manages services

Managed Services Market to reach $354.8 billion by 2026 as demand for core IT skills surges

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The managed services market is set to experience significant growth at a compound annual growth rate of 7.9%, with the market size expected to reach USD 354.8 billion by 2026, up from USD 242.9 billion in 2021, reports MarketsAndMarkets. 

This growth is being driven by businesses of all sizes and industries investing heavily in their IT infrastructure to remain competitive and achieve operational excellence. In response to the adoption of increasingly complex technologies, many businesses are turning to managed service providers to manage their IT infrastructure, allowing them to deliver services more efficiently while also maintaining a focus on core competencies. There is also a growing importance of information security as businesses continue to redefine their strategies to accommodate the changes brought about by new technologies. 

Demand for managed services is growing 

Several key players in the managed services market, including IBM, Fujitsu, Accenture, Atos, Cisco, DXC, and TCS, are set to benefit from a growing demand for their services.  

70% of businesses look to managed services to fill IT skills gaps 

The shortage of skilled IT professionals is expected to drive the growth of the managed services market.  

  • Many organizations are finding that their current IT staff lacks the necessary skills to keep up with new technological trends.  
  • Hiring skilled professionals for SMEs and small businesses in their growing stage may not be feasible due to budget constraints.  
  • Additionally, a lack of skilled IT security services has made organizations vulnerable to cyber-attacks, leading to potential damage to their brand equity.  

Managed services can help fill this gap by providing expertise to organizations, allowing them to focus on their core business activities.  

As these technologies are complex, IT experts are required to deliver the maximum output. However, enterprises are finding it difficult to find such talents and are turning to MSPs for support. According to a survey, 60% of enterprises are experiencing more acute IT challenges, while around 90% of IT enterprises report that their cloud skills gaps have nearly doubled in the past three years. As a result, nearly 70% of enterprises are reaching out to MSPs to fill cloud IT skill gaps. 

Managed service providers minimize costs and risks 

Organizations seek third-party experts to provide managed services that are cost-effective and reduce risks. Managed services help to control and minimize costs and risks, with MSPs providing solutions that mitigate risks for organizations through their team of experts.  

  • The dynamic nature of work requires ongoing identification and addressing of various risks, which can boost the managed services market.  
  • Enterprises facing low IT budgets and adopting the Operation Expenditure (OPEX) model face tremendous pressure.  
  • IT downtime severely impacts enterprise revenue. 

To address these challenges and reap these benefits, enterprises leverage managed IT services.  

A study revealed that unplanned downtime costs enterprises USD 58,000 for every 100 users, with server and network downtime causing the average employee to lose 12.4 and 6.2 hours per year, respectively. However, managed IT infrastructure services can reduce server and network downtime by over 85%. 

APAC region to lead managed services adoption 

APAC is projected to exhibit the highest Compound Annual Growth Rate (CAGR) during the forecast period, as per MarketsAndMarkets. In terms of managed services adoption, APAC is considered one of the fastest-growing regions. With the increasing demand for advanced technologies such as cloud, artificial intelligence (AI), machine learning (ML), and the Internet of Things (IoT) to address technology and business challenges, APAC enterprises are aggressively adopting managed services to enhance their productivity.  

The highly competitive market conditions have further fueled the growth of the managed services market in the region. Major contributors to the market in APAC include Australia, India, Japan, New Zealand, and China.  

Although the business models and technologies of managed service providers are now mature in the US, Australia, and across Europe, there is still enormous potential for growth in the APAC region. 

Read the full report here. 

Source: MarketsAndMarkets 

Read next: Cloud, side hustles and AI making SMBs optimistic for growth– DigitalOcean report

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