Outsourcing and technology partnerships between clients and service providers have evolved significantly over the decades. Let’s take a quick look in the rearview mirror at IT Outsourcing, explore how it differs from Managed Services today and where Managed Services is heading.
Yesterday’s outsourcing model
The former model of IT Outsourcing was inspired by cost arbitrage and labour substitution. From the 1980s until the 2000s, organisations would outsource entire IT functions – from data centres and help desks to application maintenance, ERP implementation and management, and Business Process Outsourcing. Large multi-national vendors would usually perform these services under long (7-10 years) fixed-term agreements with inflexible contractual frameworks. What made this proposition attractive? The vendor could do the work more economically, usually thanks to offshored headcount. The lure of shifting cost from CapEx to OpEx was also a big drawcard for clients.
These contracts were usually reactive in nature (break-fix), companies paid for the hours, often with a massive scope, riddled with vendor lock-in (making switching hard), restrictive governance (change requests painfully slow) and the IT was owned by the vendors (which led to lost internal capability over time).
Modern Managed Services
Around 2010, the market shifted away from labour substitution and towards outcome delivery. Managed Service Providers (MSPs) assumed ongoing responsibility for specific functions – such as security, cloud infrastructure, networking, and end-user support – and were/are held accountable for agreed (contractual) outcomes. Some of the best differences include the shift from reactive to proactive and automated prevention, improved transparency through dashboards and real-time reporting, and vendor-agnostic approaches.
The key differences:
| Dimension | IT outsourcing | Managed Services |
| Contract length | 7-10 years | 1-3 years, often rolling |
| Pricing model | Time & materials / FTE-based | Subscription / per-device / outcome-based |
| Scope | Broad, monolithic | Modular, stackable |
| Posture | Reactive | Proactive/preventative |
| Client capability | Often hollowed out | Retains strategic ownership |
| Technology | Vendor-proprietary | Vendor-agnostic tooling, often cloud native |
| Transparency | Low (black box) | High (dashboards, real-time reporting) |
In short, traditional outsourcing enables companies to have someone else meet their IT requirements more cost-effectively. Managed Services help companies continuously improve IT outcomes while clients retain strategic control and MSPs provide specialist depth without the internal headcount to match.
Why did Managed Services become more palatable?
Cloud computing threw cold water on the data centre monopoly, diluting the outsourcing stickiness. The complexity of cybersecurity called for always-on, specialist expertise. Thanks to Software as a Service (SaaS) IT was less about running systems and more focused on integrating and governing. MSPs made enterprise-grade IT accessible to the mid-market, to whom the previously high-value traditional outsourcing contracts were out of reach. Lastly, never thought a silver lining was possible from COVID but … accelerated remote work made endpoint management and cloud-first MSP models essential (and quickly).
What’s next?
The way Managed Services are offered to clients has changed. Clients can now have access to a self-service experience via cloud-based platforms.
Now more than ever, clients have unprecedented transparency and control over Managed Services at their fingertips. Through MSP platforms, clients can discover, review and analyse standard (and stand out) services. Requesting, provisioning and deprovisioning services is now offered with automated workflows and pre-agreed (and mapped) approvals. Clients enjoy visibility into their environments, with the ability to run queries and reports and gain insights, which are enhanced by AI to predict patterns and trends.
| MSP 1.0 (2000-2012) | MSP 2.0 (2012-2025) | MSP 3.0 (2025+) |
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Technology enables MSPs to significantly reduce incident response time thanks to automated remediation. The standout MSPs are using the same technology to shift from reactive incident response to preventative actions. While the use cases have started relatively simply – like ensuring more storage is allocated before a system crashes – the results are phenomenal (84% reduction in human effort, with some requiring no human effort at all). It won’t be long before fully automated preventative Managed Services become the norm – freeing up resources to focus on more strategic innovation, automation, and business outcomes.
This is just the beginning. The next iteration won’t take as long as the change from traditional outsourcing to modern-day Managed Services. It is happening now. If you like the sound of where Managed Services is heading, reach out to us at Advent One. We’d be happy to chat and help you understand and innovative approach to Managed Services can support your organisation.