The market for managed services is set to grow at an impressive CAGR of 10% by 2020, which reflects the trend among major organizations of outsourcing managed services to third-party vendors. A managed service provider (MSP) offers network, application, system, and e-management services, typically on a pricing model selected by the customer / organization. Hiring vendors to take care of managed services helps organizations set a predictive cost model for their IT infrastructure, control capital expenses, and gain access to expert knowledge.
This brings us to the fundamental question: what is driving the global managed services market? To begin with, many organizations, especially small ones, lack the proper in-house resources needed to manage their IT infrastructure. Managed services providers, on the other hand, have access to both skilled labor and the latest technology through which they can provide highly customized services for their clients. Service providers are scaling up their technology offerings in order to meet the growing demand for enhanced performance from end-users. They achieve this by widening their resource pool and launching several innovative products that allow for more seamless organization management.
Likewise, there has been a growing trend among several organizations of routing their capital and other capabilities towards their ‘core’ service areas. It is in this context that MSPs have emerged as a key requirement. As providers of managed services improve automation capabilities, analytics, and calibration of the IT infrastructure, end-users can easily shift their focus towards enhancing performance and improving productivity.
Adoption of big data services and cloud infrastructure is another major driver of the managed services market. There are several reputed MSPs who provide services for platforms like Hadoop by monitoring and optimizing Hadoop storage grids for their customers. They enable end-users to accurately predict product demand, create better products, and provide enhanced experiences for their customers. Additionally, by taking care of both managed and unmanaged cloud infrastructure, MSPs like Rackspace not only reduce the capital expenditure of enterprises, but also enable greater flexibility and scalability.
The global managed service market is also growing as a result of aging IT infrastructure, obsolescence of software, and the emergence of new threats in the form of spyware and malware. These factors drive companies to seek innovative solutions that don’t require major investment or the creation of a brand new workforce.
In 2015, the Americas held the largest share of the global managed services market at 50%, followed by Europe and APAC, respectively. The growing demand for MSPs has resulted in increased investments in merger and acquisition processes (M&A), leading to consolidation of the market.
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