The already-huge managed services segment will continue to grow at double-digit rates over the next four years as business demand increases for reliable IT and telecommunications alternatives to fixed costs, according to Insight Research.
The Insight report, released last week, pegs the 2013 global managed services market at $152bn (£98.9bn). In the US, businesses ranging from enterprise to SMB will spend $34bn on managed IT and telephony services.
Over the next four years, managed services spending will increase 11.6 per cent annually. In the US, the market will balloon to $51bn.
"A large percentage of business activity now depends on the internet for everything from e-commerce to intranet applications to customer service. These data applications are driving exponential traffic growth onto corporate networks, while increasing their complexity," according to Fran Caulfield, research director for Insight Research.
"Managed services allow corporations to handle this growth, while outsourcing the most complicated elements to the skilled service provider."
The Insight study covers everything from basic voice-and-data transport services to managed networks and endpoints to security services - essentially the full spectrum of managed services offerings.
Noteworthy is the growth of managed services among services providers - the traditional providers of either transport or hosted services.
As cloud computing matures, more services providers are offering more than just end-to-end connectivity and virtual services, but managed services over the assets, applications and services.
Insight believes this expansion of the services provider portfolio will contribute greatly to the managed services market expansion.
Managed services has transformed the channel over the last decade, providing value-added resellers and integrators built on one-time product sales and term professional services contracts with a persistent and predictable revenue stream.
It has also helped IT providers scale their capacity, as managed services replaces the traditional on-site support paradigm with a one-to-many automated administration and support model.
The 2112 Group's recent channel profitability report found managed services are the most lucrative offering of the major channel business models.
Managed services, according to 2112, generates between 40 and 60 per cent gross profits for providers. By comparison, hardware margins are under 10 per cent and software sales are under 20 per cent and falling.
The evolution of services to include service and cloud providers is also transforming the managed services landscape. Vendors are increasingly looking at all services providers - regardless of their level and capacity - as potential managed services providers, as they see the need for more than just service delivery.
Services need support and automated support is more lucrative and less expensive.
While Insight's managed services report is optimistic, there is a chance that the estimate is actually low. As more cloud services fold into the managed services category, and more vendors and third-party providers automate applications, infrastructure and back office delivery, the managed services market could swell even higher by the end of the decade.
The report is good news for resellers and managed services providers who offer automated and managed systems. However, the continued expansion of this market will likely put pressure on the already battered hardware and software resale market.
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