Managed Services Market Growth & Trends
The global managed services market size is expected to reach USD 552.35 billion by 2028, according to a new study conducted by Grand View Research, Inc. It is projected to expand at a CAGR of 12.7% from 2021 to 2028. The growing reliance of organizations on IT infrastructure for driving the productivity of their business is anticipated to drive the growth of the market over the forecast period. Benefits associated with the implementation of managed services, such as considerable reduction in IT operational costs, and improvement in organizational efficiency, also bode well for the growth.
Several businesses are confronting challenges in the wake of the outbreak of the COVID-19 pandemic and Managed Services Providers (MSPs) are no exception to that. Although many businesses and organizations are opting for managed services for ensuring operational efficiency amid the lockdowns being implemented across various nations as part of the efforts to arrest the spread of coronavirus, organizational spending on new automation initiatives has been slowing down gradually. As a result, market players are expected to witness a significant decline in their revenues in 2020, thereby pressurizing them to reduce costs. Nevertheless, the spending on business automation is expected to increase from 2021 onwards, thereby driving the growth of the market over the forecast period.
The rising number of Small and Medium Enterprises (SMEs) in emerging economies is anticipated to propel the demand for managed services over the forecast period. Strengthening profit margins, which are catering efficiently to the needs of dynamic business environments, and improvements in operational efficiency are also expected to contribute to the growth of the market. Managed services help in optimizing the recurrent in-house IT costs while simultaneously automating business processes. This subsequently allows organizations to effectively achieve their business objectives, especially about strengthening the bottom line and increasing profitability.
Initiatives being pursued aggressively by various governments toward digital transformation focusing on modernizing their IT infrastructure, strengthening governance, and improving citizen services are anticipated to drive the demand for managed services over the forecast period. For instance, in 2018, the Canadian government invested USD 2.1 billion on a 6-year digital transformation program. The program envisages modernizing the government’s IT infrastructure and services.
Managed Services Market Report Highlights
- The managed security segment is expected to register the highest CAGR over the forecast period owing to the stringent government regulations regarding data security and privacy protection and the increasing incidences of cyber-attacks on businesses
- The business support systems segment is anticipated to register the highest CAGR from 2021 to 2028. The increasing adoption of business support systems, such as business analysis, database integration, demand management services, and project management, by the incumbents of various end-use industries is anticipated to propel the growth of the segment over the forecast period
- The on-premise segment dominated the market in 2020. On-premise hosting of software ensures easy customization according to the needs of the business processes. On-premise installation is particularly lucrative for large enterprises
- The Small & Medium Enterprises (SME) segment is anticipated to register a significant CAGR over the forecast period. SMEs are aggressively opting for managed services owing to the numerous advantages, such as controlled IT costs, increased efficiency and competitiveness, and reduced risk, associated with them
- Healthcare is anticipated to emerge as the fastest-growing segment over the forecast period. The healthcare industry has been turning out to be a primary target of cybercriminals, thereby driving the need to effectively protect the patient database. Several healthcare organizations are opting for managed services to protect patient data and secure monetary transactions, thereby contributing to the growth of the segment
- North America accounted for the largest market share in terms of revenue in 2020. The rising number of Multinational Companies (MNCs) in North America bodes well for the growth of the regional market