Best IT MSP · Buyer's Guide

IT Outsourcing Services: Models, Benefits, and How to Choose

IT outsourcing services hand some or all of your technology work to an external provider, for cost savings, access to scarce talent, and the freedom to focus on your core business. Models range from staff augmentation and project-based work to a fully managed IT department, delivered onshore, nearshore, or offshore.

Reviewed by the Best IT MSP research team · Updated 2026-06-18

What is IT outsourcing?

IT outsourcing is contracting an external provider to handle some or all of your technology functions, instead of doing everything in-house. That can mean a single project, extra hands for your team, or running your entire IT department. The goal is to reduce cost, reach skilled talent you cannot easily hire, and free your people to focus on the core business.

It is a large and growing market: the broader managed services market is forecast to grow from about $330 billion in 2025 to roughly $879 billion by 2032[1]. A big driver is the talent shortage, with a global shortfall of about 4.8 million cybersecurity and IT professionals[2] making it hard to build deep teams in-house.

Best IT MSP does not sell IT outsourcing. We are an independent directory that vets and merit-ranks providers. This guide explains the models, then helps you shortlist verified firms.

IT outsourcing models by location

  • Onshore. A provider in your own country. Easiest communication and time-zone overlap, usually the highest cost.
  • Nearshore. A nearby country with similar time zones. A popular balance of cost and collaboration.
  • Offshore. A distant country, lowest cost, with more time-zone and communication management required.

IT outsourcing engagement models

  • Staff augmentation. Rent skilled people to work alongside your team. The most common model, ideal for filling specific gaps.
  • Project-based. Hand a defined project (a migration, a build) to a provider end to end.
  • Dedicated team. A standing external team that functions as an extension of yours.
  • Fully managed. The provider runs the whole function, the model behind managed IT services and co-managed IT.

What businesses commonly outsource

Cybersecurity is one of the fastest-growing categories to outsource, because in-house security is the hardest to staff and the cost of failure is high: the average breach reached $4.88 million in 2024[3].

Benefits and risks

Benefits

  • Significant cost savings versus building in-house
  • Access to specialized, hard-to-hire talent
  • Faster scaling up or down as needs change
  • Freedom to focus on core business

Risks to manage

  • Data security and compliance when sharing access (require least-privilege, encryption, and audits)
  • Communication gaps, especially offshore
  • Quality and accountability without clear SLAs
  • Vendor lock-in without a clean exit clause

How much does IT outsourcing cost?

Pricing depends on model and scope. Ongoing managed support commonly runs from roughly $500 to $1,000 per month for basic coverage, $1,000 to $2,500 for advanced, and $2,500 to $5,000+ for a full managed service, with project work and staff augmentation priced separately. Compare the total cost of ownership against in-house: salary, tools, and turnover usually make outsourcing cheaper for small and midsize teams.

How to choose an IT outsourcing partner

  • Does the model fit your need (staff augmentation, project, dedicated team, or fully managed)?
  • Do they have proven experience and references at your scale and in your industry?
  • Are SLAs, security controls, and data ownership clear in the contract?
  • Can they scale with you without becoming a bottleneck?
  • Is there a clean exit and knowledge-transfer clause?

Shortlist three, ask each the same questions, and compare. To start from a vetted, merit-ranked list, browse providers by city in the Best IT MSP directory.

Frequently asked questions

What is the difference between IT outsourcing and managed IT services?
IT outsourcing is the broad practice of contracting any IT work to an external provider, including one-off projects or extra staff. Managed IT services are a specific, ongoing form of outsourcing where a provider proactively runs and secures your IT for a fixed monthly fee under an SLA. All managed IT is outsourcing, but not all outsourcing is managed.
What are the main IT outsourcing models?
By location: onshore (your country), nearshore (a nearby country), and offshore (a distant country). By engagement: staff augmentation (extra people for your team), project-based (a defined project), dedicated team (a standing external team), and fully managed (the provider runs the function).
What is the most common IT outsourcing model?
Staff augmentation is the most common model, where a business hires external experts to work alongside its in-house team. It offers flexibility to fill specific skill gaps without long-term hiring commitments, which is why smaller and growing companies favor it.
Which type of IT outsourcing is best for a small business?
Small businesses often benefit most from project-based outsourcing or a fully managed service. Project-based work suits one-time needs, while a managed service gives complete day-to-day coverage for a predictable fee. Both avoid the cost and risk of building a full in-house team.
What is co-managed IT and how does it differ from full outsourcing?
Co-managed IT is a hybrid where an external provider supports your existing internal IT staff rather than replacing them, sharing duties like monitoring, security, or after-hours coverage. Full outsourcing hands the entire function to the provider. Co-managed suits businesses that want to keep an internal lead while adding capacity.
How much does IT outsourcing cost?
Ongoing managed support commonly runs about $500 to $1,000 per month for basic coverage, $1,000 to $2,500 for advanced, and $2,500 to $5,000 or more for a full managed service. Staff augmentation and project work are priced separately. Compare the total cost against in-house salary, tools, and turnover.

Related insights

The Business Benefits of IT Outsourcing

Sources

  1. Fortune Business Insights, Managed Services Market (2025). https://www.fortunebusinessinsights.com/managed-services-market-102430
  2. ISC2, 2024 Cybersecurity Workforce Study. https://www.isc2.org/research
  3. IBM, Cost of a Data Breach Report 2024. https://www.ibm.com/reports/data-breach

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