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What is a managed service provider? Strategic outsourcing for IT services explained.

MSPs are increasingly being turned to as strategic outsourcing partners that remotely manage or delivery IT services, thanks to talent and technologies most enterprises lack.

A managed service provider (MSP) is an outsourcer contracted to remotely manage or deliver IT services such as network, application, infrastructure, or security management to a client company by assuming full responsibility for those services, determining proactively what technologies and services are needed to fulfill the client’s needs.

Services delivered by an MSP are delivered by employees located at the client’s locations, or elsewhere. MSPs can also bundle in hardware, software, or cloud technology as part of their offerings.

Managed service providers structure their business to offer technology services cheaper than what it would cost an enterprise to do itself, at a higher level of quality, and with more flexibility and scalability. This is achieved through efficiencies of scale, as an MSP is able to hire specialists that smaller enterprises in particular may not be able to justify, and through automation, artificial intelligence, and machine learning — technologies that client companies may not have the expertise to implement themselves.

What differentiates managed service providers from traditional outsourcing companies is that when an enterprise outsources an IT department or function, the outsourcing company either picks up those employees or replaces them with a roughly equivalent number of employees elsewhere. An MSP, however, focuses not on the jobs themselves, but the end results the customer seeks. For example, an enterprise might contract an MSP to handle support calls to a certain level of satisfaction and response time. As long as the managed service provider meets those metrics, it doesn’t matter whether it uses dedicated staff, automation, or some other system to handle calls for that customer; the MSP decides.

There is a great deal of overlap between these definitions, however, and many companies traditionally thought of as offering business process outsourcing are now operating more as managed service providers.

Managed services also differ from traditional IT consulting arrangements in that consulting is typically project-based, while managed services are ongoing subscriptions.

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