Managed Application Services Market Size, Share & Trends Analysis Report By Organization Size (Small and Medium-scale Enterprises, Large Enterprises), By End-User Vertical (BFSI, Retail and E-commerce, IT and Telecom, Manufacturing, Healthcare, Other End-user Verticals) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2022-2030

Market Overview

The global managed application services market size was valued at USD 3.65 billion in 2021. It is projected to reach USD 16.82 billion by 2030, growing at a CAGR of 18.50% during the forecast period (2022-2030).

Managed Application Services, also known as MAS, is a support contract that enables businesses to reserve a predetermined amount of service hours per month from their supplier to supplement the team's assistance. Managed application services use the expertise of a managed service provider to facilitate the effective management of an enterprise's vital applications. The successful implementation of managed services is predicted to save IT costs by 25–45% and boost operational effectiveness by 45–65%. Managed services provide several advantages that have been shown to benefit the firm's growth since they allow them to concentrate on their primary areas of competence.

Market Dynamics

Global Managed Application Services Market Drivers

Increasing Demand for Integrated Application Hosting Services and Cloud Transition

Computing systems called application hosting services to allow for the online delivery of software. Virtually every software program can be operated on a platform provided by application hosting services. Common examples of on-demand software hosted over the Internet include content management systems, web development applications, database applications, and email management applications. Vendors and organizations are moving to the cloud since it offers them flexibility, enhanced security, scalability, and simplicity of integration, among other benefits, causing the rise of the global managed application services market.

Additionally, several companies are growing their market share by offering cloud-based services. For instance, to fulfill rising client demand for its Silverline managed security services, F5 will increase its Silverline managed services capabilities in India in April 2020. F5's solution suite delivers high-value cloud-based security services like DDoS Protection, Web Application Firewall, IP Reputation Filtering, and upcoming Shape Defense on Silverline to keep applications secure wherever they are located.

Global Managed Application Services Market Restraints

Operational Concerns and Security and Privacy Questions Related to Outsourcing to Third-Party Organizations

Although managed application services offer many advantages, specific difficulties, such as dependability issues, may limit the market's expansion over the forecast period. The assumption that the provider's business will survive the partnership with them is part of the hiring process for a MAS to host crucial corporate infrastructure. Businesses dependent on the providers may need to rebuild vital infrastructure entirely if they cannot maintain market competition. Without this infrastructure, operations would be impossible. The demand for data analysts focused on operational intelligence is growing as more businesses delve deeper into IoT. Organizations are likely to be concerned about security threats. A different business may be in charge of overseeing its job. The third-party managers have exercised the utmost caution when providing the services. However, the possibility of data breaches is constant, which hinders industry expansion.

Global Managed Application Services Market Opportunities

Outsourcing of Non-Core Functions by Organizations

Longer and more complex work processes necessitate trustworthy apps to produce higher corporate production levels. Enterprise applications must operate quickly, securely, and optimally for smooth business processes. As a result, the majority of businesses outsource their non-core tasks, which helps them cut costs and boost internal productivity. Additionally, several businesses offer managed application services that can be outsourced at a lower price while still offering the enterprise that is outsourcing the most benefits.

Reduced application maintenance costs, increased service levels, risk mitigation, and employee concentration on key business competencies are just a few advantages of outsourcing application maintenance. Additionally, different organizations increasingly use outsourcing as a competitive strategy. This strategy benefits these organizations in various ways, including by bringing expertise to their services, decreasing investments in non-critical functions, and granting them the flexibility to act with fewer financial constraints.

Regional Analysis

The global managed application services market is divided into four regions, namely North America, Europe, Asia-Pacific, and LAMEA.

North America Dominates the Global Market

North America is the most significant shareholder in the global managed application services market and is anticipated to grow at a CAGR of 17.10% over the forecast period. In North America, the managed application services industry has been expanding due to the shifting IT infrastructure landscape, particularly for small and medium-sized businesses continually focusing on outsourcing different services. For instance, Fujitsu was hired by Kpaul Properties LLC to replace physical servers with a virtualized environment. Kpaul Properties LLC is a new manufacturer and distributor of IT equipment in the United States. This action resulted in a 15% cost reduction for the business and a 95% uptime. A growing number of businesses in the area are utilizing managed services to expand due to the quickly accelerating development of innovative technologies and the requirement for simplified IT operations.

Europe is expected to grow at a CAGR of 17.90%, generating USD 4.45 billion during the forecast period. Regardless of their size, regional organizations increasingly depend on managed service providers to ensure the use of technology to transform and scale enterprises to maintain a competitive edge. By offering the appropriate knowledge, solutions, and pricing structures, managed service providers enhance the value of their products and services. Additionally, Infosys, a well-known provider of consultancy and next-generation digital services, revealed in October 2020 that it had successfully acquired GuideVision, one of Europe's giant ServiceNow Elite Partners. The company added that this acquisition would boost its digital capabilities, expand its cloud services offering, and reinforce its dedication to the expanding ServiceNow ecosystem.

Asia-Pacific is expected to expand significantly over the forecast period due to the rising use of mobile applications. A significant number of SMEs with few resources also reside in the region, forcing them to adopt managed services. Governments in the area have also started to use a mobile-first strategy to offer their citizens better services, propelling the industry. The cost of using the public cloud and related services is also rising quickly. Although companies in the region are keen to use the cloud, adoption has been slowed by structural flaws. Some problems holding back cloud-based innovation include ill-defined processes and a lack of solid alignment between businesses and IT.

The countries in the LAMEA region are those in Latin America, the Middle East, and Africa. As more workloads in Latin America switch from traditional outsourcing to cloud-based services, the market is expected to grow. Some of the factors that encourage fintech start-ups and other start-ups to utilize managed services are the underlying advantages of cheaper costs and simplified application management. Numerous midmarket businesses operating in the area have been targeted by the region's well-known managed service providers. These businesses are drawn to the cloud since it allows them to avoid spending more on their outdated IT systems.

Segmental Analysis

The global managed application services market is segmented by organization size and end-user industry.

Based on organization size, the global managed application services market is bifurcated into small and medium-scale enterprises and large enterprises.

The large enterprise segment is the highest contributor to the market and is expected to grow at a CAGR of 18.20% during the forecast period. The primary users in this market sector are major businesses with substantial IT environments that cover a variety of technology types and have historically been challenged by complexity and scale. Managed services can significantly contribute to the organization's success when these complications are exacerbated by a business plan heavily dependent on IT. The requirement for business agility has been driving up demand for IT agility, even though enterprises may operate across a variety of industries. As a result, they all share a similar scale and transformation pace.

The biggest obstacle facing small and medium-sized businesses (SMEs) is a lack of funding and resources, which results in severely constrained internal IT resources. However, applications are now necessary for SMEs, particularly to make up for their inadequate physical infrastructure and human resource resources. Therefore, it becomes essential for SMEs to ensure that these applications work as intended and do not result in any business interruptions or client losses. In order to manage their applications and save the expense of a full-time IT workforce, SMEs have depended more and more on these application service providers.

Based on the end-user industry, the global managed application services market is bifurcated into BFSI, retail and e-commerce, it and telecom, manufacturing, healthcare, and others.

The BFSI segment owns the highest market share and is anticipated to expand at a CAGR of 17.40% over the forecast period. The BFSI sector is undergoing a rapid digital transition that presents issues with cyber security, cost cutting, regulatory requirements, and consumer intelligence. In order to address these issues, robust network functions are needed. Application portfolio management (APM) has made it simpler to decide which programs to upgrade. Continuous application enhancement is vital to meet changing business needs. Bank's IT infrastructure is supported by its core banking applications, which need to be highly functional and adaptable to change. The majority of financial organizations are looking to source as a platform for both cost reduction and innovation in today's tumultuous environment.

As retail technology advances, consumers continuously adopt new perspectives and buying habits. The organization's technological systems and applications must be continuously optimized and maintained to meet and exceed the needs and expectations of its customers. Retail application management includes several intricate activities, including security updates, patching, new functionality, service integration, local support, and more, since retail applications like Oracle Retail are so sophisticated. These services ensure that the company's technological infrastructure can handle the enormous amount of information that retail apps generate, preventing data inconsistencies and batch problems from slowing down the retail industry.

Due to the increasing rate of technological adoption, the increased frequency of BYOD policy confirmation, and the increased requirement for high-end security due to the quickly expanding data among businesses, the IT and telecom sector is an important market for managed application services. The application management layer permeates all software engineering operations in IT services. Transition management, project management, proactive risk, scope change management, quality management, and SLAs are frequently used in this context. Downtime can seriously hurt the bottom line for telecommunications firms. Thus, telecommunications firms try to meet the demand for speed and availability as internet and mobile usage rises.

Energy and utilities, media and entertainment, and other verticals are among the other end-user verticals. The energy and power businesses are increasingly depending on communication networks and security services to maintain consumer confidence as grid modernization (smart grids and smart meters) focuses more on them. Therefore, the development of managed services in the energy and power vertical was influenced by the introduction of smart grids and smart meters. The end-to-end deployment of smart meters, data collecting, analytics, customer engagement, and other processes are changing distribution and retail utilities. New operating procedures, security issues, and more IT resources are involved.

Impact of covid-19

The automotive industry is critical to the economy's growth. However, during the second and third quarters of 2020, the COVID-19 outbreak impacted the whole automotive supply chain, affecting new car sales in FY 2020.

South America is most affected by COVID-19, with Brazil leading the way, followed by Ecuador, Chile, Peru, and Argentina. South America's government (SAM) has taken a number of steps to protect its citizens and stem the spread of COVID-19. South America is expected to have fewer export revenues as commodity prices fall and export volumes fall, particularly to China, Europe, and the United States, which are all significant trading partners. The manufacturing industry, especially automotive manufacturing, has been damaged by containment measures in various South American countries. Due to the pandemic, major automotive manufacturers have also temporarily halted manufacturing in the region as a cost-cutting move. Furthermore, the automobile disc brake industry has been significantly affected in 2020 due to a lack of raw materials and supply chain disruption.

The Automotive Brake System control module of a vehicle is meant to alert the driver with a warning light if the system fails. The module itself is rarely defective; instead, the sensors or the wiring to the sensors are frequently defective. The most typical cause of dysfunction is when the Automotive Brake System is contaminated with particles or metal shavings. There is no signal continuity when sensor wiring is destroyed. Brake fluid becomes contaminated in corrosive situations, and the hydraulic unit fails to function.

Recent Developments

• April 2022- Fujitsu announced the introduction of its new service portfolio, "Fujitsu Computing as a Service (CaaS)," by providing access to some of the most cutting-edge computing technologies via the cloud for commercial usage to accelerate digital transformation (DX) and empower businesses internationally. The new service includes cutting-edge computing tools, including Fugaku, the world's fastest supercomputer, Fujitsu's quantum-inspired Digital Annealer technology, and software tools that let a variety of users employ AI and machine learning to solve problems.
• February 2022- Fujitsu successfully developed new software virtualized radio access network (vRAN) technology with support for 5G Standalone (SA) and will make it available for testing by telecom providers starting in March 2022. The newly developed vRAN technology resolves one of the main issues with conventional brands, giving a great performance with low energy consumption by utilizing Fujitsu's AI and quantum-inspired "Digital Annealer" technologies to maximize computing resources.