IT Outsourcing vs. Managed Services Explained

Information technology covers a vast number of responsibilities related to data processing, including cybersecurity, network infrastructure maintenance, software integrations, cloud storage, system performance, and user support. There are just as many ways to take care of IT tasks effectively, such as in-house management, IT outsourcing, and managed services. What are the differences, and which option is right for your needs?

Key Takeaways:

• Scope of Responsibility: Task vs. Process Oversight While IT outsourcing allows you to hire third-party providers for specific tasks (like software development or helpdesk support), Managed Services is a comprehensive form of outsourcing where the vendor oversees the entire IT process.
• Engagement Model: Transactional vs. Partnership IT outsourcing functions like an "a la carte" menu, where you select individual services to fill gaps or complete short-term projects, often using a break-fix model. MSPs focus on deep integration, proactive monitoring, and custom solutions rather than just troubleshooting issues as they arise.
• Cost Structure and Investment Outsourcing costs are highly flexible, often charging by the hour or project, making it ideal for supplementing your existing team without long-term commitments. Managed services typically utilize a recurring monthly subscription model. While the monthly cost may be higher, MSPs provide their own tools and team, potentially lowering your long-term internal infrastructure and training expenses.
• Determining the Right Fit The choice depends on your internal capabilities. Choose IT Outsourcing if you need to scale temporarily, require specialized expertise for a specific project, or want to retain full management control. Choose Managed Services if you want a "white-glove," turnkey solution where a vendor handles the heavy lifting of security, infrastructure, and maintenance, allowing your team to focus on core business goals.

WHAT IS IT OUTSOURCING?

Outsourcing IT means hiring third-party providers to handle aspects of your IT program. Instead of paying company employees to perform tasks like network maintenance or security scanning, you partner with an outside firm.

Common examples of IT outsourcing include:

• Software-as-a-service
• Platform-as-a-service and cloud storage solutions
• Network monitoring and cybersecurity services
• Data center planning and consulting
• Helpdesk and technical support
• Software development

IT outsourcing can cover processes, services, tools, and technology solutions. You can outsource simple, repetitive tasks to an external firm or hire an expert consultant for specific IT goals.

IT outsourcing costs

Outsourcing costs are flexible. Some third-party services charge by the hour. Others use recurring subscriptions or service-level agreements.

For network maintenance, the break-fix model is a popular approach, charging you only for services rendered. You call technicians when issues arise, they fix the problem promptly, and your business pays an agreed-upon fee based on the time and materials required.

Types of IT outsourcing

You don’t need to go all-in with in-house or outsourced IT. Outsourcing is a broad category, so organizations have flexibility in choosing how to implement it:

• Project-specific outsourcing: You temporarily outsource IT tasks, usually to scale beyond your normal capabilities or for specialized expertise.
• Fully-outsourced IT: A third-party agency handles every aspect of your IT, from managing security patches to ensuring network uptime.
• Hybrid outsourcing models: Outside service providers can complement in-house IT, keeping your personnel in charge of operations but leaving the heavy lifting to outside technicians.

Many vendors allow you to further customize what IT outsourcing means for your business. The goal is to deliver the right solutions for your needs efficiently and cost-effectively.

WHAT ARE IT MANAGED SERVICES?

Managed IT services are a specific type of outsourcing model. With this approach, vendors do more than offer a specific service or license an application. They actively oversee the area of IT involved, performing tasks, assigning responsibilities, monitoring results, and ensuring that delivered services adhere to program goals.

Managed service providers can handle virtually any aspect of IT, including:

• SaaS design, setup, integration, customization, and support
• Network infrastructure development, maintenance, technical support, and 24/7 emergency services
• Cybersecurity services, including network vulnerability scanning, anti-malware software, password and credential management, pen testing, and firewall administration
• Network delivery, DDoS protection, and IP blocking (e.g., Cloudflare)
• Data center design, cable management, preventative maintenance, and repairs
• Cloud hosting

Managed services always involve outsourcing, but not vice versa.

Cloud services vs. managed IT

Established cloud-based tools (e.g., Microsoft 365 Enterprise) provide support, but they’re not really managed IT. You still need in-house personnel to handle software configurations, access control, network logging, and patch management.

On the other hand, smaller cloud service providers may offer complete IT packages. They provide the server infrastructure, handle security in the cloud environment, centralize data storage, deliver the platform your team uses for business operations, and monitor system resources to adapt to demand.

IT OUTSOURCING VS. MANAGED SERVICES: HOW DO THEY COMPARE?

Both IT outsourcing and managed services involve handing over some network responsibilities to a third-party IT team. The main differences between the two models come down to how hands-on you want the process to be.

Program management

With managed services, your organization only needs to set objectives. The MSP handles the details of how to get from point A to point B, overseeing projects from start to finish. Your team is free to focus on other aspects of business.

Outsourcing is closer to an a la carte restaurant menu. You manage the program, selecting individual products and services as needed to supplement your company's capabilities.

Product support

Another way that IT outsourcing and managed services are different is the way support works. With outsourcing, vendors mainly ensure that the product works correctly. Support revolves around troubleshooting.

MSPs go further. They help your team integrate the product with your systems. They focus on providing solutions and making the tech as seamless as possible for your employees.

Customization

Managed services often provide more customization than straight-up outsourcing. MSPs take the time to learn about your operations and develop programs that fit your needs precisely. On the other hand, IT outsourcing gives you a list of “as is” options to choose from.

Costs and investments

IT outsourcing is designed to supplement your existing team. This means you need to invest in hiring, training, software subscriptions, and other IT support costs.

MSPs have their own team and tools. Packages cost more per month than ad hoc services, but you may save money in the long run because of lower infrastructure expenses.

Number of vendors

Depending on the size of your operations, IT outsourcing generally means working with a larger number of vendors. Managed services involve a deeper relationship with fewer vendors.

It’s easy to see the difference when you compare IT to advertising. Would you rather have one full-service vendor coordinate everything? Or hire specific vendors for social media marketing, search optimization, content creation, video marketing, and paid ads?

IT OUTSOURCING VS. MANAGED SERVICES: HOW DO THEY COMPARE?

When you work with high-quality partners, both IT outsourcing and managed services are valuable tools for your company. Outsourcing is ideal for meeting targeted needs, boosting your capabilities, and filling short-term projects. MSPs provide white-glove services, custom solutions, and turnkey packages that make your life easier.

At TSP, we’re experts at both. Discover our exceptional IT outsourcing tools, talent, and services today.