Managed Services Market Size, Share & Trends Analysis Report By Solution, By MIS, By Deployment (On-premise, Hosted), By Enterprise Size, By End Use (Government, Healthcare, Retail), By Region, And Segment Forecasts, 2023 - 2030

Report Overview

The global managed services market size was valued at USD 267.3 billion in 2022 and is expected to grow at a compound annual growth rate (CAGR) of 13.6% from 2023 to 2030. Managed services reduce downtime redundancy and provide customized value-added services like application testing, service catalog building, and expert consultancy. Multiple monitoring tools and several layers of infrastructure managed by isolated teams contribute to the market growth. For instance, in April 2021, BMC launched the "BMC Helix ITSM," a centralized, cloud-native, observability, and AIOps-integrated system. Data from IT infrastructure, application performance, network performance, and cloud monitoring tools is completely visible through this system. Additionally, individual and team dashboards are tailored to the requirements of each user.

Factors such as improving operational efficiency by focusing more effectively on core competencies, cutting operating expenses, and increasing the use of cloud-based technologies such as automation, IoT, blockchain, and cloud computing are driving the market growth. Moreover, managed services focus on providing secure and customized IT solutions and end-to-end hosting applications is expected to drive market growth. Additionally, the emergence of the COVID-19 pandemic led to disruption in business operations and the supply chain. Thus, with a sudden change in business operations and remote working solutions, employees required access to different work applications for company-owned devices. Organizations have therefore started relying more on managed services during the Covid-19 pandemic.

Managed services involve outsourcing management functions to a third party to advance business operations. The introduction of cloud-based technologies and their technological proliferation have led to managed services. Managed services assist businesses in improving operational efficiency and cutting down companies' operating expenses. The growing preference for outsourcing management functions to cloud service providers and managed service providers is anticipated to drive the market's growth 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 imposed by various governments as part of the efforts to contain the spread of coronavirus. Most companies 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. Furthermore, businesses and organizations were 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.

The adoption of the latest technologies such as artificial intelligence (AI), cloud management, and others is eventually helping organizations meet 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.

As cyber threats become more prevalent, organizations are adopting managed security services (MSSs) into their business models. There is an increase in cyber threats in government sectors and enterprises. Thus, forcing MSPs to develop advanced offerings that can detect and address cyber risks. For instance. in June 2021, Internal Business Machines Corporation (IBM) announced the IBM Center for Government Cybersecurity, designed to meet the cybersecurity needs of federal agencies.

However, a lurking lack of knowledge and experience in integrating new technologies and implementing managed services is expected to limit the managed services market's growth over the forecast period. Other factors, such as concerns about the efficacy of managed services models, concerns about data security and privacy protection, and the need for skilled resources, among others, are expected to limit market growth to some extent.

Solution Insights

The managed data center segment accounted for the largest market share of over 15% in 2022. The managed data center segment is expected to expand due to the continued integration of cutting-edge technology into existing and new corporate infrastructures. Managed data center services might help optimize corporate operations by boosting business automation and strengthening business management in a hybrid IT architecture.

The usage of managed security services in end-use sectors is anticipated to rise as the number of cyber-attacks rises. In addition, managed security services are commonly used in business operations to protect confidential data. Growing network complexities are posing severe impediments to effective data security management, necessitating the need for and adoption of managed security services. It helps enterprises not only detect and mitigate risks through security assessments but also automate compliance monitoring, thus, increase in demand. Also, endpoint management solutions are available through managed IT services, managing endpoint environments, protecting remote workers, automating provisioning and compliance, and offering complete endpoint troubleshooting. Organizations are adopting proactive IT security strategies to safeguard their businesses and secure individual digital identities and services/devices to be more agile, adaptable, and cooperative in their efforts to secure their key assets.

Managed Information Service (MIS) Insights

The Business Process Outsourcing (BPO) segment accounted for the largest market share exceeding 40% in 2022. The growing need for incorporating BPO as part of a business strategy to focus on core strengths and boost profitability is expected to fuel the growth of the BPO segment during the forecast period. The use of BPO services is projected to be driven by several factors, including a focus on process automation, social media management tools, and investments in cloud computing.

Various industries are integrating analytics with project & portfolio management, as it enhances the decision-making capabilities of organizations. Project and portfolio management services are extensively utilized by project managers because of the several advantages, including improved capacity planning and resource management, increased productivity, and increased agility. As a result, the segment's growth is predicted to accelerate over the projection period. Moreover, the usage of robotic process automation, artificial intelligence, and the changing nature of work are all new developing trends that are anticipated to grow and increase in project and portfolio management. Agile approaches are becoming more popular, especially when analyzing the user or customer experience and continuously enhancing the product.

Deployment Insights

The on-premise segment accounted for the largest market share of over 64% in 2022. Numerous organizations have adopted the on-premise mode of deployment as it does not require an internet connection and allows easy customization of software to suit the business process requirements of clients. The on-premise implementation also aids in increasing operational efficiency and establishing a control center within an organization for efficiently coordinating and controlling various project management duties and business operations.

Due to technological developments and other benefits such as cost-effectiveness and minimal operational costs, the hosted deployment segment is expected to be the fastest-growing category. The main advantage of this deployment strategy is that enterprises that use hosted services do not have to upgrade them regularly. The service providers can upgrade the system software and services as needed. Manufacturers are expected to use a hosted managed services (HMS) based deployment approach to regain control of rising IT and licensing expenses while relieving IT workers from spending their time on upgrades and system updates rather than supporting new business.

Enterprise Size Insights

The large enterprise's segment accounted for the largest market share of over 60% in 2022. Large businesses deal with large amounts of data that must be successfully maintained and accessible locally and remotely. Furthermore, large organizations are increasingly turning to managed security services to keep and monitor their corporate data security. Due to increasing cyberattacks and less developed infrastructures to detect breaches, managed security services are the most requested service by businesses across the region. A cyberattack or data breach at a large corporation in APAC might result in a considerable loss. The key verticals contributing to the managed services market in the region are retail and consumer goods, healthcare, manufacturing, and telecom & IT.

Increasing government through different types, including loans, tax reliefs, social support, and financial support, focused on encouraging and promoting SMEs and various digital SMEs campaigns worldwide, is expected to fuel the SME segment’s growth. Other factors expected to boost segment expansion during the projected period include SMEs' increasing adoption of modern information technology infrastructure and business operations automation. Cloud computing, automation, and virtualization have combined to develop a delivery platform that provides managed services to small businesses much more cost-effectively and efficiently. In a cloud brokerage model, managed service providers (MSPs) have partnered with cloud service providers (CSPs) and effectively function as resellers. Smaller firms are likely to increase their IT spending, benefiting managed service providers, especially as they move to automated services, the cloud, and experiment with innovative digital technologies.

End-use Insights

The financial services segment accounted for the largest market share of over 15% in 2022. Financial institutions are turning to managed services to address various issues, including keeping up with technological advancements, market and regulatory changes, and a looming shortage of employees with experience in cutting-edge technologies, among others. In the long run, the managed services model often aids in the management of company processes and operations while boosting operational efficiency and product quality. Managed services are becoming increasingly popular as businesses seek a more strategic approach to operate, organize, and protect their operations effectively. A managed services partnership's long-term, tightly integrated structure provides significant strategic benefits in addition to cost savings. The bank can expand its domicile and investment coverage and volume without investing more money by using a scalable, worldwide third-party delivery infrastructure on a pay-per-use basis.

Retailers who use managed services can automate their business operations, focusing on their core activities. Some examples of retail managed services include retail asset management, retail help desk, and remote monitoring and management services. A managed service provider can give the knowledge and assistance needed to efficiently manage and maintain the IT network of the retail and consumer goods industry. Rapidly growing retailers frequently overlook the infrastructure required to support their expansion. Hence, the usage of retail managed services providers allows the company to be more flexible during times of growth.

Regional Insights

North America dominated the market in 2022 with a market share of over 30%. Due to the significant emphasis on digitalization, IT firms in the U.S. are lowering operational expenses, particularly in the wake of the pandemic; they are adopting a variety of managed services to improve operational efficiency. Businesses in the U.S. depend more on managed service providers (MSPs), primarily for IT support services, to stay competitive in the face of continued digitization.

The Asia Pacific regional market is expected to register significant growth during the forecast period. Several firms in the Asia Pacific region are predicted to substantially contribute to the market's growth throughout the forecast period by implementing cloud-based solutions and boosting data security investments. Furthermore, rising spending due to organizations’ adoption of cutting-edge technologies such as cloud-based technology and advanced technology for company development is expected to contribute to market growth.

Key Companies & Market Share Insights

The major market players focus on mergers and acquisitions, joint ventures, and strategic partnerships to defend and expand their respective market shares. Market players are also collaborating and acquiring other organizations looking forward to automating, digitalizing, and streamlining their business processes to gain a competitive edge. For instance, in March 2022, Xperience, Ireland based IT firm acquired Riverlite Limited, an MSP firm that provides cybersecurity and cloud expertise. As a result of the acquisition, managed services will be provided across the U.K. and Ireland. The acquisition benefited Xperience clients as cyber threats, and data security increased.

Market players primarily invest in new product development and product portfolio expansion to provide affordable and dependable managed services solutions. They also focus on improving cloud services to support the incumbents in various end-use sectors as they undergo digital transformation. For instance, in March 2022, Oracle Cloud Infrastructure (OCI), a cloud infrastructure service of Oracle, released 11 new networking, computing, and storage services and capabilities that enable customers to run workloads more quickly, securely, and affordably. These new services provide customers with fully flexible core infrastructure services at significant cost savings by incorporating resources that are automatically optimized to match application requirements. Enterprise applications run quickly on cloud infrastructure servers, giving users complete autonomy and isolation. By offering flexible memory, sub-core burstable CPUs, and preemptible instances, flexible virtual machines optimize the total cost of ownership for clients. Using these features, users optimize and utilize computing elasticity to consume only what they need. Some of the prominent players in the global managed services market include:

• 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

Global Managed Services Market Segmentation

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 2018 to 2030. 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, 2018 - 2030)

  • 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, 2018 - 2030)

  • Business Process Outsourcing (BPO)

  • Business Support Systems

  • Project & Portfolio Management

  • Others

• Deployment Outlook (Revenue, USD Billion, 2018 - 2030)

  • On-premise

  • Hosted

• Enterprise Size Outlook (Revenue, USD Billion, 2018 - 2030)

  • Small & Medium Enterprises (SMEs)

  • Large Enterprises

• End-use Outlook (Revenue, USD Billion, 2018 - 2030)

  • Financial Services

  • Government

  • Healthcare

  • IT & Telecom

  • Manufacturing

  • Media & Entertainment

  • Retail

  • Others

• Regional Outlook (Revenue, USD Billion, 2018 - 2030)

  • North America

    • U.S.

    • Canada

  • Europe

    • U.K.

    • Germany

  • Asia Pacific

    • Japan

    • China

    • India

  • Latin America

    • Brazil

    • Mexico

  • Middle East & Africa (MEA)