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What is the Difference Between Managed Services and Outsourcing?

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Differences Between Managed Services and Outsourcing

Outsourcing is narrower in scope; companies often outsource a part of their operations, i.e., sales, customer support, or payroll. With outsourcing, leaders and stakeholders can identify and select services and business needs that can be handled by external partners.

For example, if you have a food delivery business and you have an app for it that you want to revamp but don’t have the requisite expertise, you can outsource the project to an IT outsourcing company.

On the other hand, the managed services outsourcing model is more holistic compared to the traditional outsourcing model. In this model, a managed services provider looks after all operational needs of the business, and also anticipates the need for processes and functions for the smooth operation of the business.

Let’s say that an organization wants to hire an IT outsourcing company to build, maintain, and update an HR app for a long period of time. The IT sourcing company will then manage the services that are asked of them and continuously improve them to match the employer’s business needs.

The top reasons to choose outsourcing service providers

One of the main reasons for choosing outsourcing is that it allows internal employees to focus on more valuable tasks. Apart from that, it can also extend resources such as customer service. Also, business leaders can focus on rolling out new products and services quickly. Moreover, an outsource partner can provide access to digital systems and software services without charging any additional fee.

The top reasons to choose managed services

The managed services option is better for companies that are looking to integrate solutions, technology platforms, and service providers under a unified plan. A competent managed services provider will make a thorough assessment of your existing infrastructure and operational arrangements to understand all the pain points.

The service provider will identify all the operations that are compromising performance and will create a plan for immediate improvements and long-term enhancements. Moreover, the service provider will proactively share best practices and suggest ideas for increasing savings and troubleshooting problems.


While both outsourcing and managed services offer valuable solutions for businesses seeking external support, they differ in scope and approach. Outsourcing targets specific functions, allowing companies to focus on core tasks and access specialized expertise, making it ideal for discrete projects. On the other hand, managed services encompass a holistic approach, optimizing operational efficiency and offering strategic insights for long-term growth.

The choice between them depends on the unique needs and goals of the business. Whether it’s unleashing internal resources or embracing comprehensive solutions, understanding the differences between these models is crucial to making the right decision to drive success and innovation.

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