Managed IT Service Companies

Managed IT service companies have been bringing together disparate IT infrastructures, making them work seamlessly across heterogeneous platforms and applications for a long time. The primary focus of a managed services provider is to manage the computing environment, help reduce costs and provide security. As a result, they often take over the responsibility of daily administration of the data center from internal IT departments.

TMCnet’s 2020 MSP 501© survey reports that the market for managed IT service providers is mature, competitive, and global. The role of the IT manager has changed from just supporting infrastructure to ensuring business agility through a robust computing environment. But reduced budgets and a lack of in-house knowledge pose problems for many companies, necessitating the services of a third party.

According to TMCnet, in 2020, managed service providers experienced revenue growth in all regions, with Asia/Pacific leading the way at 22%. While Europe and North America reported a 7% increase, Latin America grew by 6%, and Middle East/Africa increased by 4%.

A recent Enterprise Strategy Group 2019 MSP Survey found that many companies are looking for new ways to reduce costs while increasing revenue. With the need for 24/7 availability, cost containment, and better IT service delivery, managed service providers offer a complete solution for the challenges of today’s business environment.

Over 50% of surveyed groups were dissatisfied with their level of supplier satisfaction in terms of support, planning, and investment. Therefore, CIOs should look for a proven track record of providing reliable services at an affordable price when choosing a managed service provider.

More than 40% of respondents said they were unhappy with the lack of clarity in pricing models offered by MSP partners, which created confusion about costs. For example, one company providing on-premise support emphasizing remote monitoring was more expensive than another that provided cloud-based services.

If IT managers find that their core business is not related to technology, they should consider outsourcing instead of hiring extra staff. It can be difficult for small companies to justify new hires to maintain infrastructure or applications when there is a dependency on third parties for other business functions.

TMCnet predicts that global IT service provider revenues will exceed $205 billion in 2022, representing a compound annual growth rate of 8% from 2015 to 2022. This translates into about an 80% market share compared to the early 2010s when there were many smaller players. In addition, managed service providers are mostly regional or local companies rather than global enterprises.

The managed services market is fragmented, with many small businesses offering niche capabilities. However, as competition increases and prices become more uniform, large companies that can provide end-to-end services will take over the major share of the market. For example, TMCnet mentions Dell Inc (NYSE: VMW) and Cisco Systems Inc (NASDAQ: CSCO) as two suppliers integrating hardware, software, and services.

Skylight Inc forecast that the North American market for managed IT services could hit $37 billion in 2021. More than half of enterprise IT budgets will be outsourced to third parties by 2022. This figure is up from the 34% of IT budgets spent on outsourced services in 2017.