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Outsourcing vs. managed services: Knowing the difference will save you time and money

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Outsourcing and managed services are appealing options for many companies at a time when workforces are stretched thin. But don’t be fooled—these terms aren’t interchangeable. Both involve receiving business services from a third party but determining which of the two options is the better fit could make the difference between a thriving company versus just staying afloat.

What is outsourcing?

Although managed services and outsourcing both involve hiring a partner organization, they encompass different levels of work. Outsource firms provide services for narrowly defined business processes. For instance, a company may want to outsource specific tasks such as handling payroll or tier 1 help desk calls to a partner. With outsourcing, business leaders select specific services and business needs that can be handled by an external partner. There are also different types of outsource partners including onshore, offshore, and nearshore partners.

What are the top reasons to use outsourcing?

Outsourcing business processes and tasks can free up employees to focus on more complex or valuable work; it can extend resources, such as sales support, for targeting new or underserved markets; support new product and service rollouts; and provide expertise within a specific industry focus. An outsource partner can also give companies access to digital systems and software services without paying for maintenance fees.

What are managed services?

In comparison to outsourcing, managed services take a more holistic approach to supporting a company’s business needs. A managed services provider offers a comprehensive range of services within one or several areas, such as IT or ERP. Instead of supporting a few business processes, a managed services provider provides end-to-end operational support and enhancements for a seamless end-user experience.

For example, Customer Experience as a Service (CXaaS) is a cloud-based customer solution for planning, designing, and executing activities that encompass all parts of the customer experience. CXaaS operations are typically managed by a third-party partner on behalf of a brand. A CXaaS managed services provider offers end-to-end management of CX and employee experience operations and continuous optimization for global talent (e.g., recruiting, onboarding and training), technology, consulting and implementation services.

What are the top reasons to work with a managed services provider?

For companies that are looking to integrate different solutions, service providers, and technology platforms with a unified plan, a managed services provider is the better choice. A good managed services provider will perform an assessment of the current infrastructure and operations to understand the pain points. The partner will determine whether any operations are compromising performance and create a plan for immediate improvements and long-term enhancements, in addition to providing skilled staff to support the company’s business needs. A skilled managed services provider will also proactively share best practices and suggest ways to increase savings and trouble-shoot problems before they arise.

Whether you are looking for an outsource or managed services provider, working with the right partner can propel a business forward faster and more effectively than doing it alone. The key is to define your business needs: do you want to outsource a specific business process or do you need extensive support? Next, find an external organization that always has your back. Look for a partner with in-house specialists in a wide range of technologies and skillsets, an extensive partner ecosystem of their own, various support models, and the flexibility and scalability to meet your enterprise needs.

Learn more about outsourcing and managed services from these resources:

Inside sales outsourcing: 11 ways to grow your business: learn how outsourcing inside sales can increase customer lifetime value well beyond times of uncertainty.

4 questions to decide if contact center outsourcing is right for you: Not every organization needs a contact center partner. To make the decision process easier, ask yourself these questions first.

The case for a contact center carve-out: Digital transformation around the customer is a strategic challenge. It needs a strategic solution.

Agile outsourced support from day one: A case study on end-to-end outsourced support that delivers best-in-class results.