Managed Services Market

Market Overview

The global managed services market size was worth USD 242 billion in 2021. It is estimated to reach an expected value of USD 638 billion by 2030, growing a CAGR of 12.9% during the forecast period (2022–2030).

Managed services enable businesses to better concentrate on their core capabilities while increasing operational efficiency and lowering operating costs. Managed services provide the best possible resource allocation and usage, which helps to improve overall profitability and boost operational effectiveness. Mainly, scalable infrastructure and adaptable managed service models make it simpler for enterprises to adopt new technologies. All these variables are anticipated throughout the projected period to fuel market expansion.

Market Dynamics

Market Driving Factors

Rising Dependence on IT Operations and New Applications to Enhance Business Productivity

Organizations are witnessing a change as fundamental business operations rely heavily on the internet. The organizations are more focused on aligning advanced operational technology and IT infrastructure to drive digital business operations. These trends are eventually helping organizations meet various functional business requirements. IT operations deliver effective services at minimal cost and quality. It also helps ensure the reliability and consistency of services offered for multiple business processes.

The growing use of technologies such as cloud computing, Internet of Things, big data, Software-as-a-Service (SaaS), artificial intelligence & machine learning, and data security applications are expected to drive the managed services adoption in several end-use industries. Small & medium-sized and large enterprises opt for cloud computing to enhance the security, availability, and accessibility of their data and applications without increasing their IT footprint. Internet of Things enables organizations to gather real-time data from numerous sources through the sensors embedded in connected devices. It also helps manage, synchronizes, integrate, and store the growing volumes of real-time data.

Various enterprises are leveraging SaaS to access a variety of cloud-based applications. Enterprises have been switching to managed services by outsourcing multiple IT operations to carry out their business processes. The increasing dependence on IT operations and new applications to improve business productivity is expected to propel the adoption of managed services over the forecast period.

Need for Specialized MSPS to Manage Complex IT Infrastructure and Reduce IT Staffing Cost

A Managed Service Provider (MSP) is an IT company that provides servers, networks, and specialized applications to end users. The technological applications are managed and hosted by service providers. Managed service providers supervise, monitor, and secure application procedures or outsourced networks on behalf of the enterprises using managed services. MSPs help a company to stay updated with the emerging trends and latest tools. Additionally, managed services offered by MSPs are considered an alternative to the on-demand outsourcing model, thereby helping organizations minimize business expenses. They also help enhance enterprise-related operations by updating cloud-based managed services.

Specialized MSPs help reduce IT staffing costs by providing human resources to resolve IT concerns related to infrastructure. They also help in minimizing network downtime and reducing network operating costs. MSPs help organizations to deploy the right technology to overcome IT complexities and respond quickly to the changing market dynamics such as the digital transformation of services. MSPs help improve agility and reduce cost & complexity across a wide area, local, data center, and hybrid cloud networks. End-use industries require specialized MSPs to manage complex IT infrastructure as specialized MSPs securely adapt to the new technologies and help maximize the network performance. The growing need for specialized MSPs to manage complex IT infrastructure and reduce IT staffing costs are expected to drive the growth of the managed services market over the forecast period.

Market Restraining Factors

Need for Regulatory Compliance to Hinder Market Growth

The changing requirements of compliance risk management and governance make it difficult for businesses to address stringent standards for managing and storing data. The International Organization for Standardization (ISO) has established global standards for efficiency, security, safety, and quality. ISO has also created standards for various aspects such as IT security & risk management, and quality management. It has designed IT security management standards to help enterprises secure customer data, employee details, intellectual property, and financial records.

In 2006, JCB, Discover, American Express, MasterCard, and Visa associated with establishing security standards for protecting a consumer's sensitive data and reducing the number of credit card frauds. They introduced Payment Card Industry Data Security Standards (PCI DSS), which applied to all organizations storing and transmitting cardholder data. The Defense Federal Acquisition Regulation Supplement (DFARS) standard specifies security controls for contractor information systems. The Federal Risk and Authorization Management Program (FedRAMP) offers a standardized approach to secure cloud solutions for federal agencies.

Managed services in the medical industry must abide by the Health Information Technology for Economic and Clinical Health (HITECH) Act and the Health Insurance Portability and Accountability Act (HIPAA) in the United States to ensure adequate data privacy and security. The Health Information Trust Alliance (HITRUST) Common Security Framework (CSF) helps businesses minimize the risk of a data breach. The Federal Information Security Management Act (FISMA) entails federal agencies to support and implement standardized IT security controls. This Act enables safe outsourcing of critical applications to SaaS providers and manages to host environments and FISMS-compliant cloud providers. An increasing number of regulations and compliances among different regions is expected to hinder the managed services market growth during the forecast period.

Key Market Opportunities

Growing Implementation of Bring Your Own Device (BYOD) Among Organizations to Spur Market Opportunities

In the current technology-driven business environment, Bring Your Own Device (BYOD) is one of the critical elements of digital technology and productivity across numerous sectors. The BYOD strategy enables employees to access and manage data via their devices, increasing workplace productivity. Companies that support BYOD usage might save up to USD 350 per team member per year, per Cisco Systems, Inc. research. BYOD increases employee accountability and job flexibility, which boosts productivity. This has prompted businesses to implement BYOD choices alongside their current IT infrastructure to foster a work climate that is welcoming to employees.

Tablets, smartphones, laptops, and other smart devices have become more prevalent in the workplace due to the rising use of BYOD. Using this technique would increase the risks to data security and integrity as it transfers across smart devices. To manage and monitor the safety of these smart devices, many firms are turning to managed services, creating profitable prospects for the market.

Regional Analysis

By region, the global managed services market is segmented into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa.

Which Region Accounts for Most Demand for Managed Services Market?

North America accounts for the largest market share and is estimated to grow at a CAGR of 12.2% during the forecast period. Numerous IT companies in North America are driving the regional managed services market growth. The prevailing number of technology start-ups and continued adoption of ERP, CRM, and cloud services in North America are expected to drive the development of the managed services market in the region over the forecast period. The US is home to many managed service providers, such as International Business Machines Corporation, Cisco Systems, Inc., CA Technologies, and DXC Technology Company, which bodes well for the North American managed services market growth.

The growing emphasis by the IT companies based in the US on arresting their rising operational costs is prompting them to adopt various managed services. In Canada, the transition of technology, which is particularly evident in Toronto and the Greater Toronto Area (GTA), is driving rapid digital development in the country, which is further driving the demand for cloud computing, IT security, and software development and eventually encouraging the adoption of managed services.

Europe is the second-largest region and is estimated to reach an expected value of USD 153 billion by 2030, growing at a CAGR of 12.5%. In Europe, managed security services are gaining popularity owing to the improved customer experience and enhanced data security they can provide while managing network operations. Germany holds the highest potential for adopting managed services due to several engineering, automotive, and manufacturing companies. The UK is becoming one of the significant markets for managed services in Europe. A high concentration of small and medium enterprises (SMEs) coupled with the continued deployment of cloud-based services in the UK is expected to drive the growth of the managed services market in Europe. 

Asia-Pacific is the fastest-growing region. The demand for managed cloud services and managed security services has been increasing in Asia-Pacific countries in line with the growing need to handle complex workloads and the continued migration of ERP systems to cloud platforms. In India, the rapid increase in the number of small & mid-sized businesses (SMBs) and their strong emphasis on the implementation of next-generation technologies and services as part of the efforts to drive the regional and global industry are expected to trigger the adoption of managed services and eventually cause the growth of the managed services market in Asia-Pacific.

Segmental Analysis

The global managed services market is segmented by solution, managed information service (MIS), deployment, enterprise size, end-user, and region.

By Solution

By solution, the global market is segmented into managed data centers, managed networks, managed mobility, managed infrastructure, managed backup & recovery, organized communication, managed information, and managed security.

Managed Data Center accounts for the largest market share and is estimated to grow at a CAGR of 12% during the forecast period. A managed data center enables the rapid scaling and deployment of new services to meet business demands efficiently. It also allows the rapid adoption of new technologies in existing and new business infrastructures. In a hybrid IT infrastructure, managed data center services help optimize operations through improved automation and management. These factors will drive the demand for managed data center services over the forecast period. Moreover, managed data center services are widely adopted by these IT companies to optimize the use of the networking assets to improve the internal network operations of businesses. This is also expected to fuel the growth of the managed data center over the forecast period.

By Managed Information Service (MIS)

By managed information service (MIS), the global market is segmented into Business Process Outsourcing (BPO), Business Support Systems, Project & Portfolio Management, and Others.

Business Process Outsourcing (BPO) accounts for the largest market share and is estimated to grow at a CAGR of 12.6% during the forecast period. The increasing demand for incorporating BPO as part of the business strategy to focus on business core competencies and increase business profitability is expected to drive the growth of the BPO segment over the forecast period. Various factors such as emphasis on process automation, focus on social media management tools, and investments in cloud computing are expected to drive the adoption of BPO services.

By Deployment

By deployment, the global market is segmented into Hosted and On-premise.

On-premise accounts for the largest market share and is estimated to grow at a CAGR of 12.4% during the forecast period. Many businesses now choose the on-premise deployment method since it doesn't need an internet connection. It makes it simple to modify the program to meet a customer's unique requirements for business processes. Throughout the projected period, this is anticipated to aid in the on-premise segment's expansion.

By Enterprise Size

By enterprise size, the global market is segmented into Large Enterprises and Small & Medium Enterprises.

Large Enterprises account for the largest market share and are estimated to grow at a CAGR of 12.4% during the forecast period. Large enterprises have enormous data that needs to be effectively managed in local offices and overseas. Therefore, large enterprises widely adopt managed security services to monitor and manage their business data.

By End-User

By end-user, the global market is segmented into Financial Services, Government, Healthcare, IT & Telecom, Manufacturing, Media & Entertainment, Retail, and Others.

Financial Services account for the largest market share and are estimated to grow at a CAGR of 12.2% during the forecast period. Financial service firms widely adopt managed services to focus on resources and drive business growth. This, in turn, is expected to fuel the adoption of managed services in financial service firms.

Recent Developments

• August 2022 - Accenture (NYSE: ACN) and Swisscom (OTCMKTS: SCMWY) worked on a climate strategy to help the telecom company's clients cut their carbon emissions by one million tonnes by 2025, or 2% of Switzerland's overall emissions.
• August 2022 - Accenture (NYSE: ACN) has agreed to acquire Sentia's businesses in the Netherlands, Belgium, and Bulgaria. With headquarters in the Netherlands, the Sentia group is a leading cloud consulting company that manages private and public cloud migrations and provides digital-experience monitoring services.