For years, the managed services pitch has been simple: we’ll run your IT cheaper. This model was effective when cost reduction was the primary goal, but the rise of AI, cloud and security means standing still is falling behind.
As organisations face converging pressures into 2026, true value comes from end-to-end technology partners focused on building capabilities rather than just cutting costs – delivering what would be slow and cost-prohibitive to develop internally.
The perfect storm facing Australian organisations
Mid-market organisations are caught in a convergence of pressures that are making the old IT outsourcing model obsolete:
Rising technology costs erode margins
Technical salaries in major Australian cities are growing at double-digit rates while the economy remains sluggish. The dominance of major platforms also means that pricing models can change overnight, leaving users with minimal negotiation power.
Critical skills gaps limit growth
Deloitte Access Economics projects Australia will need 1.3 million technology workers by 2030*. Mid-market organisations are already feeling the strain: with internal teams at capacity, they must either compete with enterprise salaries they can’t match or risk their capability gap widening as technology advances faster than teams can upskill.
Economic headwinds pressure decision-making
Many organisations are experiencing flat or declining growth. Business models developed in more stable times are coming under pressure, while margins are tightening across industries – particularly in not-for-profits, where there is a squeeze on donations and grants.
Where traditional outsourcing falls short
When organisations ‘lift and shift’ existing technology stacks to outsourcers, they continue running the same legacy systems – with reduced control. Three years into a contract, they can find themselves further behind than when they started.
Contracts won on cost reduction leave little scope or margin for investing in change. They’re structured to maintain existing systems, rather than helping organisations evolve. Meanwhile, technical debt accumulates, security vulnerabilities multiply and the capability gap widens.
The evolution of managed services
Leading organisations are moving beyond selective outsourcing toward comprehensive, end-to-end managed services that cover user devices, security, cloud and network infrastructure.
With strong technology partnerships – such as Microsoft’s comprehensive stack from M365 and Copilot to Azure, Security, data and Fabric – modern providers deliver efficient operations today while building new capabilities for the future.
What distinguishes this approach
AI-enabled operations from day one
With built-in capabilities like Copilot and integrations with platforms such as ServiceNow, automation does more than process tickets faster – automation reduces ticket volumes by identifying and resolving issues before they occur. Human expertise is augmented with intelligent tools that scale capacity and improve resilience.
Strategic governance layer
Rather than just maintaining systems, modern partners continuously evaluate and integrate emerging technologies. The focus shifts from simply keeping the lights on to helping organisations become more capable and run more effectively. The focus is measurable capability uplift, quarter by quarter.
True partnership model
Instead of vendor relationships defined narrowly by SLAs, organisations gain access to expertise they could not hire directly. Choose providers that understand sector-specific challenges, such as compliance in financial services, donor management in not-for-profits or citizen services in government.
Single point of accountability
End-to-end coverage simplifies governance and accountability. When a single provider manages the entire technology stack, issues are resolved faster and with less complexity, eliminating the finger-pointing that often arises when coordinating multiple vendors.
Moving forward
Asking potential managed services partners the right questions makes all the difference:
- Can they deliver across all layers – from user devices to cloud infrastructure – with consistent governance and control?
- What capabilities will we gain beyond our current setup – not just the price per user?
- Do they understand our industry as well as the technology?
- What is their Microsoft partnership level? Do they have the right security, compliance and governance frameworks in place?
- What new capabilities will we see in 12 months? Look for clear quarterly roadmaps
- Who is accountable for incidents, changes and improvements? What are the KPIs?
The convergence of cost pressures, skills shortages and economic challenges is not temporary. The era of cost-only outsourcing is over. Success will belong to organisations that invest in building capabilities for the future, not those maintaining yesterday’s technology.
Elliot Jurd is the General Manager Cloud at Nexon Asia Pacific, and was recently named a finalist for Management Excellence at the ARN Innovation Awards 2025. Nexon is also a finalist in the Mid-Market Partner category.
For a no-obligation discussion about our end-to-end managed services solutions, contact Nexon today.
References:
Deloitte Access Economics: Australia’s Digital Pulse 2024
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