Organizations across all industries are facing rising digital demands, evolving cybersecurity threats and increasing pressure to optimize costs. As a way to tackle these demands, organizations are partnering with managed service providers (MSPs). MSPs assume responsibility for managing IT systems and services, helping businesses stay secure, resilient and ready for growth.

In this article, we explore what a managed service provider is and the services they deliver. We also examine the benefits of MSP services, how they compare to outsourcing and consulting and what to consider when selecting the right provider.

What is a managed service provider?

An MSP is a third-party organization that manages a client’s IT infrastructure, systems and operations. Rather than reacting to issues as they arise, MSPs take a proactive approach to continuously monitor environments and address issues before they disrupt business.

MSP services are typically delivered through a subscription or service-level agreement (SLA) model, with costs, performance standards and responsibilities defined upfront. For businesses, this model provides predictable IT support while freeing internal teams to focus on strategic initiatives, supported by expert partners who help maintain stability, security and compliance.

How do MSPs work?

MSPs are built on 3 principles:

  • Proactive and remote management – Instead of waiting for systems to fail, MSPs use monitoring tools to detect, alert and resolve issues before they escalate.
  • Subscription-based service – Clients pay a recurring monthly fee for a defined service package, ensuring predictable budgeting and scalability.
  • Specialized expertise – MSPs bring in-depth skills across areas like cloud, cybersecurity and networking—resources that can be difficult or costly for businesses to maintain internally.

This combination creates a stable, cost-efficient IT model that adapts to changing business demands.

What does an MSP do?

In practical terms, an MSP assumes shared accountability for outcomes enabled by IT operations. The distinction between MSP services and traditional IT outsourcing lies in their proactive model. MSPs focus on prevention, optimization and alignment with business outcomes—rather than simply fixing issues after they occur.

Services MSPs provide

Common MSP services

Most commonly, MSP services offer IT services, security services and cloud services, while some MSPs extend into areas such as analytics, communication platforms or HR system management. Expanded offerings transform the MSP from a purely technical support provider into a partner that supports broader business functions and long-term organizational enablement.

1. Managed IT services

Managed IT services involve outsourcing the day-to-day maintenance of technology operations and the management of enterprise tools. Managed IT services partners can ensure reliable performance and provide consistent end-user support.

Common IT services:

  • Anomaly detection
  • Performance optimization
  • System administration
  • Licensing, configuration and user support
  • Help desk support
  • Routine maintenance

2. Managed security services

Managed cybersecurity services involve outsourcing digital security to a third-party expert who provides around-the-clock monitoring to identify threats and support security incidents.

Cybersecurity services are particularly critical for industries with strict regulatory requirements and a heightened need for proactive threat protection.

Common cybersecurity managed services:

  • Firewall implementation
  • Endpoint protection
  • Intrusion detection systems
  • Managed detection and response (MDR)
  • Incident response
  • Compliance monitoring

3. Managed cloud services

Cloud services, which span public, private, hybrid and multi-cloud environments, enable you to outsource managed services to manage and maintain cloud solutions/applications. Managed cloud services improve scalability, control costs and fully leverage the efficiencies of cloud-based solutions.

Common cloud managed services:

  • Cloud migrations
  • Optimization
  • Infrastructure management
  • Performance optimization
  • Cloud maintenance

4. Additional managed services

Beyond traditional IT support, managed services partners can expand their offering, transforming the MSP from a purely technical support provider into a partner that supports broader business functions and long-term organizational enablement.

Moreover, as managed services mature, some organizations extend their model through Global Capability Centers (GCCs). Established and operated with an MSP, GCCs provide access to global talent and scalable delivery while supporting long-term goals such as cloud modernization, AI adoption and operational resilience.

Other managed services include:

  • Analytics
  • Communication platforms
  • HR system management
  • Data backup services
  • Disaster recovery plans

How MSP services can help in a variety of industries

Managed service providers offer support across industries, tailoring services and SLAs to the unique needs of each organization. MSP services should never be a one-size-fits-all approach, which is why partnering with a team that has vast industry expertise ensures specialized delivery of IT support, advanced security and scalable infrastructure tailored to your organization and industry.

By shifting IT management to trusted experts, businesses across these industries gain cost predictability, improved uptime and the freedom to focus on core innovation—setting the stage for real-world case studies that demonstrate the impact of these capabilities.

How are MSP services commonly used across industries?

Financial services - Maintain always-on systems, meet strict regulatory demands and safeguard sensitive transactions. Healthcare - Protect electronic health records, uphold HIPAA compliance and ensure the reliability of clinical and telehealth systems. Manufacturers - Support IoT integration, predictive maintenance and ERP or supply-chain optimization. Retail - Support resilient customer-facing systems, securing sensitive data and enabling seamless digital experiences.

How outsourcing managed services can support payroll and case management

The State of California established a seven-year managed services partnership with us in 2018 to organize and modernize its Case Management Information and Payrolling System (CMIPS). This mission-critical technology supports the In-Home Supportive Services (IHSS) program, which provides domestic and personal care services to children and adults with disabilities and older adults to keep them safely in their own homes and communities and avoid institutionalization.

Currently, there are over 715,000 recipients and 600,000 providers in the IHSS program, with over 1.5M payroll payments per month totaling over $14.8B per year. As a committed partner in the mission of the program, we integrate innovation, such as intelligent automation, advanced business intelligence and cloud migration, to improve decision-making, simplify service and expand self-service options for all stakeholders.

How managed IT services can be used in financial services

A large, U.S.-based financial services firm entered a multi-year managed services partnership with us following a merger and acquisition that significantly expanded its workforce with skilled IT and business experts. As part of the managed services agreement, we assumed ownership of these operations across multiple countries and successfully integrated more than 120+ employees.

This endeavor’s success was partially realized due to our deep knowledge of the client’s systems and industry standards, and the scope of the partnership continues to grow. At the onset of the partnership, the organization experienced no service disruptions, and we helped ensure service quality was maintained and improved post-acquisition. The client continues to realize benefits, including our ongoing management and maintenance of resources and skillsets.

How outsourcing managed services can support digital transformation

The Society for Human Resource Management (SHRM) has engaged us in a 10-year full managed services partnership that will deepen SHRM’s impact as the voice of all things work across its membership base of more than 330,000 HR and business executives and professionals in 165 countries. We integrated SHRM’s existing technology talent to form a unified, agile digital team, assuming end-to-end responsibility for planning and execution of SHRM’s IT strategy and delivery. In addition, our digital strategists and business consultants are working closely with SHRM’s executive leadership to realize the organization’s vision for holistic digital transformation.

How managed services can be used for workforce training

A U.S.-based utility company sought assistance with talent recruitment and maintenance through their MSPs with us. This partnership helped them manage efforts to decrease their reliance on temporary workers.

We focused on retaining existing talent and implementing a robust training strategy to enhance their workforce's skills. Additionally, we introduced a governance model that reduced unnecessary costs and allowed the company to utilize skilled talent and innovative approaches to improve its processes.

MSP vs. outsourcing vs. consulting

MSPs, outsourcing providers and consultants collaborate with organizations to provide external support and expertise, but there are key differences in their operational approaches. As you are comparing partners and providers, make sure to note the duration, responsibility and scope provided in each agreement.

MSP services deliver continuous IT management through a subscription model, emphasizing proactive monitoring and long-term business outcomes. Outsourcing providers, by contrast, are typically contracted for defined tasks or functions—such as software development, customer support or back-office operations—and their work is often transactional or limited to a specific project or service scope. Consulting services focus on strategic advice, assessments and specialized expertise.

In practice, most organizations blend these models based on needs, duration, responsibility and scope. Using this, you can determine what partnership would be best. Most often, organizations use MSP services for steady operational support, outsourcing partners for targeted execution needs and consultants for strategic or high-level guidance.

How MSPs use AI and automation

From chatbots to machine learning (ML) algorithms, automation and AI have emerged as game-changers as organizations seek to streamline operations, boost productivity and stay competitive. Digital leaders put AI at the top of their lists of innovation investments over the next three years, with 57% already investigating it or conducting proofs of concept. MSPs increasingly bring extensive expertise in developing and implementing these emerging solutions. While not replacing human expertise, these tools strengthen efficiency and reliability.

Special attention to understanding how to build a foundation for deploying responsible AI is imperative. Tools that capture the full value of data, drive efficiencies and reduce costs by automating manual, repetitive tasks through intelligent process automation (IPA) and ML are high-priority investments.

Benefits of outsourcing managed services

Cost efficiency

Pricing models based on staff augmentation and full-time equivalents (FTEs) are no longer the norm. Next-gen buyers and top-tier service providers are challenging the status quo, embracing innovative commercial approaches such as co-development and go-to-market models centered around output or outcomes.

Output-based pricing determines payment based on the quantity of production delivered, such as “number of hospital claims processed on time” or “time to approve mortgage applications,” often with agreed-upon base prices and volume bands. Outcome-based pricing is contingent on the business outcomes the buyer achieves through the MSP’s contributions, focusing on positive revenue impacts or bottom-line improvements.

The eventual adoption of the appropriate pricing model should be based on baseline commercial models, the predictive nature of work, the risk-reward matrix and the change management framework. Both offer new ways for organizations to measure value from managed services.

Scalability and agility

MSP services can quickly scale to match seasonal demand, expansion or new projects. This flexibility helps businesses remain agile in changing markets. For application development and maintenance, leading MSPs employ models that deliver quality at optimal cost-to-performance ratios and with methodologies that enable organizations to benefit from consistent performance in their traditional, agile and DevOps delivery. Working with an experienced agile partner to manage a scaled agile transformation provides assurance to the process and supports skills growth for internal teams.

Enhanced security and compliance

Cyber threats continue to become more prevalent and sophisticated, and businesses are moving quickly to fortify their defenses against data breaches, ransomware attacks and other threats. As investments in cybersecurity solutions and training ramp up significantly, digital leaders are outsourcing managed services to implement more robust security controls using industry-recognized solutions to protect their assets.

Additionally, organizations are navigating an increasingly complex web of data privacy and compliance requirements. They’re investing more resources into compliance efforts and risk management to avoid repercussions and demonstrate their commitment to responsible business practices. MSPs are applying their domain expertise to help organizations navigate the unique demands of regulators and stakeholders.

Strategic partnership

Fortune 500 companies and large organizations likely embarked on their first managed services engagements many years ago. For some, outsourcing has been considered a black box arrangement. As an example, when purchasing office cleaning services, it doesn’t matter who takes care of things overnight; employees simply arrive in the morning to an office environment that’s suitable for work or not. Technology isn’t so simple.

It is essential for organizations to find MSP services that will fully integrate into operations, working side-by-side with the leadership and functions you have chosen to retain. If chosen well, the MSP is a partner you will collaborate with daily for years to come.

But be careful to ensure that their values, model and people align with service expectations, and avoid boxing the MSP in to provide commodity functions. A strategic managed service provider partnership should blend business fluency with technology savvy and a shared, long-term commitment to your success.

Considerations for finding the right managed service provider for your business

Choosing the right MSP requires alignment with your goals. Consider asking:

  • Do they have industry-specific expertise?
  • How do they handle cybersecurity and compliance?
  • What is their SLA structure for response and uptime?
  • Can their services scale as our business grows?
  • How do they ensure clear communication and reporting?

Other key considerations include onboarding, tools used, cultural fit and client references. Running a pilot engagement can help test compatibility before committing to a long-term relationship when outsourcing managed services.

Let’s keep the conversation going

Outsourcing managed services can be a powerful step toward efficiency, resilience and growth. From IT infrastructure to workforce agility and federal agencies, MSPs deliver the expertise and proactive support organizations need to stay competitive.

At CGI, we collaborate with clients to design managed service solutions that drive measurable outcomes. With local presence and global capabilities, we provide the right mix of security, scalability and innovation. Connect with us to explore how MSP services can support your business goals today—and in the future.