Managed Services - Future

By Amandeep Singh, Vice President & Group Head - IT Infrastructure, Thomas Cook India Limited

Before going in-depth about Managed services, lets first understand what Managed services is all about, for me Managed services is nothing but “convenience” to get certain task done from external party in order to reduce overhead/burden.

With growing competition in market – I believe – managed services options are one of viable option to make company focus on their primary goal rather than utilising resources in managing task which are not their core competency. In today’s market each and every company as currently adopted – Managed services option in one form or another, when I say this there are various types of services offered currently, however it is not termed as “managed” each time, and primary objective is still to go with external party who can handle task more efficiently and eventually lead to benefit organisation in maintaining efficiency and reduce operational cost.

“In order to control risk at each level, corporate should make sure the required governance check/ mechanism is built”

Let’s talk about various options currently organisation avail under managed services category – Warm body contracts, SLA based contract, profit sharing contracts, etc. The warm body kind of services are more common in industry where organisation still want to keep end to end management with them; here resources are hired from external party to do certain task dictated by organisation. There are certain pros and cons of such type of contract however if we see primary benefit of going with such approach is to keep control on task being outsourced, cost is also not an higher side as liability of service management is still with contract owner. However on cons side if you see it is not fully managed services wherein team within organisation are still involved in end to end management, business continuity is again an issue as if warm body resource is absent – entire burden is still to be taken care internally.

                                Amandeep Singh, Vice President & Group Head - IT Infrastructure, Thomas Cook India Limited

Second option is SLA based contracting – this I can term as managed services, however, if you see in this contracting, there are various pros and cons wherein in such type of contract SLA is end to end managed by third party with their management team. The entire control of activities is with third party with limited visibility to contract owner. In this, contract owner to keep a tight watch using strict governance control wherein penalty clause to be imposed as part of contract in case of any breaches. The benefit of this type of contract is, there is no resource dependency wherein service provider take entire ownership and make sure agreed services gets delivered.

Third option is profit sharing model wherein service provider here sign contract with company and make sure agreed services gets delivered with profit sharing percent i.e. in this case, it is end to end outsourcing wherein infrastructure and services is totally managed by provider and there is very less role to be played by contract owner. In this case, service provider comes with layered approach wherein different layers of team are built for delivering services. This type of contract is growing these days as service provider provides services in more responsible manner and it is also named as strategic outsourcing wherein service provider will be part of business and deliver services more like in-house services with agreed terms.

As we now understand three categories of managed services, it is also very important to understand risk/security concerns associated with each type of contract, let’s briefly understand in tabular format below

As we see in table above as we go on increasing scope of managed services, the risk associated is also on higher side. However, in order to control risk at each level, corporate should make sure the required governance check/mechanism is built.

To conclude – Managed services is going to change overall market trend I believe; going forward, organisations are going to establish themselves based on their core competency, which will lead to handshake between enterprise to grow business faster. This will also help talent within organisation to grow as there won’t be any partiality between resources from different units within organisation, this will definitely give good opportunity to individual and eventually help organisation!

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