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The global managed services market size stood at USD 200.29 billion in 2019 and is projected to reach USD 492.15 billion by 2027, exhibiting a CAGR of 12.2% during the forecast period.
The overall market is booming with the rising adoption of IT managed services among enterprises in various sectors such as corporate, medical, among others. Enterprises are implementing these services in their business unit to digitize their business processes, upgrade and innovate their infrastructure, enhance productivity, and scalability. In addition to this, the rising demand for end-to-end hosting application is expected to drive the market growth. Further, key managed service providers (MSPs) are focused on providing secure and customized IT solutions to their users by deploying various advanced tools in their business units. For instance, according to the report published by the Technology Services Industry Association (TSIA) in 2018, around 81% of the managed service providers (MSPs) took leverage of commercial off-the-shelf tools, to provide a customized IT solution to their consumers.
Further, rising government initiatives for the development of outsourcing services across various industries is expected to propel the market size during the forecast period. As a part of a strategy, key players in the market are adopting various marketing strategies. The marketing strategies adopted by key players include mergers & acquisitions, new product launch, collaboration, and others, to expand their business across different geographies. In May 2018, Fujitsu expanded its Fujitsu Security Solution by strengthening its managed security service offerings. Managed security service provides comprehensive defense against and centralized lifecycle support from diversifying cyber-attack. This strategy helps the company to strengthen its customer base.
The world economy has been disturbed by both demand and supply and the 2020 GDP will likely contract by more than 2%. COVID-19 impacts the world economy and forces many enterprises to acknowledge with spending cuts and contingency planning in the short term. However, the adoption of cloud applications, AI, security solutions, and Big Data is expected to see a surge in the coming years. This growth has allowed the cloud giant to switch its services to deal with the increased load. Managed service providers (MSPs) are adopting the new norms of working remotely and social distancing. The COVID-19 crisis will spill consumers and organizations over to the online world. As a result, it may improve productivity and open new opportunities.
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Increasing Adoption of Managed Security Services (MSS) Based on Cloud
One of the emerging managed services market trends is the increasing adoption of managed security services (MSS) based on cloud, among the large organizations. The increasing demand for securing IT infrastructure against cyber threats is driving organizations to adopt managed security services (MSSs) in their businesses. Cyber threats are promptly evolving in both enterprises and government sectors, forcing managed service providers (MSPs) to develop advanced offerings that can detect and address cyber risks. Various SMEs and large enterprises are focused on adopting cloud-based managed security services packages to secure online attacks and eliminate intruder evasion. Key players in this market are focused on providing advanced security services based on cloud to maintain and expand their market shares. For instance, in May 2019, Integrated Telecom Company expanded its security services portfolio by launching a new suite of managed security services (MSS). The MSS Service assists various organizations with incident handling, monitoring, management of ongoing cybersecurity risks, and threat detection.
Further, cloud-based MSS provides security against various email viruses, DDOS attacks, prevention services, firewalls, and intrusion detection. The focused targeting of cyber-attacks and increasing complexity boosts demand for organizations to follow a MSPs, thus boosting the market growth. Therefore, the organization needs upgraded IT infrastructure to cater to the business demands. This will increase the adoption of secure IT services such as managed security service among end-users.
Growing Adoption of Bring Your Own Device (BYOD) Among Organizations Aid to Market Growth
One of the emerging drivers for the market is the rising adoption of bring your own device (BYOD), across various sectors. In the corporate environment, the BYOD strategy allows workforces to access and manage data through personal devices to improve productivity. According to a report published by Microsoft Corporation in 2012, around 67% of workers use their personal devices at the workplace. The usage of BYOD enhances work flexibility and accountability of employees, resulting in higher productivity. This, in turn, has urged the organizations to deploy option for BYOD solutions with the existing systems to create a workforce-friendly environment.
Further, various organizations are focused on implementing BYOD strategies to reduce operational costs of information technology (IT) by reducing capital expenditure. This rising implementation has led to an increase in the number of smart devices such as tablets, smartphones, laptops, and others. This strategy would increase the demands for the integrity and security of information that flows across smart devices. Thus, many enterprises are shifting towards adopting this type of services to manage and monitor security for these smart devices. These outsourcing services offer support to organizations by monitoring potential threats and also secure them against any hazards threats by applying intelligence. With the rise in the adoption of BYOD, the market is also expected to develop at a significant CAGR.
Lack of IT security professionals proving to be Inhibiting Factor for Market Growth
The lack of availability of IT and cybersecurity professionals might be considered as one of the market restraints for the growth of the market. This deficiency can hinder the organizations’ ability to meet their IT security needs. A lack of valued IT security skills has left organizations open to cyberattacks resulting in data loss and reputation damage. With the growth of several cybersecurity threats, the requirement for advanced security solutions to deal with cyber-attacks is growing exponentially. This highlights the need for cybersecurity training, which can help close the cybersecurity skills gap, introduce new talent into the work field, and make the organization more secure.
Also, various factors such as the need for skilled workforces, lack of efficacy of the managed service model, data privacy & security concerns, and need for huge investment are expected to restrict the market growth. Besides, concerns regarding lack of trust by large organizations on the third party MSPs results in uncertainty for adopting such services, which in turn impedes the managed services market growth.
IT Managed Services Segment is estimated to Hold High Market Share in the Upcoming Period
Based on the service, the scope of the study is divided into voice services, non-voice services and IT managed services. Among all segments, this is expected to hold the largest market share during the forecast period. Rising penetration of virtual chat-box service based on AI and IoT platform and big data is expected to significantly accelerate the demand for IT managed services. Further, various organizations are implementing voice and non-voice service enabled with virtual chat-box. This strategy assists in managing various functions such as email marketing, human resources outsourcing, marketing, sales, and customer relations service. MSPs are focused on providing conversational interfaces such as voice-enabled Chatbot into their customer service applications to create an automated workflow. Vendors such as SAP, Microsoft, etc., deployed speech-enabled chatbots options in their service offerings to transform customer service interactions as well as, human resources applications. This service provides ample prospects for sharing information and helps to reduced threats and complications related to cross-organizational workflow management. These features are estimated to boost the demand for this type of services.
Additionally, the market growth is primarily driven by the rising spending and adoption of IT outsourcing services among various SMEs and rising demand for front-end web applications among various end-users. According to International Data Corporation (IDC), in 2018, the total IT outsourcing services spending by small and medium-sized enterprises (SMEs) is around USD 602 Billion, an increase of 4.9% over 2017.
Rising Adoption of Managed Services based on Big Data and Cloud is expected to boost the Market Growth
Based on function, this market is divided into finance and accounting (F&A), marketing, procurement, supply chain, human resource (HR), and information technology (IT). Among these functions, the finance and accounting segment is expected to hold the largest share during the forecast period. The growth is due to the increasing adoption of services based on big data and cloud applications among various organizations. With the growing internet traffic and end-users across the banking and financial sector, the need for advanced storage applications is also expected to rise. To support this massive amount of online traffic circulation, big data application is preferred in place of any other storage applications. Big data offers vast storage volume to manage the flow of traffic circulation. Major companies in this market are focusing on providing this type of services based on big data applications. The big data-based services offer users with various benefits such as broad certified control, consultant management, advanced security monitoring, and others. For instance, Deloitte provides procurement consulting services, implementing outsourcing, and offers procurement-related technologies such as Coupa and Ariba. Coupa and Ariba are based on the public cloud platform and big data capabilities that help organizations to optimize their business spending.
Further, the procurement segment is expected to grow with considerable CAGR during the forecast period. The growth is primarily owing to the rise in the number of SMEs operating in this market worldwide. The governments of countries including the US, Germany, India, Brazil, Saudi Arabia, and others are aimed at investing in the growth of SMEs. For instance, in 2019, in Lebanon, the government-funded investment was USD 30 million for the development of various projects such as Innovative Small and Medium Enterprises (iSME) and others. Additionally, the organizations offering procurement services are tactically shifting towards the online channel to expand their commercial globally. Also, the supply chain and human resource (HR) segment is expected to hold a significant share in 2018. The growth in these segments is mainly owing to the rising investment for the development of services across applications in supply chain and HR.
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Corporate Industry is Prognosticated to Experience Market Growth in the Coming Year, owing to Rising Adoption of IoT Solutions among SMEs and Government Projects
Based on the end-user, this market scope includes medical, financial, government, audit & consulting, corporate, telecommunication, and insurance & re-insurance. Among these, the corporate segment is expected to hold the largest market share in 2018. Key players in this market are focused on strategically acquiring and collaborating with other regional and local players to strengthen their geographical presence. For instance, in September 2019, Siemens AG acquired CD-Adapco, US-based enterprise. This acquisition assists Siemens to manage and monitor the growth of its engineering sector globally.
Further, the government segment is expected to hold a significant share in 2018. The growth in this segment is mainly owing to the rising adoption of IoT solutions among various government projects including smart buildings, smart parking, smart transportation, and others. Various governments of countries including India, the UK, Saudi Arabia, and others are focused on investing in these outsourcing services to complete these projects. Also, major players in the BFSI sectors are deploying outsourcing managed services to address issues such as talent scarcity, technological change, market, and regulatory change among others. Furthermore, the growth of the telecommunication industry is owing to the rising implementation of these services based on AI, big data, and machine learning (ML). Key players in this market are launching advanced smart devices to boost market growth. For instance, in 2019, Dell Technologies launched advanced laptop XPS 13 2-in-1. This laptop is installed with big data and machine learning (ML), which helps to execute several multi-tasks simultaneously and equipped with the latest processor.
North America Managed Services Market Size, 2016-2027 (USD Billion)
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Under the scope of the study, the regional segment is divided into five regions, including North America, Asia Pacific, Europe, Middle East & Africa, and Latin America.
North America is expected to dominate the market by capturing maximum market share in terms of revenue during the forecasted period. The growth in this region is mainly owing to the robust presence of a large number of MSPs such as IBM Corporation, Accenture, and Cognizant, among others. Also, the market in North America is expected to witness enormous growth opportunities. The rise in opportunity is owing to shifting focus of various key players such as IBM Corporation, Telefonaktiebolaget LM Ericsson, etc. towards increasing their presence in various industries, such as telecommunication, finance, medical and government. The US holds the majority of the North American market, owing to the rising adoption of these services among the small and medium-sized enterprises and the provision of substantial IT budgets. Thus, key players in this market are focused on merger and acquisition strategies, to prevent cybersecurity breaches and create ample opportunities. For instance, in October 2018, Cisco Systems, Inc. acquired Duo Security for USD 2.35 billion to prevent cybersecurity breaches. Under this acquisition, Cisco users will be able to securely and easily connect any application on networked devices.
Asia Pacific is expected to grow with the highest CAGR during the forecasted period. The growth in this region is owing to the increasing investments in data security and the rising adoption of cloud-based solutions among several organizations. Growing economies in countries such as China, India, Singapore, Australia, and New Zealand, etc. provides massive opportunities for the adoption of such managed outsourcing services. Various managed service providers in this region are focused on developing an integrated cloud storage platform for the banking sector. For instance, in August 2018, ESDS Software Solution launched “Banking Community Cloud” for the banking sector in India, which offers all the cloud-based managed services to the organizations for addressing issues such as compliance, service, and security norms.
Europe holds a significant position in this market. The growth in this region is owing to the rising adoption of the cloud platform, the rising demand to manage enterprise data, and the presence of key players operating in this market. Key market players in this region are focused on various strategies such as product launch, mergers, and acquisitions to expand their business globally. For instance, in February 2017, Deloitte launched Managed Threat and Managed Digital Identity Services which are designed to augment cybersecurity posture and digital transformation of enterprise assets.
Furthermore, the Middle East and Africa and Latin America are estimated to develop at a considerable rate. This growth is owing to the increasing ICT spending, rising government initiatives, the growing trend of big data and analytics, and advent technological advancement across these regions. For instance, the government of GCC countries is focusing on pursuing pioneering national development projects, such as the UAE’s Vision 2021 and Saudi Arabia’s Vision 2030. These projects help to improve cloud-based services and boost economic diversification, through the expansion of the IT infrastructure.
Leading Market Players Are Focusing On Strengthening the Market Positioning
Telefonaktiebolaget LM Ericsson or Ericsson manufactures and offers software, network equipment, infrastructure across ICT the sector, and services for network & business operations. The Company’s operating division includes cable television, products for the enterprise, power module markets, and mobile platform. Under its product segment, Ericsson offers smart design, dynamic deployment, data-driven operations, intelligent optimization, seamless security, and agile application management. The managed services offered by Ericsson is easy to deploy and operate. These services drive efficiency enhances customer experience and paves the way for innovation on next-generation networks. The company is currently investing in the development of AI-based outsourcing services projects all across the globe. Ericsson is one of the key players in this market.
March 2020 – Ericsson’s managed services partnership with Omantel, Oman-based telecom services provider. This partnership includes the deployment of automation platforms and Network Functions Virtualization (NFVI) that allow Omantel to surge operational network proficiency and augment consumer’s experiences.
This market is progressing towards developing a new prospect for various industries including BFSI, retail, manufacturing, and others. This advancement would assist the organizations to adopt advanced outsourcing services based on technologies, such as cloud, artificial intelligence (AI), and others. AI-based services address increasing network complexity, multiple technologies such as 4G, 5G, and IoT, etc., and more diverse service requirements. In the future consequence, several SMEs will adopt these services based on AI, to optimize their business capabilities as they offer scalable infrastructure and data security. Also, growing internet penetration, increasing government initiatives, and technological advancements such as AI, machine learning, cloud computing, mobility services, and big data are estimated to develop abundant opportunities for market growth during the forecast period.
The managed services market report offers qualitative and quantitative insights on the managed service industry and detailed analysis of market size & growth rate for all possible segments in the market.
Along with this, the report provides an elaborative study of market dynamics, emerging trends, opportunities, and competitive landscape. Key insights offered in the report are the adoption trends of managed service, recent industry developments such as partnerships, mergers & acquisitions, consolidated SWOT analysis of key players, business strategies of leading market players, macro and micro-economic indicators, and key industry trends.
An Infographic Representation of Managed Services Market
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2016 - 2027
2020 - 2027
2016 – 2018
Value (USD billion)
Fortune Business Insights says that the market value stood at USD 200.29 billion in 2019.
By 2027, the market size is expected to reach USD 492.15 billion.
The market is expected to grow at a CAGR of 12.2% in the forecast period (2020-2027).
Asia Pacific is anticipated to grow with the highest CAGR
Within service, the IT managed service segment is expected to lead the market during the forecast period.
Rising adoption of bring your own device (BYOD) among various industries is one of the key drivers for market growth.
IBM Corporation, Fujitsu Limited, Telefonaktiebolaget LM Ericsson, and DXC Technology Company are the top companies in the market.
The finance segment is expected to grow significantly at the highest CAGR during the forecast period, owing to improved efficiency and reliability, increased capacity, and enhanced security compliance.
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