Table of Contents
Introduction
The global managed services market, valued at USD 278.9 billion in 2023, is anticipated to expand significantly, reaching USD 834.7 billion by 2032. This growth, at a CAGR of 11.9% from 2023 to 2033, is driven by the increasing complexity of IT systems, the demand for cost reductions and operational efficiency, and the rising need for cybersecurity measures.
Key growth factors for this market include the adoption of cloud-based solutions, the emphasis on data security, and the integration of advanced technologies into corporate infrastructures. These factors are particularly influential in regions like North America, which is expected to maintain its lead due to the presence of major managed service providers (MSPs) and substantial IT budgets among businesses. Asia Pacific is projected to experience the highest growth rate, driven by investments in data security and cloud-based solutions, offering a fertile ground for managed outsourcing services.
However, the market faces challenges, including concerns over data security in outsourcing IT operations and the costs associated with managed services. Data breaches and cyber-attacks remain significant risks, potentially hindering organizations’ willingness to outsource sensitive IT tasks.
Recent developments highlight the market’s dynamism, with key players launching new services and forming strategic collaborations to enhance digital transformation efforts. For example, in 2023, companies like VMware, Inc. and Sinch AB announced new managed services offerings and partnerships aimed at expanding services in secured multi-cloud environments and providing enhanced communication services, respectively.
Managed security services, offering threat detection, vulnerability management, and identity access management, are among the most sought-after due to the growing complexity of IT systems and the widespread skills shortage in the industry. The market’s segmentation reveals a wide range of service types, including managed data center, network, mobility, infrastructure, backup and recovery, and communication services, catering to various industry needs.
Key Takeaways
- The managed services market is projected to reach a size of USD 934.7 billion by 2032, growing at a CAGR of 11.9% between 2022 and 2032.
- In 2023, the market was valued at USD ~312 billion and is expected to grow substantially over the forecast period.
- Managed Data Center segment held the highest revenue share in 2022, accounting for 17.3% of the market.
- The Managed Security Solution segment is forecasted to experience the fastest compound annual growth rate between 2023 and 2033, with a projected rate of 11.2% annually.
- Large Enterprises dominated the market in 2022, commanding 54.6% of the market share, with an anticipated compound annual growth rate of 10.4% over the forecasted period.
- Business Process Outsourcing (BPO) led the Managed Information Service segment with a 37.4% market share in 2022 and an expected compound annual growth rate of 10% during its forecast period.
- On-premise deployment had the highest revenue share, 67.2%, in 2022, and it is projected to grow at a compound annual rate of 10.9% during the forecast period.
- The BFSI (Banking, Financial Services and Insurance) sector held the largest revenue share among End-Use segments for Managed Services Market, accounting for 18% in 2022 with an expected compound annual growth rate of 11.6% over its
forecast period. - North America is estimated to be the most lucrative market, with the largest market share of 36.6% in 2022 and a projected CAGR of 10.6% during the forecast period.
- Asia-Pacific is expected to be the fastest-growing region, with a projected CAGR of 11.2% during the forecasted period.
Managed Services Statistics
Here are key statistics on cloud services, IT outsourcing, cybersecurity, and Managed Service Providers (MSPs) trends:
- Cloud Service Adoption: 94% of companies are exploring or already using cloud services to improve operations. SMEs particularly view cloud services as crucial, with 71% expecting them to be central to their business in five years.
- Benefits of IT Outsourcing: Nearly half of all businesses (49%) find that outsourcing IT operations frees up essential resources for core activities, and 46% value outsourcing for accessing skills not available internally.
- Managed IT Services Efficiency: Managed IT services ensure network monitoring around the clock, offering a 99.99% uptime guarantee and can significantly lower infrastructure expenses by leveraging world-class data center hosting.
- IT Budget Allocation: A significant portion of IT budgets (65%) is spent on maintaining existing systems, which can restrict innovation and growth opportunities.
- Impact of Digital Strategies: Businesses implementing strategies in big data, cloud computing, and mobility report 53% higher growth.
- Managed Service Providers (MSPs) Role: MSPs are pivotal in extending the capabilities of internal IT teams, especially in areas like cloud infrastructure and network setup.
- IT Spending Trends in the UK: A notable percentage of UK companies (45%) plan to boost their IT budgets by 10% to 20% in 2023, highlighting the increasing investment in managed IT services.
Cybersecurity and MSPs
- Global Cybercrime Costs: Cybercrime damages are projected to reach $6 trillion annually by 2021.
- Frequency of Hacker Attacks: A hacker attack occurs every 39 seconds on average.
- Cybersecurity Breaches: Human errors cause 95% of cybersecurity breaches, and 60% of small businesses close within six months post a cyberattack.
- Ransomware Targets: Small businesses were the victims in 63% of ransomware attacks in 2019.
- Disaster Recovery Preparedness: Only 21% of SMEs have a comprehensive disaster recovery plan in place.
- Data Loss Causes: The leading causes for data loss include system failures, human error, and malware.
- Disaster Recovery Testing: About 58% of SMBs test their disaster recovery plan once a year or less, indicating a need for more frequent checks to ensure business continuity.
Use Cases Of Managed Services
- Healthcare Sector in the US: Managed services in the US, especially in the healthcare sector, exemplify their value by handling IT infrastructure management, ensuring compliance with healthcare regulations, managing electronic health records (EHR), data backup and recovery, cybersecurity, and compliance support. This sector benefits significantly from managed services due to the complex IT requirements and stringent regulatory standards.
- Cybersecurity Threats: As technology evolves, so do cybersecurity threats, including sophisticated phishing attempts and AI-generated deep fakes. Managed Services Providers (MSPs) offer comprehensive solutions, such as data encryption, firewall installation, employee training on cybersecurity trends, security protocol management, and secure cloud migration, to protect organizations from these evolving threats.
- Cloud Migration: With a focus on reliable data availability, remote collaboration, and system scalability, many organizations look to migrate to the cloud. Managed services facilitate this transition by offering planning, strategy, compliance assurance, and optimization consultations, making cloud adoption smoother and more effective.
- Closing IT Skill Gaps: The rapid pace of technological advancements necessitates continuous learning and upskilling in areas like AI and data literacy. Managed services provide immediate access to IT specialists, ensuring uninterrupted IT operations while internal teams are trained. They can also directly support training efforts, offering hands-on guidance and interactive learning experiences.
- Modernizing Systems: Updating outdated systems is crucial for leveraging new technologies. Managed services can assist in selecting appropriate solutions and implementing them efficiently, ensuring a modern and robust IT infrastructure that supports future technological endeavors.
Recent Developments
- NTT’s Next Generation Platform for Managed Network Services: In May 2023, NTT unveiled its Next Generation Platform designed to facilitate network transformation for its customers. This platform is underpinned by NTT’s extensive experience, expertise, and technical resources in managed services.
- Huawei’s Digitally Managed Network Solution: Huawei introduced a new digitally managed network solution in February 2023, aimed at boosting growth for carriers’ B2B services. This development reflects the company’s commitment to enhancing digital transformation and service delivery for business clients.
- Collaboration between Cisco and AT&T Business: In June 2021, AT&T Business, in partnership with Cisco, launched Webex Calling with AT&T – Enterprise, a solution hosted on Cisco’s Unified Communications Manager – Cloud (UCMC). This initiative is directed at optimizing operations and accelerating digital transformation for businesses.
- Cisco Webex and Box Integration: In May 2021, Cisco Webex and Box announced new and deepened integrations to facilitate easier collaboration for customers using cloud-based solutions. This collaboration is indicative of a broader trend towards seamless integration between different technology platforms to enhance user experience and productivity.
- IBM’s Enhanced Cloud Security Services: IBM Security announced the launch of new and enhanced services in March 2021, aimed at simplifying security for hybrid cloud environments. These services are designed to help organizations protect data, user identities, workloads, and applications across dispersed cloud and on-premises systems. By bringing together cloud-native, IBM, and third-party technologies, along with IBM’s expertise, these services aim to create a unified security strategy across hybrid cloud ecosystems.
Conclusion
The managed services market is poised for substantial growth, fueled by technological advancements, digital transformation initiatives, and the continuous need for enhanced data security and operational efficiency. Businesses across sectors are increasingly relying on MSPs to navigate the complexities of modern IT environments, optimize operations, and achieve strategic goals efficiently.
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