Managed Services Market

The global Managed Services Market is valued at USD 276.7 Billion in 2023 and is projected to reach a value of USD 473.28 Billion by 2032 at a CAGR (Compound Annual Growth Rate) of 6.15% between 2024 and 2032.

Key highlights of Managed Services Market

• The North American region dominated the market in 2023, obtaining the largest revenue share of 33.2%,
• The Asia Pacific region will witness remarkable growth with a CAGR during the forecast period,
• In 2023, the Managed IT Infrastructure & Data Center Services segment dominated the Managed Services market with significant market share,
• The On-premises segment dominated the market with a market share of 65.1% in 2023,
• BFSI dominated the market with a significant market share of 16.3% in 2023,
• The growing adoption of cloud computing and hybrid IT architectures fuels demand for managed services that enable organizations to optimize their cloud environments, improve agility, and reduce costs.

Managed Services Market: Regional Overview

North America Dominated Sales with a 33.2% share in 2023. North Americas dominance in the Managed Services market can be attributed to a various factor, such as its well-established IT infrastructure, thriving digital economy, and widespread technological adoption across industries. North America has a strong network of managed service providers who provide customized solutions as per business requirements. Additionally, the need for managed security services has increased due to strict regulatory requirements and growing cybersecurity concerns. The growing number of technology start-ups and continued adoption of ERP, CRM, and cloud services are anticipated to drive demand for managed services in North America, with the US projected to contribute the largest share. MSPs relieve complexity and resource challenges for healthcare providers and companies by managing IT infrastructure, guaranteeing compliance, and improving cybersecurity measures.

US Managed Services Market Overview

The US Managed Services market, valued at USD 59.4 Billion in 2023 to USD 98.99 Billion in 2032, is anticipated to grow at a CAGR of 5.8% from 2024 to 2032. The US Managed Services market is distinguished by its broad industry adoption and strong growth trajectory. Managed services are used in various industries to improve productivity, reduce cybersecurity risks, and streamline operations. Managed service providers (MSPs) play a critical role in the healthcare industry in protecting sensitive patient data, guaranteeing regulatory compliance, and managing intricate IT systems. The changing threat landscape and strict regulatory requirements are also driving up demand for managed security services in the US market. The US managed services industry is expected to have consistent development and innovation in the upcoming years as companies prioritize digital transformation and look for scalable, affordable IT solutions.

Managed Services Market: Service Type Overview

In 2023, the Managed IT Infrastructure & Data Center Services segment dominated the Managed Services market with the largest share. The Managed Services market, segmented by the Service Type, is bifurcated into Managed Security Services, Managed Network Services, Managed IT Infrastructure & Data Center Services, Managed Communication & Collaboration Services, Managed Mobility Services, and Managed Information Services. The leadership of the Managed IT Infrastructure & Data Center Services segment highlights the essential role that managed services play in overseeing and enhancing IT infrastructure and data center operations for businesses across diverse industries. As IT environments grow increasingly complex and expansive, organizations increasingly rely on managed service providers to ensure their infrastructures dependability, security, and efficiency. This segment encompasses a wide array of services, including server management, network monitoring, storage optimization, and disaster recovery, tailored to meet the varied needs of businesses seeking to delegate infrastructure management responsibilities and focus on core objectives. With businesses prioritizing digital transformation and agility, the demand for Managed IT Infrastructure & Data Center Services is expected to remain strong, propelling further growth and innovation in the managed services market. Moreover, the expansion of the managed data center segment is anticipated due to the ongoing integration of advanced technology into corporate infrastructures, offering opportunities to optimize operations through enhanced business automation and bolstered management within hybrid IT architectures.

Managed Services Market: Deployment Type Overview

In 2023, significant revenue of 65.1% was generated by Managed Services for On-premises. The Deployment Type segment is divided into On-premises and Cloud. The enduring dominance of on-premises solutions in the managed services market reflects their continued relevance in addressing the diverse needs of businesses across industries. On-premises deployment provides organizations with enhanced control, customization, and security over their IT infrastructure and applications, making it particularly appealing for sectors requiring stringent data handling and compliance measures. Despite the rise of cloud-based alternatives, many businesses opt for on-premises deployments to preserve data sovereignty, meet regulatory mandates, and maximize existing infrastructure investments. The on-premise mode of deployment is favored by numerous organizations for its offline accessibility and the ability to customize software to align with specific business processes.

Managed Services Market: Vertical Overview

In 2023, the BFSI segment dominated the market with the largest share of 16.3%. The Managed Services market, segmented by the Vertical, is bifurcated into BFSI, IT & telecom, Manufacturing, Retail & Consumer Goods, Healthcare & Life Science, Energy & Utilities, Government, Media & Entertainment, and Other Verticals. The dominance of the BFSI segment in the managed services market underscores its heavy reliance on such services to bolster operational efficiency, security, and customer service. Given the sectors management of sensitive data and stringent regulatory demands, managed services emerge as an appealing solution, allowing BFSI companies to focus on core functions while addressing compliance needs. With the sector facing many cybersecurity threats due to the nature of financial data handled, managed security services offer proactive monitoring and incident response, mitigating breach risks and ensuring adherence to regulations like GDPR or HIPAA. Moreover, these services streamline IT operations through continuous support and system maintenance, facilitating the adoption of cutting-edge technologies such as AI, ML, and blockchain, which can enrich customer engagement and strengthen risk management. In the BFSI industry, where customer experience is paramount, managed services are vital in crafting and sustaining user-friendly digital platforms, enabling seamless transactions, prompt query resolutions, and personalized financial guidance.

Key Trends

• There is a shift towards increasing adoption of multi-cloud and hybrid cloud environments. Businesses leverage multiple cloud platforms simultaneously (multi-cloud) or combine cloud and on-premises infrastructure (hybrid cloud) to gain flexibility, scalability, and resilience. To optimize performance and cost-effectiveness, managed service providers offer solutions that support these complex settings by facilitating seamless management across various cloud platforms.
• There is a growing trend towards managed security services as cyber threats increase in frequency and sophistication. Businesses are resorting to managed security services to safeguard their digital assets and sensitive data. To prevent cyberattacks and guarantee regulatory compliance, managed security services provide proactive threat intelligence, real-time monitoring, and incident response capabilities.
• There is an increasing trend towards integrating AI and ML technologies into managed services to enable predictive analytics, automation, and enhanced security threat detection and response. By analyzing vast amounts of data, AI-driven managed services can anticipate issues, automate routine tasks, and improve efficiency and reliability.

Premium Insights

The Managed Services market is driven by various factors, including the growing complexity of IT environments and rapid technological advancements, compelling businesses to seek external expertise in managing their IT infrastructure, applications, and security. The rise of digital transformation initiatives and the need for scalable IT solutions further boost the demand for managed services, supporting business continuity, innovation, and competitiveness. Companies in the Managed Services market are forming strategic partnerships to offer cloud, and infrastructure-managed services, enhancing security, compliance, and overall business performance. For instance, in 2023, Sinch partnered with Synoptek to provide managed services for the Microsoft Teams Phone System, integrating direct routing or operator connect. The market is also driven by factors like improving operational efficiency, cutting operating expenses, and increasing adoption of cloud-based technologies such as automation, IoT, blockchain, and cloud computing. Managed services focusing on secure and customized IT solutions and end-to-end hosting applications are expected to drive market growth. For instance, in 2022, UiPaths partnership with Neostella to offer RPA-managed services for the midmarket segment.

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Market Dynamics

Increasing adoption of cloud-managed services is being driven by the growing recognition among businesses of the benefits offered by cloud computing

Cloud-managed services allow organizations to outsource the management and maintenance of their cloud infrastructure, platforms, and applications to specialized service providers. This will allow companies to concentrate on their core skills and use managed service providers' experience to optimize their cloud systems for cost, scalability, and performance. Cloud-managed services are in high demand as businesses look to update their IT infrastructure and embrace digital transformation efforts, which is driving market expansion.

A significant challenge facing the Managed Services market is the need for more skilled IT security professionals

With the increasing complexity and sophistication of cyber threats, businesses are under mounting pressure to bolster their cybersecurity posture and protect their sensitive data and digital assets. Businesses have the advantage of cutting-edge security tools, threat information, and specialized knowledge to efficiently identify, stop, and handle cyberattacks with managed services. However, the lack of skilled cybersecurity experts impedes the markets expansion since companies require assistance in attracting and maintaining personnel who can handle their security requirements. In order to meet this challenge, managed service providers need to invest in talent acquisition tactics, certifications, and training programs to develop a qualified workforce to provide top-notch cybersecurity services.

Changing work environments, such as the shift towards remote and hybrid work models, present opportunities for managed service providers

The need for cloud-based collaboration tools, virtual desktop infrastructure (VDI), and secure remote access solutions has increased due to the widespread adoption of remote work. Managed service providers can profit from this trend by providing specialized solutions that satisfy the particular IT requirements of remote workers, such as maintaining dependable connectivity, smooth collaboration, and strong security protocols. Managed service providers can set themselves apart from the competition and promote long-term success by offering comprehensive managed services that meet the changing requirements of contemporary workplaces, including remote work settings.

Competitive Landscape

The competitive landscape of the Managed Services market is dynamic and multifaceted, characterized by a diverse array of players ranging from global IT giants to niche service providers. Established industry leaders like IBM, TCS, and Fujitsu strive for market share alongside emerging contenders. Differentiation in this competitive environment frequently depends on attributes like service quality, scalability, specialization, and inventiveness, forcing suppliers to hone their products to satisfy clients' ever-changing wants and maintain an advantage in the competitive market.

The key players in the global Managed Services market include - Tata Consultancy Services (India) among others.

Recent Market Developments

Alfar Capital and Walter Capital Partners Acquire MSP Corp to Enhance IT Services in Canada

• In May 2023, Alfar Capital and Walter Capital Partners acquired MSP Corp, a managed IT service provider in Canada. MSP Corp and Groupe Access, an MSP for cybersecurity and IT solutions would join. The acquisition would improve the companys standing in Canada and enable it to offer cutting-edge solutions.

Rackspace Technology Launches Modern Operations Managed Public Cloud Service for Azure, AWS, and GCP

• In January 2023, the multi-cloud technology solutions company Rackspace Technology introduced Rackspace Technology Modern Operations, a managed public cloud service for Azure, AWS, and GCP users. The benefits of the service will include managed assistance available around the clock, 365 days a year, cloud expertise, cloud resilience, and innovative cloud services that assist customers in managing intricate cloud infrastructures.

IBM Introduces Unified Key Orchestrator as Part of Cloud Hyper Protect Crypto Services

• In March 2022, IBM introduced Unified Key Orchestrator, a cutting-edge multi-cloud solution, as a managed service under IBM Cloud Hyper Protect Crypto Services.

Other Recent Developments

• In 2023, a package of intelligent connectivity solutions, including SASE, SSE, SD-WAN, and Private 5G powered by Cisco Systems, Inc., was introduced by technology services provider Logicalis. Customers of Logicalis will be able to utilize digitally managed services created with Cisco technology and backed by the Logicalis Digital Fabric Platform.
• In September 2023, Cloud5 Communications, a technology and communications solutions provider, opened a new managed services business. The division is made to assist the demands and difficulties associated with IT in various businesses, including senior living, student housing, and the hospitality sector. Customers will receive assistance from this sector in effectively managing technological infrastructures, security, and IT operations.

The global Managed Services market can be categorized as Service Type, Deployment Type, Vertical, and Region.