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What is an MSP?

By Derek Schauland
Updated May 16, 2024
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A managed service provider or MSP is a company that receives compensation for services it provides to other companies or organizations. Many businesses today work with consulting firms who provide information technology services to help keep the networks of these organizations running smoothly.

Services that are used infrequently or are more expensive to hire and train existing staff within an organization are usually outsourced to msp firms. Many companies outsource things like call centers or technical support because it can be cheaper in the long run to do so.

An example of a company using an msp is with a cable provider that brings television and internet services to customers all over the country. The corporate call center and phone support office might be in New York and the company may service customers in California. By working with a network of managed service providers, the cable company can dispatch technicians and pay a contracted fee to the msp in California rather than keeping a fully staffed office in California to answer service calls.

Many individuals or households rely on msps everyday to provide services such as telephone, Internet, television, water delivery, among other services. Sometimes an msp can be a party that works between two organizations to provide a service to both of them. A law firm providing services to companies working to merge might be an example of an msp acting as a middleman between two other parties.

Many services that are used by millions of people every day come from managed service providers and in some cases the end user does not even realize this is the case. However, any time a service is used without many tangible goods, the Internet, television, and even pizza delivery, these services are provided by an msp. In some cases the manufacturer is also the msp and will not be specifically compensated for the service portion, but for the product itself.

Managed Service Providers may also add value to another service. For example, when a manufacturer outsources the support of their products to another company, the third party may add other things to the product. Perhaps they will have onsite support for one price, customization or modification and support for another price, or support via chat and email for a lower price. If the third party msp can add other services or values to the original product, this will make the msp even more valuable to the end user.

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Discussion Comments
By JimmyT — On Aug 25, 2011

For an MSP company that handles something like customer service calls, do they always work with the same parent company, or are there some customer service centers that handle calls from several different companies under the same roof?

It seems like this could be a very efficient way for a company to make a lot of money. Because they were covering calls from two or three companies, they would be bringing in the usual payments, but they wouldn't have to invest in separate buildings, office supplies, utilities, and all of the other overhead that comes from running a business.

I could see certain companies' contracts stating that the building can only house the individuals handling their calls, especially if the MSP wanted to handle calls for two competing companies.

By Emilski — On Aug 25, 2011

I guess this would classify as someone working as an MSP. I had a friend who used to work as a directory assistant for a major phone company. He was the person you got when you dialed zero. They covered calls from all over the United States. The company he actually worked for was not the actual phone company, though.

I'm wondering about how pizza deliver could be an MSP. In bigger cities, do they really have independent companies that contract delivery drivers to restaurants?

By matthewc23 — On Aug 24, 2011

I think another good example of an MSP that most people would be familiar with is the team of Geek Squad and Best Buy.

If you order a computer or office equipment from Best Buy, they have a separate group of people who can travel to your home or office and help with installation or technical problems.

I've never used the system personally, so I don't know about the effectiveness of it, but it seems like a good idea. You get more personalize service rather than talking to someone over the phone who may not have experience with your problem.

By TreeMan — On Aug 23, 2011

A while back, we ordered a large chest freezer. Before the warranty was up, the compressor or some other part in it stopped working. We called the store where we bought it, and they used an MSP. I didn't know there was a specific term for it until just now.

The article mentions some of the possible advantages of using an MSP, but in our experience there were some drawbacks. Because you aren't dealing with the store directly, they really have no incentive to help you. The repairman that worked on our freezer took an extremely long time to order parts and make the repairs, but there was nothing we could do about it.

Also, the store where you bought the appliance will always try to get it repaired rather than letting you replace the item. At least from our example, it would have probably been cheaper for them to have replaced the freezer rather than have to pay for repairs.

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