MSP meaning: what a managed service provider is

By the HRPricing editorial teamReviewed October 18, 2026How we research and score

MSP stands for managed service provider: an outside company that runs a business function for you on an ongoing basis, most often IT, under a contract with a recurring fee. In staffing the same letters mean a provider that manages your contingent workforce program and the agencies that supply it, so check which meaning a contract uses before you sign.

MSP (managed service provider) is a company that runs a business function, usually IT systems or contingent staffing, for a client on an ongoing basis under a service contract with a recurring fee.

On this page
  1. The two MSP meanings in business
  2. What an MSP covers and what it does not, with prices
  3. The rules that apply when an outside firm touches employment
  4. MSP vs BPO, HRO, RPO and PEO

The two MSP meanings in business

IT MSP. The full form most people search for. An IT MSP monitors your network, manages laptops and accounts, runs backups and answers the help desk. It bills by user, device or a flat monthly retainer. It does not employ your staff or touch your payroll taxes.

Staffing MSP. In large companies, an MSP manages the staffing agencies that supply temps and contractors: it sets rates, collects timesheets and sends one consolidated invoice. The workers stay employed by the agencies (or are contractors), not by the MSP.

Neither kind of MSP takes on employer duties. If you want an outside firm to share or carry those, you are shopping for a different product: a payroll service, a PEO or an employer of record. Our HR outsourcing overview sorts the options by what they take off your plate.

What an MSP covers and what it does not, with prices

MSP compared with providers that handle employment
Provider typeWhat it runsLegal employerPublished price
IT MSPNetworks, devices, help deskYouQuote based (no prices in our research)
Staffing MSPAgencies, rates, invoices for tempsThe agenciesQuote based
Payroll providerPay runs, tax filing, W-2sYouGusto Plus $80 + $12 per person a month
PEOPayroll, benefits, workers comp, HRShared (co-employment)Justworks PEO Basic $79 per employee a month
EOREmployment in another countryThe EORDeel EOR $599 per employee a month

Source: Gusto, Justworks and Deel pricing pages, checked Oct 16, 2026.

For a 25-person US team, that means $80 + ($12 x 25) = $380 a month for Gusto Plus, or $79 x 25 = $1,975 a month for Justworks PEO Basic before health premiums. An IT MSP contract would sit on top of either, because it covers none of the same work. See what payroll costs per employee and PEO pricing in detail.

The rules that apply when an outside firm touches employment

Employment tax rules start to matter when a provider handles wages. Under 26 USC 3511, a certified PEO (CPEO) is treated as the employer for federal employment taxes on the wages it pays, so the IRS looks to the CPEO, not you. The IRS publishes the list of certified PEOs; check a name on our list of IRS-certified PEOs.

With a staffing MSP, classification is still your problem if the workers are really doing your core work under your control. The IRS weighs behavioral control, financial control and the type of relationship. Our misclassification explainer covers what goes wrong.

MSP vs BPO, HRO, RPO and PEO

  • MSP: runs an ongoing function (IT or contingent staffing) and keeps it running.
  • BPO: takes over a whole business process, such as a call center or accounts payable.
  • HRO: takes over HR administration, sometimes including payroll.
  • RPO: runs recruiting and hiring.
  • PEO: becomes a co-employer and shares employer duties, including payroll tax filing and benefits.

Frequently asked questions

What does MSP stand for in business?
MSP stands for managed service provider, a company that runs a business function such as IT or contingent staffing for a client on an ongoing basis for a recurring fee.
What is an MSP in staffing?
In staffing, an MSP manages a company's contingent workforce program: it oversees the staffing agencies, sets rates, tracks timesheets and sends one consolidated invoice. The workers stay employed by the agencies, not by the MSP.
Is an MSP the same as a PEO?
No. A PEO is a co-employer that runs payroll, files payroll taxes and offers benefits for your employees; Justworks PEO Basic is $79 per employee a month (checked Oct 16, 2026). An MSP does not employ anyone on your behalf.
Does an MSP run payroll?
Usually not. IT MSPs run systems, and staffing MSPs manage agency workers who are paid by their agencies. For your own employees you need payroll software, such as Gusto from $49 a month plus $6 per person (checked Oct 16, 2026), or a PEO.
What is the difference between an MSP and a BPO?
An MSP keeps a function running, usually IT, under a service contract. A BPO takes over a whole business process, such as customer support or claims handling, and often staffs it with its own employees.
Sources (5)
  1. Gusto: Gusto pricing page (checked Oct 16, 2026)
  2. Justworks: Justworks pricing page (checked Oct 16, 2026)
  3. Deel: Deel pricing page (checked Oct 16, 2026)
  4. IRS: Certified professional employer organization (checked Oct 16, 2026)
  5. IRS: Independent contractor (self-employed) or employee? (checked Oct 16, 2026)

This page is general information, not tax, legal or accounting advice. Rules and rates change, so check the official source linked above before you file or sign a contract. Read our disclaimer.