What is Managed Services?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 09 November 2019
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Managed services is a term that is used to describe different types of business tasks that can be outsourced to various providers, allowing a company to divert money and resources that normally would be used to manage those same tasks in-house to other purposes. Under the best conditions, managed services help companies to enhance profitability while still successfully managing essential tasks. There are three main areas in which managed services may be especially helpful: financial, technology, and customer care.

Outsourcing financial tasks is easily one of the more common examples of managed services. In this scenario, a client contracts with a service provider to take over tasks such as managing the company payroll, preparing and mailing invoices, and even processing payments. Doing so allows the business to manage its financial affairs with fewer employees, saving a great deal of money in terms of salaries and benefits. At the same time, payroll and other services keep abreast of changes in governmental regulations that could impact the tax filings of the business, minimizing the potential for accounting issues that lead to audits and possibly penalties.


Technology outsourcing is an increasingly popular form of managed services. Small businesses can contract with independent services to maintain their internal networks by troubleshooting problems with servers and work stations, locating and implementing new hardware and software into the networks and in general monitoring and managing all activities taking place on the customer’s networks. Many providers manage routine tasks in exchange for a monthly fee, while also performing other tasks like a network migration for an additional fee.

Customer service is another example of managed services support that companies may use as a means of limiting staff but still remaining responsive to customer needs. This approach involves outsourcing the customer care component of the business, providing customers with contacts that can answer questions regarding service issues and concerns. Service providers that offer customer service solutions also provide assistance in obtaining technical support, receiving information about certain products offered by the company, setting up a new account, or making changes to a current account.

While the potential for saving a great deal of money is inherent in the use of managed services, choosing the wrong suppliers can seriously cripple the progress of a company. For example, a technical support provider that is unresponsive when systems are down may negatively impact the ability to receive and process orders or manage internal tasks that ultimately cost the company a great deal of money and time. In like manner, an ineffectual customer service provider could damage relationships with existing customers to the point that those relationships are severed and cannot be repaired.


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