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The global managed services market has experienced remarkable growth over recent years, driven by rapid digital transformation across industries, a shortage of skilled IT personnel, and increasing cybersecurity threats. In 2023, the managed services market was valued at $283.9 billion, and it’s expected to soar to $576.7 billion by 2031, growing at a compound annual growth rate (CAGR) of 9.4% from 2024 to 2031. This substantial growth reflects the increasing reliance of businesses on Managed Service Providers (MSPs) to enhance efficiency, reduce operational costs, and address evolving technological challenges.

With the right managed services strategy, businesses can focus on core competencies, leaving IT management and support to expert providers. This blog delves into key managed services industry trends, growth drivers, market segmentation, challenges, and notable developments that are shaping the managed services market today.

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Managed Services Market

Growth Drivers of the Managed Services Market

Increasing Demand for Cost Optimization

One of the main drivers behind the growth of the managed services market is the strong demand for cost optimization across industries. Companies are increasingly inclined to outsource their IT infrastructure and operations to MSPs to focus on core business functions while reducing operational costs. By leveraging managed services, organizations can mitigate expenses associated with in-house IT staff and technology infrastructure. The outsourcing of IT operations allows companies to pay for only the services they need, thus reducing the burden of managing complex IT environments.

Growing Investments in Digital Transformation

As part of broader digital transformation initiatives, businesses are turning to managed services for support in implementing advanced technologies like AI, IoT, and cloud solutions. The integration of managed services with these technologies offers a streamlined, cost-effective route to digital transformation. For example, cloud-based managed services are becoming more popular due to their flexibility, scalability, and agility. The managed network services market is also gaining momentum as companies seek reliable connectivity solutions that can adapt to their evolving digital strategies.

Trends in the Managed Services Industry

Rising Adoption of Cloud-Based Managed Services

Cloud-based solutions are a cornerstone of digital transformation. The managed services market is witnessing a significant shift towards cloud deployments, as more organizations prefer the flexibility and on-demand nature of cloud-managed services. In 2024, cloud-based managed services are expected to account for over 62% of the market. This preference for cloud-based solutions stems from benefits such as enhanced business agility, automated updates, and robust cybersecurity features.

Managed Security Services on the Rise

Managed security services are set to dominate the managed services market due to the escalating threat of cyberattacks. Businesses are prioritizing security solutions to protect sensitive data and infrastructure from potential breaches. In 2024, the managed security services segment is projected to hold over 39% of the market share, driven by the need for advanced identity management, application security, and threat detection & response. The BFSI sector, in particular, has been an early adopter of these services, leveraging managed security solutions to ensure regulatory compliance and safeguard financial assets.

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Advanced Technologies Driving Market Opportunities

The adoption of advanced technologies like artificial intelligence (AI), machine learning (ML), and big data analytics is creating lucrative opportunities for the managed services industry. These technologies improve operational efficiency, enhance data-driven decision-making, and automate repetitive tasks, allowing MSPs to offer more value-added services. Companies lacking the resources or expertise to manage these emerging technologies are increasingly turning to managed services providers, who can provide the necessary support and technology integration.

For example, Ericsson recently introduced AI-powered intent-based operations within its managed services portfolio, a move that will allow businesses to offer premium 5G services and improve customer experience through predictive analytics and automation.

Key Segments in the Managed Services Market

By Type: Managed Security Services Leading the Way

Among the various types of managed services, managed security services have emerged as the largest segment. These services are essential for businesses aiming to protect their systems from cyber threats and attacks. The growing complexity of cybersecurity, coupled with the need to comply with strict data protection regulations, has led to an increased demand for managed security services across multiple industries.

However, the managed IT infrastructure, information, and data center services segment is expected to record the highest CAGR during the forecast period, driven by businesses’ growing investments in digital technologies, such as SaaS and cloud solutions.

By Deployment Mode: Cloud-Based Services Leading in Popularity

Based on deployment mode, the market is segmented into cloud-based and on-premises managed services. The cloud-based managed services market is projected to dominate, reflecting the significant benefits it offers to businesses, such as automated updates, improved scalability, and enhanced cybersecurity. The adoption of cloud-based solutions is especially strong among small and medium-sized enterprises (SMEs), who seek cost-effective ways to enhance their technology infrastructure.

By Organization Size: Large Enterprises Are the Primary Market

In terms of organization size, large enterprises hold a substantial portion of the managed services market share due to their complex IT requirements and the need for specialized expertise to manage intricate IT infrastructures. However, the managed services market in SMEs is also expanding as these organizations recognize the advantages of outsourced IT management, especially in areas like security and infrastructure management.

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Geographic Insights: North America Leads but Asia-Pacific Shows High Growth Potential

In terms of geographic distribution, North America holds the largest share of the managed services market due to the high concentration of established managed services providers (MSPs) and the significant adoption of managed security services in the region. However, Asia-Pacific is expected to record the highest CAGR, driven by rising cyber threats, rapid economic development, and the increasing number of SMEs seeking managed services to optimize business operations.

The managed services market in India, for example, has witnessed significant growth, with local companies and global giants investing heavily in managed IT infrastructure and security services. With the rising threat of cyberattacks and a growing digital economy, the demand for managed services in India is projected to grow substantially.

Challenges Facing the Managed Services Market

Resistance to Third-Party Control

Despite the growing demand for managed services, some businesses are still hesitant to cede control of their IT functions to third-party providers. This reluctance is especially prevalent in sectors where data security and confidentiality are paramount, such as government and healthcare. Concerns over the potential loss of control and the risks associated with outsourcing critical operations remain key challenges for the industry.

Limited Adoption Among SMEs

While the managed services market has seen considerable growth, adoption rates among small and medium-sized enterprises (SMEs) are still relatively low. Many SMEs are hesitant to invest in managed services due to budget constraints or limited understanding of the benefits. Educating SMEs on how managed services can enhance operational efficiency, reduce costs, and provide access to advanced technologies will be crucial to increasing adoption in this segment.

Competitive Landscape and Noteworthy Developments

The global managed services industry is highly competitive, with key players such as Accenture, IBM Corporation, HCL Technologies, Cognizant, and Verizon dominating the market. These companies have focused on expanding their service portfolios and establishing partnerships to strengthen their position in the managed services market.

Recent collaborations reflect the industry’s dynamic nature. For instance, Hitachi Vantara and Cisco joined forces in January 2024 to develop a suite of hybrid cloud services aimed at addressing data management challenges in the modern enterprise. Similarly, DXC Technology and AT&T inked a deal to support AT&T’s IT infrastructure, demonstrating how partnerships can drive innovation and offer better solutions to clients.

Future Outlook of the Managed Services Market

As digital transformation accelerates, the managed services market is poised for continued growth. Organizations are becoming increasingly reliant on MSPs to support their IT operations, drive efficiency, and improve security. With advancements in AI, big data, and IoT, the managed services industry is evolving to meet the demands of a tech-savvy business environment.

The future of the managed services market is also likely to see a surge in the adoption of automation and cloud-based solutions, with a growing emphasis on security and compliance. By leveraging the capabilities of MSPs, businesses can enhance their competitive edge, optimize IT resources, and position themselves for success in a fast-evolving digital landscape.

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Managed Services Market Research Summary

Particulars Details
Number of Pages 300
Format PDF
Forecast Period 2024–2031
Base Year 2023
CAGR 9.4%
Market Size $576.7 Billion by 2031
Segments Covered By Type

  • Managed Security Services
    • Managed Firewall Services
    • Managed Identity & Access Management Services
    • Managed Security Gateway Services
    • Managed Endpoint Security Services
    • Managed Detection & Response Services
    • Managed Risk Services
    • Managed Antivirus/Antimalware Services
    • Other Managed Security Services
  • Managed IT Infrastructure, Information, and Data Center Services
    • Remote Monitoring & Management Services
    • Server Management Services
    • Storage Management Services
      • Data Analytics & Business Intelligence Services
      • Data Warehousing Services
      • Data Governance & Compliance Services
    • Managed Cloud Services
    • Business Process Management Services
    • Other Managed IT Infrastructure, Information, and Data Center Services
  • Managed Network Services
    • Managed WAN Services
    • Managed LAN Services
    • Managed Wi-Fi Services
    • Managed VPN Services
    • Managed Network Monitoring Services
    • Other Managed Network Services
  • Managed Mobility Services
    • Device Life Cycle Management Services
    • Application Management Services
  • Managed Communication & Collaboration Services
    • Managed Unified Communication Services
    • Managed VoIP Services
    • Other Managed Communication & Collaboration Services

By Deployment Mode

  • Cloud-based Managed Services
  • On-premises Managed Services

By Organization Size

  • Large Enterprises
  • Small & Medium-sized Enterprises (SMEs)

By End-use Industry

  • BFSI
  • IT & Telecom
  • Government & Public Sector
  • Healthcare
  • Media & Entertainment
  • E-commerce & Retail
  • Manufacturing
  • Educational Institutes
  • Other End-use Industries
Countries Covered North America (U.S. and Canada), Europe (U.K., Germany, France, Italy, Spain, Sweden, Belgium, and Rest of Europe), Asia-Pacific (China, Japan, India, South Korea, Singapore, Taiwan, Indonesia, and Rest of Asia-Pacific), Latin America (Mexico, Brazil, and Rest of Latin America), and the Middle East & Africa (UAE, Israel, and Rest of Middle East & Africa)
Key Companies Profiled Accenture (Ireland), Tata Consultancy Services Limited (India), HCL Technologies (India), Cognizant (U.S.), IBM Corporation (U.S.), Fujitsu Limited (Japan), Kyndryl Holdings, Inc. (U.S.), Verizon Communications Inc. (U.S.), Google LLC (U.S.), Hughes Network Systems, LLC (U.S.), AT&T Inc. (U.S.), Microsoft Corporation (U.S), Cloudflare, Inc. (U.S.), Wipro Limited (India), HP Inc. (U.S.), SecureWorks Corp. (U.S.), Hitachi Vantara LLC (U.S.), Cisco Systems, Inc. (U.S.), DXC Technology Company (U.S.), and Infosys Limited (India)

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