Cloud Managed Services Market Size, Share & COVID-19 Impact Analysis, By Service Type (Managed Business Services, Managed Network Services, Managed Infrastructure Services, Managed Security Services, Managed Mobility Services, and Managed Communication and Collaboration Services), By Deployment (Public Cloud, Private Cloud), By Enterprise Size (SMEs, Large Enterprises), By Vertical and Regional Forecast, 2020-2027

The global cloud managed services market size was valued at USD 46.50 billion in 2019 and exhibiting a CAGR of 13.8% during the forecast period. The market is projected to reach USD 129.26 billion by 2027 and further expand to USD 216.78 billion by 2031. North America dominated the cloud managed services market with a market share of 35.03% in 2019.

Cloud managed services is a practice of outsourcing IT resources and management deployed on the cloud. Growing demand among companies to slash operating and infrastructural costs to manage business processes is one of the major factors driving the growth of the market. 

The externalization of cloud resources to third parties increases organizational competitiveness, allowing companies to concentrate on their core competencies. The expanding Big Data field has generated a massive demand for managed cloud computing and analytical services.

Key players in the cloud managed services market are adopting several business strategies R&D activities, partnerships, and collaborations to expand business horizons. For instance, in February 2020, NTT DATA Services partnered with Amazon Web Services, Inc. (AWS) to deliver new services, solutions, and products designed to accelerate cloud adoption globally.

Demand for Cloud Managed Services & Remote Technologies to Surge amid the COVID-19 Pandemic

As the new SARS-CoV-2 virus impacts age groups differently, this pandemic is having diverse implications across multiple sectors of the technology industry. Companies that provide technological solutions for highly-affected verticals such as travel, retail, entertainment, and hospitality experience significantly adverse consequences, while companies that provide remote-working solutions are seeing the exact reverse effects.

With the emergence of the COVID-19 pandemic, the adoption of communication and collaboration tools has increased to support remote working. As cost reduction has become a priority for many companies, including SMEs, acceptance of advanced technologies has grown exponentially to meet the constantly evolving technology needs such as cloud security, risk and compliance, and others.  This growth in the technology load has allowed managed cloud service providers to expand their portfolio and meet the ever-increasing consumer demand and support remote working needs. As a result, the pandemic is expected to favor this market growth.

LATEST TRENDS

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Adoption of Cloud Delivery Model to Spike among Businesses to Open New Opportunities

Service providers are rapidly developing advanced applications to incorporate or orchestrate their clients' use of various cloud resources. This applies not only to cloud migration but also to the development of cloud-native applications. Leading network service providers build cloud systems that combine various cloud services in order that automate deployment and seamless operations, even as these platform elements differ depending on the approach of each vendor. 

The advantages of the network include improved coordination and the processing of metadata for the application of these systems through the standardization of various cloud providers. This meta-data can be used to track cloud service usage and to prepare for future changes.

Organizations have been using hybrid cloud technologies to make the cloud infrastructure accessible and flexible without needing to move directly to the cloud or multiple clouds, either public or private since one cloud vendor will not be able to provide the functionality. Thus, with the increasing adoption of digital network channels, hybrid cloud platforms are opening new investment opportunities for managed cloud service providers.

DRIVING FACTORS

Customer Acceptance of Cloud Approach to Smoothen IT Operations & Boost the Demand for Cloud Managed Services

As enterprises are formulating plans to fulfill their IT and network needs, managed cloud services will be at the forefront among all technologies. Organizations are running their IT applications on cloud servers including accounting, finance, customer relationship management, and other applications. The rapid adoption of cloud solutions to deploy and manage business operations is changing the state of cloud adoption globally. 

For instance, Betabrand, a clothing company headquartered in the US, migrated its operations to Google Cloud infrastructure Kubernetes in anticipation of Black Friday in 2017. With this migration, the company was able to manage peak loads with no issues. Thus, with businesses moving towards cloud infrastructure, the adoption of cloud-managed services is expected to witness a huge surge in demand.

Leading suppliers recognize that the cloud distribution model is more than just cost-reduction and have built end-to-end service portfolios that are meeting the business needs and providing greater customer value. With the common goal of ensuring technology up-gradation with cloud technology, the cloud can be a valuable model for companies to manage business functionalities efficiently.

In response to the accelerated demands to integrate new technologies and to optimize application performance and costs, companies are becoming increasingly dependent on cloud-based management services to manage their business. Thus, with the increasing adoption of cloud solutions among businesses, the need for these services is heightened.

Burgeoning Need for Handling Critical IT Systems & Business Applications to Boost the Market

While companies and financial firms wade through the unpredictable economic and regulatory landscape of today, the pressure has been greater on the risk and compliance model. The adoption of managed services is increasing with companies seeking to improve their organization, operation, and security by providing more strategic responses.

Cloud managed services are advantageous for companies since they enable businesses to eliminate complex system integration services and help to establish a well-developed solution to ensure cloud scalability and economics. Maintaining full time IT staff to manage cloud services is very expensive and not feasible for most small- and medium-sized businesses. Thus, outsourcing these services allows businesses to control and reduce network maintenance costs without compromising on security or productivity.

In addition to this, cloud services provide several advantages over traditional services such as centralized applications and network services, build storage and backup, and manage all network management layers. Thus, the adoption of cloud managed type of services is growing and companies are finding it possible to drive business success.  

RESTRAINING FACTORS

Lack of Integrated Workforce Management and Data Management Limitations to Hamper Market Growth

The lack of IT and cybersecurity practitioners is a leading factor limiting the growth of this market. This shortcoming will prohibit organizations from fulfilling their IT security needs. The lack of IT and cybersecurity professionals in a company can open hackers and malware to enter the IT ecosystem resulting in the loss of valuable data and resources. 

For instance, in September 2019, AutoClerk Inc., a major property management solution provider, witnessed a security breach in its Elasticsearch database, leading to a massive loss of 179 GB of data including travel arrangements of thousands of members of the US government and the Department of Homeland Security (DHS). Thus, efficient cybersecurity practices are required for the implementation of managed cloud services.

In addition to this, the high cost associated with these services along with the data privacy and security concerns is one of the crucial factors hampering the market growth.

SEGMENTATION

By Service Type Analysis

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Managed Security Services Segment to Register a High CAGR

Based on service type, the cloud managed services market is segmented into managed business services, managed network services, managed infrastructure services, managed security services, managed mobility services, and managed communication and collaboration services.

The managed network services segment held the largest market share in 2019. The growth of this segment is mainly attributed to the increasing adoption of cloud managed services among businesses to manage network-related services and management and administration of the networks themselves. Cloud-based network managed services provide companies with a comprehensive platform to create and manage remote data networks including WAN/LAN/WLAN. Additionally, the adoption of these services has grown exponentially in recent years owing to the wide range of applications they provide such as the implementation of high-quality network solutions, IT networks management and monitoring services, equipment maintenance and ICT systems maintenance services, and others.

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The managed security services segment is expected to grow at a significant CAGR during the forecast period. The growth of this segment is mainly owing to the increasing adoption of security services among businesses. Managed security service providers (MSSPs) provide a variety of services such as security management, incident response, and others. Thus, the adoption of these services is expected to grow during the forecast period.

By Deployment Analysis

Private Cloud Segment Dominated the Market in 2019

Based on deployment, the market is segmented into workload security, network security, platform security, application security, end-point security, and others.

Deployment of cloud managed services on private cloud held the largest market share in 2019. The private cloud gives businesses many advantages, including enhanced control and enhanced data security. This model also gives businesses other advantages such as cost savings and stability. A private cloud can help an organization to customize its resources to meet specific IT requirements. These systems are primarily used by governments, banks, and other mid- to large-size entities with business-critical activities that aim to improve operational protection.

The public cloud segment is expected to grow at the highest CAGR during the forecast period. The growing adoption of the public cloud is mainly owing to the efficient computing resources and virtualization capabilities it provides.

By Enterprise Size Analysis

Large Enterprises to Witness Widespread Adoption of Cloud Managed Services

Based on enterprise size, the cloud managed services market is divided into large enterprises and small and medium enterprises (SMEs).

The large enterprise segment is estimated to hold the largest share during the forecast period. Cloud-managed services assist large companies in reducing IT costs. The pay-as-you-go model is used to deliver these facilities. These services also enable large companies to achieve efficiency goals by managing operational tasks and data needs. They also improve service capability in terms of versatility, connectivity, and integrity.

The SME segment is anticipated to grow at the highest CAGR during the forecast period. The increasing need for operating costs to be minimized and business processes to be streamlined will help accelerate SMEs' adoption of these services.

By Vertical Analysis

IT and Telecommunications Industry to Rapidly Adopt Cloud-based Services

Based on Vertical, the market is divided into Banking, Financial Services, and Insurance (BFSI), IT and Telecommunications, Government and Public Sector, Healthcare and Life Sciences, Retail and Consumer Goods, Manufacturing, and Others.

IT and telecom companies are rapidly adopting cloud managed services to better maintain their services across a variety of applications. Cloud migration will minimize internal computing needs and decrease surplus expenses. Additionally, IT and telecom companies are early adopters of efficient technologies such as Bring Your Own Device (BYOD), Machine Learning, and others that have further contributed to the market growth.

Evolving infrastructure is boosting the demand for cloud-based services in the healthcare sector. Due to research activities and healthcare activities in the recent past, large amounts of data were generated. The administration of these data necessitated the adoption of cloud expertise, and therefore healthcare providers are adopting cloud-managed services. Cloud-based platforms help organizations concentrate on their key operations.

REGIONAL INSIGHTS

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North America is expected to dominate the cloud managed services market share during the forecast period. Growing customer demand is a significant factor that is driving the adoption of managed cloud services in the region owing to the growth and profitability they provide.  End-user verticals in the region are adopting cloud services as an IT delivery model for managing costs and addressing the shortage of skilled IT professionals to manage business operations.

The US Army, Air Force, and the United States Department of Justice (DOJ), and other government agencies have been early adopters of the cloud technology in the region, setting new trends for other firms and institutions to follow. Released in January 2018, the Federal Risk and Authorization Management Program (FedRAMP) delivers a government-wide approach to authorization, continuous monitoring, and risk assessment of cloud services deployed in the region. This has provided a flourishing marketplace for service providers to provide cost-effective and mission-centric cloud services in a consistent and secure manner.  

In the different countries in Europe, spending on information technology and cloud computing are geared towards digitalization. The use of a hybrid cloud is important for moving industries towards digitalization. Cloud infrastructure is constantly used to create and execute new, innovative projects, and approaches. Key players in the region are heavily investing in research and development activities to equip businesses with multichannel cloud strategies and meet the constantly evolving digital environment. For instance, in October 2019, NTT Limited, a leading technology service provider, launched a new cloud platform in Paris. With this technical advancement, SMEs in France and other regions will gain an advantage while adopting a hybrid and multichannel cloud strategy. Moreover, government initiatives such as the G-Cloud framework are enabling governments and firms in the region to utilize these services efficiently.

Due to the adoption of cloud management services by small- and medium-sized businesses, Asia Pacific is projected to be the most disruptive region during the forecasted period. Increasing investments by prominent players present in the region such as IBM and Google are bolstering the growth of cloud- managed services. Regional governments making substantial investments to manage cloud infrastructure have further bolstered market growth. For example, in October 2018, the Singaporean government stated that most of the government IT infrastructure will be migrated to commercial cloud services in the next few years to deliver services in more cost-effective ways.

The cloud managed services market in the Middle East & Africa and Latin America is expected to grow at a considerable rate during the forecast period. Organizations in the region are adopting new technologies with an aim to expand their operations, improve customer experience, and enhance productivity. Additionally, businesses in Turkey, Dubai, South Africa, and other countries are expected to make significant investments to smoothen their IT operations. Thus, the regional market is expected to grow steadily during the forecast period.

KEY INDUSTRY PLAYERS

Key Market Players to Enhance Offerings and Adopt Partnership Strategies to Business Security Needs          

Market-leading players such as Cisco Systems Inc., Telefonaktiebolaget LM Ericsson, IBM Corporation, Amazon Web Services, Inc., and others are launching innovative offerings owing to the promising developments in advanced technologies. On the other hand, the other players are entering into strategic partnerships with other competitors to strengthen their market position and achieve strong brand advertising. 

For instance, July 2020 – Lightstream, one of the leading companies in cloud security, partnered with CloudCheckr Inc. to launch the Lightstream CMS to enable companies to manage cloud infrastructure easily. This newly-launched solution provides a comprehensive suite of security and technical services that help companies to build secure cloud environments.

LIST OF KEY COMPANIES PROFILED:

• Accenture PLC (Dublin, Ireland)


• Alcatel-Lucent S.A. (Boulogne-Billancourt, France)


• Amazon Web Services, Inc. (Washington, United States)


• Atos (Bezons, France)


• Augmentt Technology Inc. (Ontario, Canada)


• Bespin Global (Seoul, South Korea)


• Capgemini SE (Paris, France)


• Cisco Systems Inc. (California, United States)


• Cloudticity, LLC (Washington, United States)


• Cognizant Technology Solutions Corporation (New Jersey, United States)


• Datacom Group Ltd (Jakarta, Indonesia)


• Deloitte Touche Tohmatsu Limited (London, United Kingdom)


• DLT Solutions (Virginia, United States)


• DXC Technology Company (Virginia, United States)


• Fujitsu Ltd. (Tokyo, Japan)


• Google LLC (California, United States)


• HCL Technologies Limited (Noida, India)


• Hewlett Packard Enterprise Development LP (California, United States)


• Huawei Technologies Co., Ltd. (Shenzhen, China)


• IBM Corporation (New York, United States)


• Infosys Limited (Bengaluru, India)


• Logicworks (New York, United States)


• Lumen Technologies, Inc. (CenturyLink) (Louisiana, United States)


• NEC Corporation (Tokyo, Japan)


• Nordcloud Oy (Helsinki, Finland)


• NTT DATA Corporation (Tokyo, Japan)


• Progressive Infotech Pvt. Ltd. (Noida, India)


• Rackspace US, Inc. (Texas, United States)


• Smartronix, LLC (Maryland, United States)


• Taos Mountain LLC (California, United States)


• Telefonaktiebolaget LM Ericsson (Stockholm, Sweden)


• Wipro Limited (Bengaluru, India)

KEY INDUSTRY DEVELOPMENTS:

• September 2022: CloudWave, a prominent independent cloud and managed services software hosting company in the healthcare industry, made a significant announcement. They introduced OpSus Cloud Services, a new offering, in collaboration with seven additional healthcare organizations, elevating their total partnerships to over 250. This strategic move resulted in CloudWave achieving its most successful quarter to date, with the new hospitals adopting OpSus Cloud Services at the core of this achievement.


• June 2022: Eclit made a strategic decision to leverage the HPE GreenLake edge-to-cloud platform as the foundation for launching an expansive cloud portfolio. This strategic move was part of their broader strategy to expand their managed IT services and infrastructure-as-a-service offerings. As stated by Hewlett-Packard Enterprise, this initiative empowers customers to seamlessly implement customized solutions with an agile, scalable, and pay-per-use cloud experience across a wide spectrum of workloads, thanks to the extensive services portfolio at their disposal.

REPORT COVERAGE

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The cloud managed services market report offers qualitative and quantitative insights on the product and a detailed analysis of market size & growth rate for all possible segments in the market.  Along with this, the report provides an elaborative analysis of market dynamics, emerging trends, and competitive landscape.

Key insights provided in the report are the adoption trends of smart helmet solutions by individual segments, recent industry developments such as mergers & acquisitions, consolidated SWOT analysis of key players, partnerships, Porter’s five forces analysis, and business strategies of leading market players, key industry trends, macro, and micro-economic indicators.