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The global cloud managed services market size was valued at USD 46.50 billion in 2019 and is projected to reach USD 129.26 billion by 2027, exhibiting a CAGR of 13.8% during the forecast period.
Cloud managed services is a practice of outsourcing IT resources and management deployed on the cloud. Growing demand among companies to slash operating and infrastructural costs to manage business processes is one of the major factors driving the growth of the market. The externalization of cloud resources to third parties increases organizational competitiveness, allowing companies to concentrate on their core competencies. The expanding Big Data field has generated a massive demand for managed cloud computing and analytical services.
Key players in the industry are adopting several business strategies R&D activities, partnerships, and collaborations to expand business horizons. For instance, in February 2020, NTT DATA Services partnered with Amazon Web Services, Inc. (AWS) to deliver new services, solutions, and products designed to accelerate cloud adoption globally.
Demand for Cloud Managed Services & Remote Technologies to Surge amid the COVID-19 Pandemic
As the new SARS-CoV-2 virus impacts age groups differently, this pandemic is having diverse implications across multiple sectors of the technology industry. Companies that provide technological solutions for highly-affected verticals such as travel, retail, entertainment, and hospitality experience significantly adverse consequences, while companies that provide remote-working solutions are seeing the exact reverse effects.
With the emergence of the COVID-19 pandemic, the adoption of communication and collaboration tools has increased to support remote working. As cost reduction has become a priority for many companies, including SMEs, acceptance of advanced technologies has grown exponentially to meet the constantly evolving technology needs such as cloud security, risk and compliance, and others. This growth in the technology load has allowed managed cloud service providers to expand their portfolio and meet the ever-increasing consumer demand and support remote working needs. As a result, the pandemic is expected to favor this market growth.
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Adoption of Cloud Delivery Model to Spike among Businesses to Open New Opportunities
Service providers are rapidly developing advanced applications to incorporate or orchestrate their clients' use of various cloud resources. This applies not only to cloud migration but also to the development of cloud-native applications. Leading network service providers build cloud systems that combine various cloud services in order that automate deployment and seamless operations, even as these platform elements differ depending on the approach of each vendor. The advantages of the network include improved coordination and the processing of metadata for the application of these systems through the standardization of various cloud providers. This meta-data can be used to track cloud service usage and to prepare for future changes.
Organizations have been using hybrid cloud technologies to make the cloud infrastructure accessible and flexible without needing to move directly to the cloud or multiple clouds, either public or private since one cloud vendor will not be able to provide the functionality. Thus, with the increasing adoption of digital network channels, hybrid cloud platforms are opening new investment opportunities for managed cloud service providers.
Customer Acceptance of Cloud Approach to Smoothen IT Operations & Boost the Demand for Cloud Managed Services
As enterprises are formulating plans to fulfill their IT and network needs, managed cloud services will be at the forefront among all technologies. Organizations are running their IT applications on cloud servers including accounting, finance, customer relationship management, and other applications. The rapid adoption of cloud solutions to deploy and manage business operations is changing the state of cloud adoption globally. For instance, Betabrand, a clothing company headquartered in the US, migrated its operations to Google Cloud infrastructure Kubernetes in anticipation of Black Friday in 2017. With this migration, the company was able to manage peak loads with no issues. Thus, with businesses moving towards cloud infrastructure, the adoption of cloud-managed services is expected to witness a huge surge in demand.
Leading suppliers recognize that the cloud distribution model is more than just cost-reduction and have built end-to-end service portfolios that are meeting the business needs and providing greater customer value. With the common goal of ensuring technology up-gradation with cloud technology, the cloud can be a valuable model for companies to manage business functionalities efficiently.
In response to the accelerated demands to integrate new technologies and to optimize application performance and costs, companies are becoming increasingly dependent on cloud-based management services to manage their business. Thus, with the increasing adoption of cloud solutions among businesses, the need for these services is heightened.
Burgeoning Need for Handling Critical IT Systems & Business Applications to Boost the Market
While companies and financial firms wade through the unpredictable economic and regulatory landscape of today, the pressure has been greater on the risk and compliance model. The adoption of managed services is increasing with companies seeking to improve their organization, operation, and security by providing more strategic responses.
Cloud managed services are advantageous for companies since they enable businesses to eliminate complex system integration services and help to establish a well-developed solution to ensure cloud scalability and economics. Maintaining full time IT staff to manage cloud services is very expensive and not feasible for most small- and medium-sized businesses. Thus, outsourcing these services allows businesses to control and reduce network maintenance costs without compromising on security or productivity.
In addition to this, cloud services provide several advantages over traditional services such as centralized applications and network services, build storage and backup, and manage all network management layers. Thus, the adoption of cloud managed type of services is growing and companies are finding it possible to drive business success.
Lack of Integrated Workforce Management and Data Management Limitations to Hamper Market Growth
The lack of IT and cybersecurity practitioners is a leading factor limiting the growth of this market. This shortcoming will prohibit organizations from fulfilling their IT security needs. The lack of IT and cybersecurity professionals in a company can open hackers and malware to enter the IT ecosystem resulting in the loss of valuable data and resources. For instance, in September 2019, AutoClerk Inc., a major property management solution provider, witnessed a security breach in its Elasticsearch database, leading to a massive loss of 179 GB of data including travel arrangements of thousands of members of the US government and the Department of Homeland Security (DHS). Thus, efficient cybersecurity practices are required for the implementation of managed cloud services.
In addition to this, the high cost associated with these services along with the data privacy and security concerns is one of the crucial factors hampering the market growth.
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Managed Security Services Segment to Register a High CAGR
Based on service type, the market is segmented into managed business services, managed network services, managed infrastructure services, managed security services, managed mobility services, and managed communication and collaboration services.
The managed network services segment held the largest market share in 2019. The growth of this segment is mainly attributed to the increasing adoption of cloud managed services among businesses to manage network-related services and management and administration of the networks themselves. Cloud-based network managed services provide companies with a comprehensive platform to create and manage remote data networks including WAN/LAN/WLAN. Additionally, the adoption of these services has grown exponentially in recent years owing to the wide range of applications they provide such as the implementation of high-quality network solutions, IT networks management and monitoring services, equipment maintenance and ICT systems maintenance services, and others.
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The managed security services segment is expected to grow at a significant CAGR during the forecast period. The growth of this segment is mainly owing to the increasing adoption of security services among businesses. Managed security service providers (MSSPs) provide a variety of services such as security management, incident response, and others. Thus, the adoption of these services is expected to grow during the forecast period.
Private Cloud Segment Dominated the Market in 2019
Based on deployment, the market is segmented into workload security, network security, platform security, application security, end-point security, and others.
Deployment of cloud managed services on private cloud held the largest market share in 2019. The private cloud gives businesses many advantages, including enhanced control and enhanced data security. This model also gives businesses other advantages such as cost savings and stability. A private cloud can help an organization to customize its resources to meet specific IT requirements. These systems are primarily used by governments, banks, and other mid- to large-size entities with business-critical activities that aim to improve operational protection.
The public cloud segment is expected to grow at the highest CAGR during the forecast period. The growing adoption of the public cloud is mainly owing to the efficient computing resources and virtualization capabilities it provides.
Large Enterprises to Witness Widespread Adoption of Cloud Managed Services
Based on enterprise size, the market is divided into large enterprises and small and medium enterprises (SMEs).
The large enterprise segment is estimated to hold the largest share during the forecast period. Cloud-managed services assist large companies in reducing IT costs. The pay-as-you-go model is used to deliver these facilities. These services also enable large companies to achieve efficiency goals by managing operational tasks and data needs. They also improve service capability in terms of versatility, connectivity, and integrity.
The SME segment is anticipated to grow at the highest CAGR during the forecast period. The increasing need for operating costs to be minimized and business processes to be streamlined will help accelerate SMEs' adoption of these services.
IT and Telecommunications Industry to Rapidly Adopt Cloud-based Services
Based on Vertical, the market is divided into Banking, Financial Services, and Insurance (BFSI), IT and Telecommunications, Government and Public Sector, Healthcare and Life Sciences, Retail and Consumer Goods, Manufacturing, and Others.
IT and telecom companies are rapidly adopting cloud managed services to better maintain their services across a variety of applications. Cloud migration will minimize internal computing needs and decrease surplus expenses. Additionally, IT and telecom companies are early adopters of efficient technologies such as Bring Your Own Device (BYOD), Machine Learning, and others that have further contributed to the market growth.
Evolving infrastructure is boosting the demand for cloud-based services in the healthcare sector. Due to research activities and healthcare activities in the recent past, large amounts of data were generated. The administration of these data necessitated the adoption of cloud expertise, and therefore healthcare providers are adopting cloud-managed services. Cloud-based platforms help organizations concentrate on their key operations.
North America Cloud Managed Services Market Size, 2016-2027 (USD Billion)
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North America is expected to dominate the cloud managed services market share during the forecast period. Growing customer demand is a significant factor that is driving the adoption of managed cloud services in the region owing to the growth and profitability they provide. End-user verticals in the region are adopting cloud services as an IT delivery model for managing costs and addressing the shortage of skilled IT professionals to manage business operations.
The US Army, Air Force, and the United States Department of Justice (DOJ), and other government agencies have been early adopters of the cloud technology in the region, setting new trends for other firms and institutions to follow. Released in January 2018, the Federal Risk and Authorization Management Program (FedRAMP) delivers a government-wide approach to authorization, continuous monitoring, and risk assessment of cloud services deployed in the region. This has provided a flourishing marketplace for service providers to provide cost-effective and mission-centric cloud services in a consistent and secure manner.
In the different countries in Europe, spending on information technology and cloud computing are geared towards digitalization. The use of a hybrid cloud is important for moving industries towards digitalization. Cloud infrastructure is constantly used to create and execute new, innovative projects, and approaches. Key players in the region are heavily investing in research and development activities to equip businesses with multichannel cloud strategies and meet the constantly evolving digital environment. For instance, in October 2019, NTT Limited, a leading technology service provider, launched a new cloud platform in Paris. With this technical advancement, SMEs in France and other regions will gain an advantage while adopting a hybrid and multichannel cloud strategy. Moreover, government initiatives such as the G-Cloud framework are enabling governments and firms in the region to utilize these services efficiently.
Due to the adoption of cloud management services by small- and medium-sized businesses, Asia Pacific is projected to be the most disruptive region during the forecasted period. Increasing investments by prominent players present in the region such as IBM and Google are bolstering the growth of cloud- managed services. Regional governments making substantial investments to manage cloud infrastructure have further bolstered market growth. For example, in October 2018, the Singaporean government stated that most of the government IT infrastructure will be migrated to commercial cloud services in the next few years to deliver services in more cost-effective ways.
The market in the Middle East & Africa and Latin America is expected to grow at a considerable rate during the forecast period. Organizations in the region are adopting new technologies with an aim to expand their operations, improve customer experience, and enhance productivity. Additionally, businesses in Turkey, Dubai, South Africa, and other countries are expected to make significant investments to smoothen their IT operations. Thus, the regional market is expected to grow steadily during the forecast period.
Key Market Players to Enhance Offerings and Adopt Partnership Strategies to Business Security Needs
An Infographic Representation of Cloud Managed Services Market
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The cloud managed services market research report offers qualitative and quantitative insights on the product and a detailed analysis of market size & growth rate for all possible segments in the market. Along with this, the report provides an elaborative analysis of market dynamics, emerging trends, and competitive landscape.
Key insights provided in the report are the adoption trends of smart helmet solutions by individual segments, recent industry developments such as mergers & acquisitions, consolidated SWOT analysis of key players, partnerships, Porter’s five forces analysis, and business strategies of leading market players, key industry trends, macro, and micro-economic indicators.
Value (USD Billion)
Service Type; Deployment; Enterprise Size; Vertical; and Geography
By Service Type
By Enterprise Size
Fortune Business Insights says that the global market size was USD 46.50 billion in 2019 and is projected to reach USD 129.26 billion by 2027.
In 2019, the North America market value stood at USD 16.29 billion.
Growing at a CAGR of 13.8%, the market will exhibit steady growth in the forecast period (2020-2027).
The managed network services segment is expected to be the leading segment in this market during the forecast period.
Customer acceptance of cloud approach to smoothen IT operations is one of the major factors driving the growth of the market.
Amazon Web Services, Inc., Accenture Plc, Deloitte, Capgemini SE, Bespin Global, and Wipro Limited are some of the major players in the global market.
North America dominated the market share in 2019.
Burgeoning need for handling critical IT systems & business applications is expected to drive market growth.
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