Managed Services Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, 2018-2028

Managed Services Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, 2018-2028

Global Managed Services Market has valued at USD 254.56 Billion in 2022 and is anticipated to project robust growth in the forecast period with a CAGR of 12.51% through 2028. Managed services reduce downtime redundancy and provide customized value-added services such as 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. Furthermore, to streamline infrastructure and reduce costs, enterprises globally are migrating to the cloud platform. Professional and managed services help enterprises complete this digital transformation faster and more efficiently.

Managed services involve outsourcing administrative functions to a third party to facilitate business operations. The adoption of cloud-based technologies and their technological proliferation has led to managed services. Managed services help companies improve their operations and reduce operating costs. Outsourcing of management functions to cloud service providers and managed service providers has increased and is expected to drive market growth during the forecast period.

Key Market Drivers

Complexity of IT Environments and Digital Transformation:

The global managed services market has experienced significant growth in recent years, driven by a multitude of factors that are reshaping the way businesses operate and manage their IT infrastructure. Managed services, which involve outsourcing the management of specific functions or processes to third-party service providers, have become a pivotal component of modern business strategies.

Technology plays a central role in nearly every aspect of operations. The increasing complexity of IT environments, marked by hybrid infrastructures, cloud adoption, diverse applications, and data sources, has presented businesses with challenges in managing and securing their digital assets. Many organizations lack the in-house expertise and resources required to effectively oversee these intricate environments. This is where managed services come into play. Managed services providers (MSPs) offer specialized expertise and tools to manage, monitor, and maintain IT systems, networks, and applications. They alleviate the burden of day-to-day IT management from businesses, enabling them to focus on their core competencies and strategic initiatives. Moreover, the ongoing trend of digital transformation has necessitated a shift from traditional IT models to agile, scalable, and cost-effective solutions. Managed services provide the flexibility required to adapt to changing technology landscapes while ensuring optimal performance and security. As businesses continue to embrace digital transformation, the demand for managed services is poised to grow. MSPs that can offer a wide range of services, from infrastructure management to cybersecurity, will be well-positioned to capitalize on this trend and cater to the diverse needs of businesses across industries.

Rising Cybersecurity Challenges and Regulatory Compliance Generating Demand:

The increasing frequency and sophistication of cyberattacks have elevated cybersecurity to a top priority for businesses of all sizes. Protecting sensitive data, maintaining regulatory compliance, and safeguarding against potential breaches require robust security measures that often surpass the capabilities of internal IT teams alone. Managed security services have emerged as a critical component of the managed services market. These services encompass a range of cybersecurity solutions, including threat detection and response, vulnerability management, compliance monitoring, and more. MSPs with specialized security expertise can provide businesses with a proactive approach to cybersecurity, helping them identify and mitigate risks before they escalate. Additionally, regulatory requirements such as the General Data Protection Regulation (GDPR) in Europe and the Health Insurance Portability and Accountability Act (HIPAA) in the United States impose stringent data protection and privacy standards on organizations. Non-compliance can result in hefty fines and reputational damage. Managed services providers equipped with a thorough understanding of these regulations can assist businesses in aligning their operations with the necessary compliance measures. The escalating cybersecurity landscape and regulatory pressures are driving businesses to seek external partners that can offer advanced security solutions and ensure their data remains secure. As a result, the managed security services segment is experiencing rapid growth and is anticipated to remain a pivotal driver of the overall managed services market.

Cost Efficiency and Focus on Core Business Functions:

While technology is integral to business success, managing IT infrastructure can be resource-intensive and costly. Investing in hardware, software licenses, skilled personnel, and ongoing maintenance can strain budgets, particularly for small and medium-sized enterprises (SMEs). Moreover, the opportunity cost of allocating internal resources to routine IT tasks can detract from innovation and strategic endeavors. Managed services provide a solution to these challenges by offering a cost-effective approach to IT management. Instead of bearing the upfront expenses of building and maintaining IT infrastructure, businesses can opt for subscription-based models where they pay for the services they require. This shift from capital expenditure (CapEx) to operational expenditure (OpEx) allows organizations to scale their IT resources according to their needs, avoiding overprovisioning and reducing overall costs.Furthermore, outsourcing IT management to MSPs enables businesses to refocus their internal teams on core competencies and strategic initiatives. With routine IT tasks handled externally, employees can direct their efforts toward innovation, product development, customer engagement, and other activities that drive business growth. As the business landscape becomes increasingly competitive, organizations are recognizing the value of maximizing operational efficiency and agility. Managed services offer a means to achieve these objectives, positioning the market for sustained expansion. In conclusion, the global managed services market is propelled by several driving factors that reflect the evolving business landscape. The complexity of IT environments, the imperative of cybersecurity, and the pursuit of cost efficiency and core competency focus are reshaping the way organizations approach IT management. As businesses continue to navigate technological advancements and market dynamics, the role of managed services providers will remain integral in enabling their success.

Key Market Challenges

Cybersecurity Concerns and Data Privacy

While the rise of digitalization and connectivity has revolutionized the business landscape, it has also exposed organizations to an unprecedented level of cybersecurity threats. The managed services market, particularly the segment focused on providing managed security services, is at the forefront of addressing these challenges. As businesses adopt managed services to streamline their IT operations, they often entrust their service providers with sensitive data and critical systems. This exchange of information creates a potential point of vulnerability that malicious actors may exploit. One major challenge for managed services providers (MSPs) is ensuring robust cybersecurity measures to protect their clients' assets. A security breach not only threatens the data and operations of the affected organization but also erodes trust in the service provider. To mitigate these risks, MSPs must continuously invest in advanced security technologies, implement stringent access controls, conduct regular security assessments, and stay updated on the latest threat vectors. Furthermore, regulatory frameworks like the European Union's General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA) impose strict requirements on how personal data is collected, processed, and stored. MSPs operating across different jurisdictions must navigate these regulations and adapt their services to remain compliant. Failing to do so could result in significant legal consequences and reputational damage for both the MSP and its clients. Therefore, the challenge of maintaining robust cybersecurity while adhering to evolving data protection regulations remains a critical concern for the global managed services market. MSPs must demonstrate their commitment to data privacy and security to build and maintain trust with their clients.

Talent Shortages and Skill Gaps:

The success of managed services heavily relies on the skills and expertise of the professionals who manage and deliver these services. However, the technology landscape is evolving rapidly, and the demand for specialized skills is outpacing the supply of qualified professionals. This shortage of skilled talent poses a significant challenge for the managed services market. MSPs need to attract and retain individuals with diverse skill sets, including cloud computing, cybersecurity, network management, data analytics, and more. Without a proficient workforce, providers may struggle to deliver high-quality services, respond to clients' needs promptly, and remain competitive in a dynamic market. To address this challenge, MSPs must invest in continuous training and upskilling programs for their employees. This ensures that their workforce remains up-to-date with the latest technologies and industry trends. Additionally, partnering with educational institutions, offering internships, and participating in industry forums can help cultivate a pipeline of skilled professionals. The talent shortage also underscores the importance of automation and artificial intelligence (AI) technologies in managed services. By automating routine tasks and using AI-driven analytics, MSPs can enhance efficiency, reduce human error, and free up skilled staff to focus on more complex and strategic aspects of their services.

Managing Vendor Relationships and Ecosystems:

Managed services providers often collaborate with multiple vendors to deliver comprehensive solutions to their clients. This complex vendor ecosystem can introduce challenges related to coordination, interoperability, and accountability. Integrating various solutions from different vendors into a cohesive architecture requires careful planning and execution. One key challenge is vendor management. MSPs must ensure that the products and services provided by different vendors align with the needs and expectations of their clients. This involves negotiating contracts, defining service-level agreements (SLAs), and monitoring vendor performance to ensure that agreed-upon standards are met. Interoperability is another concern. Integrating solutions from various vendors can lead to compatibility issues, potentially disrupting clients' operations and undermining the value of the managed services. MSPs must thoroughly test and validate the compatibility of different components before deployment to avoid such issues. Moreover, managing multiple vendor relationships requires effective communication and collaboration. When issues arise, clients expect MSPs to take ownership and provide timely resolutions, regardless of whether the problem originates from one of the vendors. Navigating these complexities demands strong project management and communication skills. To address these challenges, MSPs can adopt a proactive approach to vendor relationship management. This involves setting clear expectations, establishing effective communication channels, and fostering collaborative partnerships with key vendors. By ensuring seamless integration and effective vendor coordination, MSPs can provide clients with a unified and optimized managed services experience. In conclusion, the global managed services market is not without its challenges. While opportunities for growth abound, the landscape is shaped by cybersecurity concerns, talent shortages, and the complexities of managing vendor relationships. By addressing these challenges strategically and proactively, managed services providers can position themselves to offer value-added solutions that meet the evolving needs of their clients in an increasingly digital world.

Key Market Trends

Adoption of Hybrid Cloud Solutions:

The adoption of cloud computing has been a significant driver for the growth of managed services. In recent years, the trend has shifted toward hybrid cloud solutions, which combine private and public cloud infrastructure along with on-premises resources. Hybrid cloud environments offer greater flexibility, allowing businesses to scale resources up or down as needed while maintaining sensitive data on-premises for security and compliance reasons. Managed services providers are at the forefront of assisting businesses in designing, implementing, and managing hybrid cloud architectures. They offer expertise in optimizing workloads across different environments, ensuring seamless integration, and managing the complexity of hybrid deployments. As organizations seek to balance performance, security, and cost-efficiency, the demand for managed services tailored to hybrid cloud solutions is expected to rise.

AI and Automation Integration:

Artificial intelligence (AI) and automation technologies are revolutionizing the managed services landscape. Businesses are increasingly leveraging AI-driven analytics, machine learning, and robotic process automation to enhance operational efficiency, predict issues before they occur, and automate routine tasks. Managed services providers are incorporating these technologies into their offerings to provide proactive monitoring, faster incident resolution, and predictive maintenance. AI-powered chatbots and virtual assistants are also becoming essential components of managed services support. They offer quick responses to client queries, troubleshoot common issues, and provide round-the-clock assistance. By harnessing the power of AI and automation, managed services providers can deliver higher quality services while reducing human intervention for routine tasks.

Edge Computing Management:

The proliferation of Internet of Things (IoT) devices and the need for real-time data processing are driving the adoption of edge computing. Edge computing involves processing data closer to the source rather than sending it to centralized cloud servers. Managed services are evolving to manage and optimize edge computing environments, addressing challenges related to connectivity, security, and data management at the edge. Managed services providers are offering solutions that ensure the smooth operation of edge devices, monitor performance, manage software updates, and ensure data integrity. As edge computing becomes a critical component of various industries such as manufacturing, healthcare, and transportation, managed services tailored to edge environments are gaining traction.

Security-First Approach:

With the escalating frequency and sophistication of cyberattacks, cybersecurity has become a top concern for businesses. Managed security services are witnessing strong demand as organizations recognize the importance of proactive threat detection, incident response, and compliance management. Managed services providers are adopting a security-first approach by offering comprehensive cybersecurity solutions. These include real-time monitoring, threat intelligence, vulnerability assessments, and security incident management. As data breaches and cyber threats continue to make headlines, businesses are turning to managed security services to safeguard their digital assets and maintain regulatory compliance.

Vertical-Specific Managed Services:

While managed services have traditionally offered general IT management, there is a growing trend toward industry-specific solutions. Different industries have unique requirements and challenges that can be better addressed by specialized managed services providers. Vertical-specific managed services are tailored to the specific needs of industries such as healthcare, finance, retail, and manufacturing. These industry-focused solutions offer a deep understanding of sector-specific regulations, compliance standards, and technological demands. Managed services providers with expertise in a particular industry can deliver more relevant and impactful solutions, driving efficiency and innovation in their clients' operations.

Managed Services for Small and Medium-Sized Enterprises (SMEs):

Historically, managed services were often associated with large enterprises due to the complexity and cost associated with outsourcing IT management. However, there is a growing trend toward catering managed services to small and medium-sized enterprises (SMEs). SMEs are recognizing the benefits of offloading IT management tasks to external experts, allowing them to focus on core business functions. Managed services providers are tailoring their offerings to the unique needs of SMEs by providing cost-effective solutions that address their specific IT challenges. This includes services such as helpdesk support, cloud migration, cybersecurity, and IT consulting. As SMEs seek to harness the advantages of technology without straining their resources, the demand for managed services targeted at this market segment is on the rise.

Segmental Insights

Service Insights

This segment is expected to account for the largest managed services market share during the forecast period. The rising penetration of virtual chat-box services based on AI and Internet of Things (IoT) platforms and Big Data is expected to significantly accelerate the segment’s growth. Furthermore, various organizations are implementing voice and non-voice services integrated with the virtual chat-box. This strategy will assist in managing various functions, such as email marketing, human resources outsourcing, marketing, sales, and customer relations services. MSPs are focusing on integrating conversational interfaces, such as voice-enabled chatbots into their customer service applications to create an automated workflow. Vendors, such as SAP and Microsoft, deployed speech-enabled chatbot options in their service offerings to transform customer service interactions as well as human resource applications..

Function Insights

The finance and accounting segment accounted for the largest market share in 2022. These services help manage and analyze financial needs through financial reporting, accounting services and more. The growth of the segment is also driven by the increasing adoption of services based on big data and cloud applications among different organizations in managing capital exchange with clients and partners.

Regional Insights

The Asia-Pasific segment will attain the dominant market share during the forecast period. The growth of the segment is due to the increased need for these services to manage and maintain a very complex IT infrastructure. This is expected to boost the growth of the market during the forecast period. The BFSI segment is estimated to be the fastest growing segment during the forecast period. Companies in this industry require advanced IT infrastructure to store and manage information from business instruments to recording, reporting and accounting and more. IT services are critical to the success of financial transactions that require communication with customers or internal employees.

Key Market Players

• IBM Corporation
• Accenture plc
• Fujitsu Ltd.
• Microsoft Corporation
• NTT DATA Corporation
• Amazon Inc.
• DXC Technology
• Tata Communication Services Limited
• Capgemini SE
• Atos SE

Report Scope:

In this report, the Global Managed Services Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• Global Managed Services Market, By Service:
• Voice Service
• Non-Voice Service
• IT Managed Service
• Global Managed Services Market, By Function:
• Finance & Accounting
• Marketing
• Supply Chain
• Human Resource
• Information Technology
• Others
• Global Managed Services Market, By End- User:
• BFSI
• IT & Telecom
• Government
• Retail & E-commerce
• Energy & Utility
• Healthcare
• Manufacturing
• Others
• Global Managed Services Market, By Region:
• North America
• United States
• Canada
• Mexico
• Asia-Pacific
• China
• India
• Japan
• South Korea
• Indonesia
• Europe
• Germany
• United Kingdom
• France
• Russia
• Spain
• South America
• Brazil
• Argentina
• Colombia
• Middle East & Africa
• Saudi Arabia
• South Africa
• Egypt
• UAE
• Israel

Competitive Landscape

Company Profiles: Detailed analysis of the major companies present in the Global Managed Services Market.

Global Managed Services Market report with the given market data, Tech Sci Research offers customizations according to a company's specific needs. The following customization options are available for the report:

Company Information

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