Managed Services Market Size, Share & Trends Analysis Report By Solution (Managed Data Center, Managed Security), By Managed Information Service, By Deployment, By Enterprise Size, By End Use, And Segment Forecasts, 2021 - 2028

Report Overview

The global managed services market size was valued at USD 215.14 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 12.7% from 2021 to 2028. The growth can be attributed to the outbreak of the COVID-19 pandemic, which has triggered the need for business automation as businesses are aggressively resorting to remote working. According to an NTT Ltd. commissioned report by IDG, almost 55% of the businesses are approaching managed service providers to opt for their value-added services and reduce security risks, which have increased multifold since the outbreak of the pandemic as employees are working remotely and business partners and customers are relying totally on electronic communication. The report also suggests that over 45% of the organizations across the globe are expected to opt for managed services over the next 18 months. These trends are expected to create immense growth opportunities for the providers in the short term as well as in the long term.

The growing preference for outsourcing management functions to cloud service providers and managed service providers is anticipated to drive the growth of the market over the forecast period. In recent times, businesses and enterprises have been aggressively opting for managed services to handle the critical IT functions and managing the IT infrastructure. Concerns over data security and privacy protection are particularly driving the demand for managed security services from enterprises operating across various industry verticals. In the long-term, the integrated nature of managed service partnerships provides substantial strategic benefits in the form of reducing the costs associated with critical business processes.

Managed services help businesses in improving operational efficiency and reducing operating expenses while allowing them to focus more effectively on core competencies. Managed services ensure optimal resource distribution and utilization and subsequently help in augmenting the overall profitability and improving operational efficiency. Scalable infrastructure and flexible managed services models are particularly making it easier for businesses to respond to the advances in technology. All such factors are expected to drive the growth of the market over the forecast period.

The outbreak of the COVID-19 pandemic is particularly prompting businesses to put a strong emphasis on remote working. The adoption of cloud services has particularly increased as businesses remain keen on ensuring business continuity during the lockdowns being imposed by various governments as part of the efforts to contain the spread of coronavirus. Most of the businesses are already renewing their contracts with managed cloud service providers in anticipation of cloud migration getting more common among enterprises, and in some cases, even gaining traction.

In the wake of the outbreak of the COVID-19 pandemic, organizations are witnessing a tectonic shift in operational procedures as fundamental business operations are increasingly getting reliant on the internet infrastructure. Furthermore, businesses and organizations are putting a strong emphasis on adopting the latest technologies, such as machine learning and augmented reality, along with their existing IT infrastructure as part of the efforts to encourage digital transformation. Adoption of the latest technologies is eventually helping organizations in meeting various functional business requirements while driving business process optimization. Managed services deliver effective functionalities at minimal costs without compromising on quality. Additionally, managed services also support and ensure the reliability and consistency of services offered for various business processes.

However, a looming lack of expertise with the end-users in integrating the latest technologies and implementing managed services is expected to restrain the growth of the managed services market over the forecast period. Other factors, such asconcerns over the efficacy of the managed services models, concerns over data security and privacy protection, and the need for skilled resources, among others, are also anticipated to restrain the growth of the market to a certain extent.

Solution Insights

The managed data center segment accounted for the largest market share of over 15% in 2020. Continued integration of the latest technologies in existing and new business infrastructures is particularly expected to drive the growth of the segment. In a hybrid IT infrastructure, managed data center services can potentially help in optimizing business operations by improving business automation and strengthening business management. These factors are expected to drive the demand for managed data center services over the forecast period.

Increasing instances of cyber attacks is expected to drive the adoption of managed security services in the end-use industries. Also, managed security services are widely adopted in enterprise operations as a measure to secure their confidential data. Growing complexities in network infrastructure are acting as major impedances in efficient data security management; thereby driving the need for and adoption of the services.

Managed Information Service (MIS) Insights

The Business Process Outsourcing (BPO) segment accounted for the largest market share exceeding 40% in 2020. Several businesses have started considering BPO as an integral part of their business strategies that allows them to focus on their core competencies. BPO also helps businesses in increasing revenues by reducing operational costsand improving the product and service quality. These benefits associated with business process outsourcing are expected to drive the growth of the BPO segment over the forecast period.

Various industries are integrating analytics with project and portfolio management, as it enhances the decision-making capabilities of organizations. Also, project and portfolio management provides real-time information about the administrative, engineering, and manufacturing projects. The growing need for effective cost management is expected to drive the adoption of project and portfolio management services over the forecast period.

Deployment Insights

The on-premise segment accounted for the largest market share of over 60% in 2020. On-premise software installation permits large-scale customization while ensuring infrastructure flexibility. Large enterprises typically prefer on-premise software installation. On-premise deployment also helps in improving operational efficiency in terms of the total cost of ownershipand setting up a control centerwithin an organization for coordinating and managing various project management tasks and business operations smoothly.

Hosted deployment is projected to be the fastest-growing. It is also preferred by enterprises owing to advancements in technology and various features it offers such as low operational cost and overall cost-effectiveness. The significant benefit of this deployment method is that organizations using hosted services need not to upgrade those services continuously. The service providers can upgrade the system software and services as and when required.

Enterprise Size Insights

The large enterprises segment accounted for the largest market share of over 60% in 2020. Large enterprises have to deal with large volumes of data that need to be effectively managed while being accessed locally as well as remotely. Moreover, large enterprises are particularly adopting managed security services for managing and monitoring the security of their business data.

Increasing government initiatives aimed at encouraging and promoting SMEs and various digital SMEs campaigns across the world are expected to further drive the growth of this segment over the forecast period. Growing implementation of advanced information technology infrastructure by SMEs and automation of enterprise processes are other factors that are predicted to drive the segment growth over the forecast period.

End-use Insights

The financial services segment accounted for the largest market share of over 15% in 2020. Financial institutions are opting for managed services to address various concerns, such as coping with the advances in technology and market and regulatory changes, and a looming lack of resources holding expertise in the latest technologies, among others. The managed services model typically helps in running business processes and operations while improving operational efficiency and product quality in the long term.

The adoption of managed services by retailers enables them to implement automation in their business operations, to allow them to focus on their core tasks. Retail managed services include retail asset management, retail help desk, and remote monitoring and management services, to enumerate a few.

Regional Insights

North America dominated the global market in 2020 with a market share of over 30%.The strong emphasis IT companies based in the U.S. are putting on reducing operational costs, especially in the wake of the outbreak of the pandemic, is prompting them to adopt various managed services for improving operational efficiency. To stay competitive amid the continued digitalization, businesses in the U.S. are relying more on managed service providers (MSPs), primarily for IT support services.

The Asia Pacific regional market was valued at USD 34.89 billion in 2018 and is estimated to witness substantial growth over the forecast period. Implementation of cloud-based solutions and increasing investments in data security among several companies in the Asia Pacific region is expected to notably contribute to the growth of the market over the forecast period. Furthermore, increasing expenditure due to the implementation of the latest technologies such as cloud-based technology and cutting edge technology by organizations for developing their businesses is also predicted to contribute to the market growth.

Key Companies & Market Share Insights

The major market players are focusing on mergers and acquisitions, joint ventures, and strategic partnerships to defend and expand their respective market shares. Market players are also collaborating with other organizations that are looking forward to automating, digitalizing, and streamlining their business processes to gain a competitive edge. For instance, in October 2018, Cisco Systems, Inc. signed a Memorandum of Understanding (MoU) with Data Mount, a data center hosting service provider based in Oman. The MoU envisages Data Mount leveraging Cisco’s innovative data center security infrastructure and networking solutions, and managed services for the cloud.

Market players are particularly investing in new product development and product portfolio expansion while engaging in R&D activities to offer cost-effective and reliable managed services solutions. They are also focusing on enhancing cloud services to support the digital transformation of the incumbents of various end-use industries. Some of the prominent players operating in the global managed services market are:

• Accenture PLC

• Alcatel-Lucent Enterprise

• AT&T Inc.

• Avaya Inc.

• BMC Software, Inc.

• CA Technologies

• Cisco Systems, Inc.

• DXC Technology Company

• Ericsson

• Fujitsu Limited

• Hewlett Packard Enterprise Development LP

• International Business Machines Corporation

• Lenovo Group Limited

Managed Services Market Report Scope

Segments Covered in the Report

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2016 to 2028. For this study, Grand View Research has segmented the global managed services market report based on solution, Managed Information Service (MIS), deployment, enterprise size, end use, and region:

• Solution Outlook (Revenue, USD Billion, 2016 - 2028)

  • Managed Data Center

  • Managed Network

  • Managed Mobility

  • Managed Infrastructure

  • Managed Backup and Recovery

  • Managed Communication

  • Managed Information

  • Managed Security

• Managed Information Service (MIS) Outlook (Revenue, USD Billion, 2016 - 2028)

  • Business Process Outsourcing (BPO)

  • Business Support Systems

  • Project & Portfolio Management

  • Others

• Deployment Outlook (Revenue, USD Billion, 2016 - 2028)

  • On-premise

  • Hosted

• Enterprise Size Outlook (Revenue, USD Billion, 2016 - 2028)

  • Small & Medium Enterprises (SMEs)

  • Large Enterprises

• End-use Outlook (Revenue, USD Billion, 2016 - 2028)

  • Financial Services

  • Government

  • Healthcare

  • IT & Telecom

  • Manufacturing

  • Media & Entertainment

  • Retail

  • Others

• Regional Outlook (Revenue, USD Billion, 2016 - 2028)

  • North America

    • U.S.

    • Canada

  • Europe

    • U.K.

    • Germany

  • Asia Pacific

    • China

    • India

    • Japan

  • Latin America

    • Brazil

  • Middle East & Africa (MEA)