Research compiled by MarketsandMarkets shows that managed services is the place to be. The market will move from a healthy $142 billion this year to a nearly doubly healthy $256 billion by 2018. The CAGR? A nice 12.4 percent over that period.
What is driving the growth? IT efficiency.
“Organizations implementing managed services have reported almost 50-60 percent increase in the operational efficiency of their outsourced processes. Enterprises have accepted outsourcing services as a means to enable them reduce their Capital Expenditure (CapEx) and free up internal sources,” the researchers said.
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And there is more and more for IT to choose from: “Newer managed services that penetrate almost all the industry domains, along with aggressive pricing in services, are being offered. This results in increase in the overall revenues of the managed services market. It is observed that there is an increase in outsourcing of wireless, communications, mobility and other value added services, such as content and e-commerce facilities. With increasing technological advancements and the cost challenges associated with having the IT services in-house, the future seems optimistic enough for application services providers and managed services providers.”
The researchers believe that managed services and lower the cost of providing 30-40 percent.
INSIGHT Has Similar Insight
INSIGHT Research earlier this year released its “Managed Services in an IP World: Global Opportunities for Wireless and Wired Networks, 2013-2017” report, which points to a bright MSP future. And its numbers are similar to those from MarketsandMarkets.
Two main factors are driving MSP growth. First, there is the worldwide recession, which is just now easing in some quarters. At the same time, there is a more and more pressing need to implement advanced technologies to drive competitive advantage.
Put two and two together and you get a healthy demand for expert MSP services, services expected to grow on average 11.3 percent a year globally, Insight says. In the U.S., overall revenue will exceed $50 billion in 2017.
“INSIGHT’s analysis suggests that the global Managed Services market will grow from $137 billion in 2012 to $235 billion in 2017, at an 11.3 percent CAGR,” the company revealed.
The Internet is also driving the need for services, as there are constantly new technologies and techniques to master. "A large percentage of business activity now depends on the internet for everything from electronic commerce to intranet applications to customer service," said Fran Caulfield, research director for INSIGHT. "These data applications are driving exponential traffic growth onto corporate networks, while increasing their complexity. Managed services allow corporations to handle this growth, while outsourcing the most complicated elements to the skilled service provider. Service providers also win, as they grow beyond basic transport services, increase margins and reduce churn."
Finally, managed services are the key to keeping enterprises competitive in lean staffing times.
“With the global and the U.S. economy stagnant, and businesses not hiring, enterprise IT departments must still find a way to deploy those new applications. With limited IT staffing, the enterprise can focus on the developing the corporate application, while outsourcing the network design, installation, and management to a provider who has the ‘state of the art’ tools and skills to do it right,” the report said. “New cloud-based applications can be deployed in weeks, allowing the enterprise to rapidly respond to their customer’s evolving needs.”
Edited by
Alisen Downey
