Managed Services is a term that most clearly defines any completely outsourced relationship. One in which an external company performs both the front-end duties and backend oversight through a standard process that would typically be handled in-house by a team or department within the outsourcer’s (client’s) organization. But this term has unfortunately been diluted to represent only one industry.
The cloud is full of vagueness and ambiguity because the jargon is relative to perspective and context. An IT Support firm might bolster the phrase Managed Services, while an HR Outsourcing company might market BPO (Business Process Outsourcing) language to describe a similar offering in a different industry. They both provide a set-it-and-forget-it, turnkey service to manage a segment of their client’s business.
There are many tasks within an organization that make more sense to outsource than insource. By that, I mean to pay someone else (an external entity) to do it. But there are so many different flavors of outsourcing to consider. Does the organization want to pay someone to do the work but still maintain operational control? What level of oversight is required? What part of the whole process should be outsourced? Why is outsourcing an option in the first place?
There are two main reasons to outsource. Either because the task is repetitive and/or labor-intensive by nature or because it requires a specialty skillset. Both are concerned with cost. Is it less expensive to outsource the repetition or perform the work internally? Is it more cost-effective to outsource the specialty assignment or to hire and manage in-house?
A great example might be customer service, which is a typically high turnover segment for any business. It requires a lot of HR interaction, trainers, team leads, and supervisors, making it ideal to outsource. Still, customer relationship management might be the core of the organization’s capabilities. They know how to do it well but don’t want the burden of the legwork. In this, it is not a set-it-and-forget-it scenario but a co-sourced opportunity where the outsourcer directs the provider by ensuring they are staffed and prepared for the expected call volume and holds them accountable for the quality of service and data accuracy. The outsourcer takes an active role in managing the daily results of the provider’s efforts.
At the same time, however, the provider is still managing its internal workflow. They have standards, protocols, processes, and procedures that need to be taught, monitored, supervised, and maintained. Their competitive advantage and industry reputation are at stake, after all. Every provider that performs some, or all, of the roles and responsibilities an organization deems necessary to function, is a Managed Service.
Co-sourcing is the act of outsourcing the legwork while internally managing the results. But many functions make more sense to hand off completely like payroll processing, IT services, branding, search engine optimization, tax prep, recruiting, and so on. They require a specialty skillset and an oversight process that intimately understands how to overcome industry challenges. Delegating complete responsibility to an external entity is the act of outsourcing.
Then we get into the where. For decades, outsourcing has been made erroneously synonymous with offshoring. For most, the word outsourcing immediately conjures visions of people from other cultures performing tasks that would be better suited internally if not for steep labor costs. But that is an incorrect assumption. Outsourcing is merely delegating responsibility to an external entity.
We outsource food delivery instead of going to get it ourselves. House cleaning, lawn care, plumbing, and auto repair are commonly outsourced chores. In fact, every service we pay for in our personal or professional lives is an outsource. Either through necessity, because we don’t know how to perform the task correctly or through convenience, because we would rather spend our time elsewhere or because financially, it makes more sense. The same applies to businesses.
Outsourcing or Cosourcing domestically sometimes referred to as onshoring, is when we pay for services from an entity in our home country; to the print shop down the road, the law firm in another town, or the IT Services company in a different state. Offshoring, however, is outsourcing to a distant country, and nearshoring splits the difference by providing cheaper labor in a place closer to our home country. Regardless, Managed Services includes every type of outsourcing.
If you’d like to learn more about managed services and how it can benefit your organization, you’ve come to the right place. I have over twenty years of experience teaching non-techies how to leverage current computing methods to overcome almost any challenge and implement creative solutions that significantly improve efficiency. Let’s schedule a video call to discuss your goals and brainstorm how best to achieve them.