Simply put, outsourcing is when a third party does specific tasks delegated by a business and managed services is when the third party manages their role more comprehensively with the aim of improving the business. Neither option is better than the other. Some companies require certain tasks to be simply outsourced while others get a greater benefit from a managed services model. It really depends on the company and the task at hand.
To fully understand managed services vs outsourcing, it’s best to look at both solutions individually.
Outsourcing is the delegation of existing or planned tasks to a business or individual outside the organization. The tasks could often be performed in-house, but it’s more cost effective and efficient to have a third party take care of them.
Essentially, the organization asks the third party to complete tasks A, B and C. The third party completes their tasks and issues an invoice. There’s no more to it.
For example, say an organization outsources recruitment. The organization asks the outsourcing company to hire a new IT manager according to the requirements given. The outsourcing company interviews some suitable candidates and hires one on behalf of the organization.
The outsourcing company doesn’t research the requirements to ensure they’ll get the best results. Nor do they analyze the organization’s recruitment process to see if it could be streamlined. The outsourcing company does what’s asked of them and that’s all.
Managed services is the hiring of an external firm that will use the expertise of their staff to manage an aspect of your business. The external firm is often a specialist in the area the business needs help in and can manage it more effectively than the business could in-house.