How Managed Services Help Work Innovators Maximize Growth

To get ahead in today’s complex and disruptive business environment, organizations need to redefine how they work and facilitate ongoing innovation. However, many leaders continue to focus on maintaining the status quo or simply reacting to industry change, which puts companies at risk of falling behind in an increasingly competitive business landscape. Successful leaders, on the other hand, take a proactive and integrated approach to innovation to help their businesses thrive. 

One of the ways high-performing companies are redefining work and rethinking their talent strategies is by partnering with managed service providers, which enable businesses to access outside expertise and more efficiently support one or more areas of the business. 

Work Innovators are more likely to embrace managed services

The Upwork Research Institute’s latest report, Work Innovators: A Playbook for Innovation in an Uncertain World, unveils how high-performing companies leverage flexible talent strategies and technology integration to get ahead in an ever-evolving business environment.

The research features insights from 1,500 global business leaders and found that 27% of companies surveyed are considered Work Innovators, meaning they work in a way that creates operational excellence and enduring organizational success. This represents a slight uptick from the 23% from our 2023 Work Innovators research. 

One key finding from the report shows that Work Innovators are 61% more likely than their peers to engage with managed services partners. Partnering with the right managed service provider enables Work Innovators to leverage deep outside expertise in business process outsourcing and outcome delivery. This helps streamline operations and overcome common barriers, and contributes to optimized business growth. 

Benefits of managed services 

An overarching theme in the Work Innovators report is that Work Innovators take an integrated and cohesive approach to all areas of the business. In the case of managed services, rather than engaging freelancers on an ad hoc basis, Work Innovators engage outside expertise in a much more integrated, systematic way. 

Organizations typically enlist the support of managed service providers to manage information technology (IT). However, managed service providers can be beneficial to business functions across the company, including operations, human resources, customer services, customer support, sales, and marketing. 

Managed service providers help companies leverage the best possible expertise and technology no matter the function, allowing businesses to focus on their core functions. 

Benefits of a strategic engagement with a managed service provider include:

• Access to specialized expertise. Organizations often turn to managed service providers when they have limited internal resources or are looking to access specialized skills their internal employees don’t possess. This helps companies fill skills gaps while enabling existing teams to focus on core business priorities.  
• Scalability and flexibility. Effective managed service providers offer scalable solutions that can easily adapt as business needs shift. This may mean scaling services up to accommodate growth, seasonal spikes in demand, and new areas of business, or scaling down during slower business periods.
• Accountability. Managed service provider contracts often include service level agreements (SLAs) that clearly define the scope of services, deliverables, responsibilities and expectations of both parties, communication channels, and other key elements. This enables organizations to ensure that the quality of deliverables meets expectations. 
• Improved business outcomes. The most important benefit Work Innovators experience when partnering with a managed service provider is improved business outcomes. Managed services enable a seamless, integrated way for Work Innovators to solve problems and achieve strategic outcomes. 

Achieving AI outcomes with managed services 

As generative artificial intelligence (AI) continues to see widespread adoption across industries, organizations are exploring more ways to integrate AI into their businesses. However, the Work Innovators report found that nearly half (46%) of global business leaders report that only a small portion (between 1% and 25%) of their workforce is currently prepared to work alongside AI. Additionally, over 57% state that fewer than one-quarter of their employees are skilled in proactively applying AI-based solutions to relevant work. 

Enlisting the support of a proven managed service provider can help companies access the skills and technology they need to efficiently manage and complete AI projects. 

Accessing expertise to deliver AI outcomes 

As technology continues to rapidly evolve, the integration of AI and flexible talent is likely to continue to grow in scale. Managed services can help companies quickly and efficiently move forward with AI projects and achieve business outcomes.

Companies that recognize and embrace this opportunity are in a better position to maintain healthy balance sheets because of the scale and efficiency offered by managed services. When companies manage AI projects on their own, they often need to hire additional full-time workers, which can be costly and time-consuming. This approach can also cause organizations to move away from their core strategic priorities, which is ultimately counterproductive. 

Incorporating AI capabilities into managed services

In addition to accessing AI expertise, partnering with a managed service provider that incorporates AI into their solutions and technology enables Work Innovators to drive efficiencies. 

Artificial intelligence can help power many of the administrative and project management tasks in a managed services relationship. This leads to reduced costs and optimal processes to deliver AI outcomes at increased speed and quality. 

Moving beyond AI to adopt emerging technologies 

For living organisms to survive in a changing environment, they have to be able to adapt, which requires looking outside of themselves—and the same is true for businesses. Managed services enable companies to look outside their own systems, ways of working, and tech stacks, and begin to think through how other organizations are doing innovative work. 

Companies can only continue to scale and be efficient by looking beyond AI and other existing solutions to adopt the latest technologies. However, the Work Innovators report found that one of the key barriers to innovation among respondents is the integration of new technology. 

Given ongoing business disruption, managed service providers have to be at the forefront of innovation, leading the way and finding efficiencies on behalf of their clients. Successful managed service providers proactively experiment with new ways of working and integrating new technologies—such as AI, cloud computing, quantum computing, and edge computing. 

Embracing emerging technology is particularly important as we continue to face a global talent shortage. The global labor force participation rate has steadily declined since 1990. Because of this, managed service providers and all businesses need to work differently and find new technologies to help drive growth when the labor is simply not available. From a managed service model perspective, there’s a significant opportunity to benefit from human-machine collaboration—especially by embracing new technologies—to continue achieving positive business outcomes. 

What to look for in a managed service provider 

Any new organizational design or way of working carries risk. However, managed services helps address the risk of having to rethink or overhaul talent management strategies.

As an example, in one of the qualitative interviews for our Work Innovators report, one of the business leaders used the term “management overhead” to describe the additional time to select the right freelancers and ensure they’re delivering quality work and outcomes. Managed services addresses this challenge and helps de-risk this new way of working. 

When looking for a managed service provider, take the following criteria into consideration:

• Available skills and expertise. As you research different managed service providers, ask about which skills are available from potential managed services providers, as you’ll want to find a partner with expertise in the disciplines or functions for which you’re seeking managed services support. 
• Project management. While technology can drive efficiencies in managed services, you also need dedicated project management and customer support from your managed services provider. When evaluating providers, ask about their processes for overseeing projects, communicating with clients, measuring project success, and addressing any challenges along the way. Effective project management will help projects stay on track and increase the likelihood of achieving agreed-upon outcomes. 
• Risk mitigation and accountability.  Ensure the managed service provider takes responsibility for delivering the agreed-upon outcomes and addressing potential liabilities. Look for a partner who assumes accountability for missed deadlines, quality concerns, and other roadblocks. A qualified managed service provider will clearly define performance standards, responsibilities, deliverables, and other details in the contract and provide ongoing monitoring and project management to ensure expectations are met. 

By selecting a managed service provider that aligns with these criteria, leaders can focus more on core business priorities and have the assurance that work will get done and critical business outcomes will be achieved.

Looking to the future of managed services 

Businesses are increasingly moving toward a skills-first workforce and focusing more on work outcomes and, as a result, the possibilities for what organizational design looks like will become much more fluid. Given this shift, Work Innovator companies will focus less on what they can accomplish on their own. Instead, Work Innovators will rely much more on managed service partners, as well as other outside coalitions and collaborators. 

As the macroeconomic environment becomes increasingly challenging to navigate, organizations that continue to do business as usual and stick to the status quo are less likely to chart a safe path. On the other hand, forward-thinking leaders often have a sense of humility and realize they can’t do everything themselves; they find the pilots who already know where profitable harbors lie.

Leveraging experts who are skilled in certain business functions can help lessen the burden of navigating ongoing disruption. Managed services are also often more cost-effective compared to hiring full-time employees, which can help organizations optimize operating expenses and improve cash flow in a challenging economic environment. 

Engaging outside expertise will also enable Work Innovator companies and other successful companies to focus on their core mission—rather than spreading themselves too thin—and prioritize a few key differentiators to get ahead in an increasingly competitive and complex market. Moreover, leveraging external partners such as managed service providers allows businesses to more easily access expertise from across the globe to help strengthen their core offerings.

Learn more about what makes Work Innovators thrive 

Engaging with managed services partners is just one of the many ways Work Innovator companies are redefining work and driving innovation to better navigate disruption. In Work Innovators: A Playbook for Innovation in an Uncertain World, The Upwork Research Institute highlights additional insights about how Work Innovators thrive by rethinking talent strategies and creating a seamless and more integrated approach to work.  

Learn more: read the full report today.