In today’s world every business wants to use the latest technologies like Automation, AI, etc., but implementing them in-house is not easy. As a result, businesses turn to outsourcing. Research is needed while making a decision to hire a company for Outsourcing vs Managed Services for business activities.
Businesses have a choice between traditional Outsourcing or Managed Services. At a glance, both Managed Services and Outsourcing can appear to be similar, but if we take a closer look at both the Managed Services vs. Outsourcing, we will find the differences.
What is Outsourcing and Managed Services?
To know the difference we have to understand what exactly is Business Process Outsourcing and Managed Services.
Business Process Outsourcing is the process of contracting a third party (BPO company) to perform non-primary activities of the business, which includes, voice services, email services, data entry services, surveys, Accounts Payable Services etc.
Managed Services are also a type of outsourcing but instead of offloading the whole business activity, remove Managed Services together to manage or complete a task. For example, Managed Services provider can be hired to set up cloud computing service for the business. In this situation the Managed Service Provider will establish operations and maintain the cloud computing service while working closely with the company.
Key differences between Outsourcing vs Managed Services
Time Period: A company would choose a BPO when they have to complete a defined task within a defined time period as BPOs are efficient and cost effective. Managed Services are perfect for ongoing contracts on subscription basis where the Managed Service Provider will manage the task assigned to them as per SLAs.
Payment: Managed Services, structure monthly or annual fees that are also generally fixed costs. While in Business Process Outsourcing, the cost is heavily influenced by the quantity of work to be done.
Staffing and Reporting: Both the BPOs and Managed Services Providers will arrange for the required staff but the difference will be in reporting. In Business Process Outsourcing, reports are sent upon completion of the assignment. Managed Services Providers will report to you as per your requirement.
Focus: The focus of BPO is on doing the work efficiently and in a cost-effective manner. While the focus of Manage Services is on improving the process and delivering the long term solutions to help the business grow.
Things to keep in mind while choosing between Managed Services and Outsourcing
While there are many differences between Business Process Outsourcing and Managed Services, neither. There are many factors that play an important role while deciding whether to choose Business Process Outsourcing and Managed Services. The best way to decide which method will be best for your business, is to consider the following factors.
- What is your goal?
- Do you have a one-time project or do you need complete solution?
- What is your budget?
- Do you want to take part in the management and have control over the process
- Are you are interested in getting a long term solution supported by a team of professionals
At ARDEM we understand the need of every business is different and each requires a specialized plan tailored made for them. We work closely with our clients to continuously deliver the best solutions. Get in touch with us and we can talk about your business needs and create a solution that works specifically for you.
About the Author
Allen Malhotra is an Entrepreneur, Director of Business Development at ARDEM Incorporated, New Jersey. He holds a degree in Business Management/Marketing and Information Technology from Monmouth University. He has worked in Client Relations and Business Development for over 11 years building lasting relationships and providing the best solutions with all of our clients since 2007. He likes to write thought articles on business process outsourcing and business process automation.