Managed services
Managed services is an outsourcing model where the vendor owns the outcome end-to-end — people, process and delivery — instead of just supplying engineers. You buy a result against a defined scope and SLA, not hours, and the vendor is on the hook for hitting it.
Managed services sits at the far end of the outsourcing spectrum. With staff augmentation you manage the work day-to-day. With a dedicated development team you steer the work and the team executes. With managed services the vendor runs the whole thing — hiring, process, tooling, delivery — against an agreed scope and service level.
The trade-off is direct control. You no longer pick who writes which ticket or how the sprint is structured, because that is now the vendor's problem. What you gain is a single accountability line. One contract, one statement of work, one number to call when something slips. For procurement-led buys, that clarity is often worth more than the flexibility you give up.
The rule of thumb is to use managed services when the scope is well defined and stable, when the buyer is procurement rather than engineering, and when the total cost of ownership — including your own management time — matters more than the per-hour rate. It is a poor fit for exploratory product work where the scope changes weekly, because every change becomes a contract change. Pick it for what it is good at, not as a default.
