has been completed.

However, in outsourcing, the prices for the service can also include individual performance compensations or unforeseen costs that revolve around the task at hand.

Down the line, outsourcing can ultimately be a more expensive route. This is expected though, given their often short-term solutions.

Differing IT Service Models

With outsourcing or managed services, one is not always better than the other. This is because, from project to project, managed services and outsourcing can take many shapes and in some instances, overlap.

As a generalisation, however, if you have many IT aspects that need managing regularly, you’ll find managed services to be a more effective and affordable solution.

If you’re not a fan of overspending and are a smaller operation with only a few issues to fix, outsourcing could be a better solution for your business.

The Verdict

All in all, outsourcing services are neat for businesses that want to resolve a specific IT issue or project—whereas,  if you’re looking for IT services to serve your business in the long run, managed services will be the support system your business thrives off.

We’ll leave you with this—managed services have been known to ultimately reduce IT costs by 25% to 45% and improve IT operations’ efficiency by 50% to 60%.

If you’d like to know more about managed IT support, then give us a call!

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