Managed Services – A Brief Overview

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Managed Services can be termed as the practice of outsourcing certain processes and functions designed to improve business operations and reduce the expenses in a cost-effective manner. Karl W. Palachuk, Amy Luby, and Erick Simpson were the pioneers of the managed services business model. All IT functions are covered in this model, wherein the provider makes all decisions related to technologies within the set parameters, and the company needs to review the processes.

A Managed Services Provider (MSP) delivers these services remotely to manage their end-user’s IT infrastructure. Managed services do not replace existing staff, rather help resources engage in the strategic IT program.

The most common managed services include traditional application and infrastructure management such as connectivity & bandwidth, network monitoring, security, virtualization, disaster recovery, storage, desktop & communications, mobility, and help desk & technical support.

Customer or end users pay a monthly fee to avail these services. An effective managed service model aims to absorb the burden of maintaining IT management chores, allowing the client to focus on core business concerns. A managed service provider (MSP) follows differing pricing models based on per-device, per-user, or all-inclusive pricing patterns. A remote monitoring and management service is charged on a per-device basis. An all-inclusive pricing model charges a flat fee for all managed IT service offerings delivered to customers. IBM, Accenture, Atos, Cognizant, Tata Consultancy Services, Capgemini, Infosys, Wipro, HCL Technologies, Datapipe, and ALTEN are some key players operating in the managed services market.

Companies providing managed services under different sectors include the following applications –

Information Services

  • Software – production support & maintenance
  • Authentication
  • Systems management
  • Data backup and recovery
  • Data storage, warehouse, and management
  • Network monitoring, management, and security
  • Human resources and payroll

Business-to-business Integration

  • Supply chain management
  • Communications services (mail, phone, and VoIP)
  • Internet
  • Videoconferencing

Supply Chain Managed Services

  • Supply chain planning, monitoring, and control
  • Sourcing and procurement
  • Logistics and distribution


  • Marketing strategy & planning
  • Integrated marketing/advertising agency services (graphic design, copywriting, PPC, social media, web design, and SEO)

The adoption of managed services helps companies stay updated with the growing technological advancements and address business issues related to cost, quality, and risks. However, managed service providers are facing challenges in cloud computing due to lack of knowledge and expertise. They are either acting as brokers with cloud service providers or providing their own cloud computing services. Setting up a pricing model and following the process is the key challenge for managed service providers. Additionally, maintaining operating costs and paying close attention to labor costs while improving efficiency and maintaining an adequate profit margin is another major challenge for MSPs.

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