Managed IT vs. IT Outsourcing: Pros and Cons, and How to Decide Which Is Best for You

More or less every business nowadays relies on an effective IT service to function.

How this service is delivered can vary considerably, however, depending on the particular needs of an organization.

In this guide, we’ll discuss two of the most common IT service delivery methods, managed IT services and outsourced IT services.

The terms ‘managed’ and ‘outsourced’ are often used interchangeably concerning IT services, which is understandable given both involve recruiting third-party support.

However, this belies significant differences between the two approaches that we’ll now lay out to help you decide which is best for your business.

What are managed IT services?

While managed and outsourced IT services refer to the use of an external organization to provide IT services, the managed approach entails more comprehensive support.

Managed IT services are very much a management tool for an organization’s broad IT requirements and vision rather than, as with outsourced services, a deployment tool wielded in response to a specific need.

To this end, a managed services provider (MSP) develops an ongoing relationship with your organization based on a subscription payment model, rather than a pay-as-you-go reactive one. As such an MSP integrates, participates in consultations, and provides advice and assistance to improve your IT services drawing on their extensive expertise.

While an outsourced IT service provider might install antivirus software, an MSP will consider overhauling your IT security infrastructure in its entirety.

An MSP can also take on more routine tasks but in addition to this, they have a vested, long-term interest in the success of your business since as your business scales, the MSP’s services expand.

As such, an MSP is not simply looking for a quick fix to the latest problem. They look further down the line to see where your IT services are headed, and how they can best align with your business’ broader strategic objectives.

What’s included in managed IT services?

The specifics of what an MSP will do with your organization are detailed in a Service Level Agreement (SLA).

The SLA outlines clearly the IT services that will be rendered, and how comprehensive this assistance will be.

An MSP will typically offer basic services such as 24/7 help desk support and hardware installation, but the SLA will most likely go beyond these to include more in-depth services to manage and improve your IT infrastructure, such as:

• Pinpointing security vulnerabilities
• Increasing operating capacities
• Monitoring network activity
• Carrying out routine maintenance
• Disaster scenario planning
• Integrating company-wide mobile devices

These are just some examples. The point is an MSP can tailor its services to the needs of your business as it goes through its various stages of growth and development, combining flexibility with expertise.

Pros and cons of managed IT services

When an outsourced IT services provider steps in to solve a problem, the benefit they’ve provided is clear for all to see.

With an MSP, the benefits are less tangible since it often concerns incremental improvements, whether that be improved efficiency or increased security. There are others as well though. They include:

• Fixed costs – The monthly subscription model makes budgeting straightforward and predictable, as opposed to paying bills for unexpected problems that may arise or for specific IT projects that run over budget.

• Access to the latest technology – Small and medium-sized businesses (SMBs) don’t usually have the capital at hand to pay for the most cutting-edge technology. Securing the services of an MSP provides these companies with access to such technology without the financial burden.

• Reduced downtime – Much of an MSP’s work is preventative and proactive. As a result, downtime is kept to a minimum.

• Experience and expertise – MSPs have experience working in close partnership with businesses to work towards achieving strategic goals.

An MSP gives you access to considerable IT experience and expertise, without having to pay and train a full-time member of staff or, with outsourced IT services, uncertainty as to who exactly you will be working with and how well they understand your business.

This doesn’t mean an MSP is right for every business. There can be downsides as well.

Most of these concern finances and control. Management may not be pleased with a fixed monthly cost if they believe the company’s IT services are working well and not holding the business back. In this case, they’d rather pay for IT support as and when problems arise.

Another potential drawback is the thought of giving up a measure of control. Management may perceive an MSP as having too much influence over a core part of the company’s operations and wonder how their integration will affect decision-making.

This can be understandable but is also a concern that can be alleviated through a robust SLA, as well as the MSP demonstrating their commitment to transparency and ensuring they share all the records and reports they have. This is also important for the business to know exactly what they are spending their money on.

What is IT outsourcing?

In truth, an MSP is a specific form of outsourcing.

IT outsourced services means, at its simplest, the use of a third party to perform IT-related functions.

But while managed IT services are viewed as proactive and preventative, outsourced IT services, as traditionally understood, are often referred to as the ‘break-fix’ approach.

This means the outsourced IT services provider will be informed by the business of an issue, which they will then investigate and find a solution to. This inevitably entails some downtime while the issue is communicated, analyzed, and a solution implemented.

It’s a reactive approach, with little in the way of preventative measures in place other than perhaps cursory checks. Critics of standard outsourced IT services claim it is actually in the financial interest of outsourced IT providers to let problems build up as this ensures a payday further down the line.

Outsourced IT services can also include working on specific tasks or projects, such as installing a new security system, or setting up new IT infrastructure. This service could be rendered on a pay-per-task basis or it could be charged hourly.

What’s included in outsourced IT services?

The range of potential outsourced IT services is vast. Some examples include:

• Telecommunications
• Technical support
• Disaster recovery
• Email client management
• Security and protection
• Data handling

Pros and cons of outsourced IT services?

The main reason a business will turn to an outsourced IT services provider is a lack of internal capacity. Especially for smaller businesses that perhaps only require a few IT services, hiring, training and investing in an IT department might not make a great deal of sense.

But there can be other benefits to securing outsourced IT services as well. These include:

• A larger pool of talent – Finding local talent can be difficult, especially if you don’t need their services full-time. Outsourcing makes the recruitment process easier and less committal for both parties.

• Scalability – As your business grows, so do your IT requirements. With an in-house team, this means more investments to increase capacity. With outsourced IT services, this simply means paying for the use of existing capacity elsewhere to keep up with your growth.

• Fewer expenses – On the whole, outsourcing IT services works out cheaper than hiring, training, and managing an IT department.

The main disadvantage to outsourced IT services will be for those businesses that already have an IT department in place. Again, an element of control comes into play as well though for management that may prefer to have an accountable staff team rather than a third party.

Managed and outsourced IT services: Which is best for your business?

Since an MSP is a form of outsourced IT service, the pros and cons of the latter also apply to MSPs.

The opposite is not true for standard outsourced IT service providers when it comes to the benefits of MSPs.

A managed IT services provider is the best approach for businesses that want to improve their IT operations and align their organizational strategies with their IT strategies in the long term.

Basic outsourced IT services will continue to have its place as a valuable service, but as the digital transformation continues to roll out across all facets of society and commerce, the more holistic and comprehensive approach of a managed IT service provider is increasingly necessary for businesses to compete and grow.

Vertikal 6 is one of the experts in managed IT services leading this transformation and helping businesses find their place in this new landscape.

Contact us to schedule a free IT strategy session to discuss your organization’s IT and business goals and find out how we can help you achieve them.