In this era, IT industries are growing rapidly and work pressure is high on these industries and to work we need candidates who will play their role towards organizational goals. But hiring skilled candidates is not an easy task as the recruitment process consists of several steps like training, documentation and many more which are difficult to handle by in-house HR. So, here employers need third-party recruitment services that handle all the recruitment process and other members focus on the main goal of the business. Two common approaches studied by employers are outsourcing and managed services. Although these terms are sometimes used interchangeably, they represent different strategies for obtaining outside assistance. So, in this article let us understand the difference between outsourcing and managed services in depth.

What do you understand by outsourcing

Outsourcing refers to the delegation of planned or existing business activities to an outside organization. The work you delegate can theoretically be done internally but getting help from a third party can reduce equipment, technology, rent and labor costs, and allow you to focus on core activities .
Importantly, outsourcing is associated with narrowly defined activities and processes rather than broad strategies. You ask a third-party organization to perform the business activities you need, and you pay them for their services at a rate far below the cost of performing those activities yourself.

What do you understand about managed services?

Managed services defined by hiring an external organization for more comprehensive support. With this approach, instead of delegating fairly narrow and specific functions or tasks to third parties, they would instead take a more holistic approach, and payment would be on a subscription-type basis.
In the IT context, managed services involve the active management and support of an organization's technical infrastructure and systems. This includes functions such as network monitoring, data backup and recovery, security management, software updates, help desk support, and overall IT strategy and consulting.

Outsourcing vs Managed services: Pros and Cons

Pros of Outsourcing:

Cost Efficient: The most important factor is that the outsourcing approach is more cost effective as compared to recruiting and managing in-house teams. These outsourced companies reduce expenses such as employee benefits, office space, equipment and training.

Access to specialized expertise: When organizations seek help from external entities, they have access to employees with skills and experience that cannot be done internally. Through outsourcing to experts, organizations leverage their expertise towards their goal with quality of work.

Increased flexibility and scalability: Flexibility is achieved with outsourcing organizations i.e. the organization can rapidly increase or decrease its operations by adjusting its outsourcing contracts. Through this, businesses stay updated with changes in market trends, fluctuations in demand.

Time Saving: As we know that by taking help from external partners organizations save time and focus on the target. By delegating time-consuming tasks, organizations can use their internal resources more efficiently leading to improved productivity and faster project completion.

Cons of Outsourcing:

Loss of Control: By outsourcing, organizations do not have any direct control over the processes and workflow. With this lack of control, businesses face difficulties with quality management, communication gaps and potential conflicts if expectations are not met.

Communication Challenges: Working with external partners brings communication challenges i.e. language barriers with external partners, cultural differences or time zone disparities that can inhibit communication and collaboration.

Potential for Hidden Costs: Outsourcing provides a cost saving factor but involves hidden costs. Hidden costs such as contract management, legal and regulatory compliance, monitoring and supervision of outsourced functions, and expenses related to addressing any potential issues that may arise.

Pros of Managed Services: Expertise and Specialized Knowledge: Managed Service Providers (MSPs) are experts in their respective field and with their skills and knowledge providers provide many benefits to the organizations. With knowledge of the latest trends in the market to improve the efficiency and effectiveness of IT operations.

Focus on core competencies: By leveraging a managed service, organizations focus on their core competencies and strategic objectives. With a reliable service provider, allows internal teams to devote their time and energy to critical business activities such as product development, customer service and growth initiatives.

Improved scalability and flexibility: Managed service providers manage infrastructure and resources according to business needs i.e. scaling up during periods of high demand or scaling down during slow times. It encourages organizations to adapt with the changing requirements.

Proactive Monitoring and Support: Managed service providers provide 24/7 monitoring and support for IT systems. They analyze errors and handle them before errors affect business operations. In addition, MSPs have service-level agreements (SLAs) that ensure quick response and resolution to any IT-related incidents.

Cons of Managed Services:

Communication and Collaboration Challenges: The most important factor for business success is effective communication and collaboration between the business and the managed service providers. Because these challenges affect the entire process and also affect the overall effectiveness of the managed services engagement.

Transformation and Integration Challenges: The process of converting from an in-house IT setup to managed services can be complex and requires careful planning and execution. When infrastructure is not properly managed, managed service providers create challenges in integrating existing systems, processes and data.

Potential vendor lock-in: Providers create conditions in which it will be difficult for vendors to incorporate managed services over the long term, change providers, and withdraw services if necessary. Therefore, the organization needs to carefully consider the terms of the contract and the exit strategies.


In conclusion, both the approaches are beneficial to the organizations and both provide efficiency in operations. The comparison of outsourcing vs managed services has been defined above and both have some advantages and disadvantages so ultimately you will decide which approach is suitable for you. When adopting third party services, it is necessary to carefully consider the specific needs, goals and potential risks before deciding to outsource.
Also, if you want to connect with experienced and skilled third party service providers, HiringGo is perfect and to know why we are perfect, visit our page and talk to our experts.

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