Analysts project that the global managed services market will reach $519.6 billion by 2031. This is based on a compound annual growth rate of 7.9 percent and is according to a report published by the market research firm SkyQuest Technology.
As of the end of 2023, analysts estimate that the managed services market is $262 billion in size. On-premises IT environments account for 64 percent of that revenue.
It’s not clear at what point the cloud might account for the lion’s share of managed services, but it’s apparent that even as the number of applications deployed in the cloud continues to grow, a significant portion of the market will still be driven by applications running in on-premises IT environments. Data has gravity, and moving it from one environment to another is still fraught with challenges. As such, it’s not likely that on-premises IT environments will go away any time soon.
In fact, with the rise of edge computing, the number of applications deployed outside of a traditional cloud computing environment is likely to increase.
Complexity leads to more reliance on MSPs
None of these IT environments are, of course, as isolated as before. The truth is that IT is evolving into a set of federated services. For example, cloud management might handle edge computing environments, and distributed application workloads might run both in the cloud and in on-premises data centers.
Modern applications must process and analyze data in near real-time at the point where they create and consume it. In many cases, data will also be processed and analyzed in transit using a messaging platform such as Kafka instead of relying on batch-oriented processing techniques to update applications once or twice a day.
The more complex IT environments become, the more likely organizations will rely on managed service providers (MSPs) to build, deploy, and secure their increasingly distributed applications.
Access and expertise lower the cost of service delivery
The truth is the term cloud computing may one day soon be an anachronism. Each IT environment is essentially becoming an instance or extension of a cloud computing environment, especially as more organizations consume IT infrastructure provided as a service from, for example, Dell, HPE, or Lenovo in local or remote data centers. If everything is a cloud, the need to distinguish where that cloud is physically located becomes less pertinent.
Many MSPs are already managing for customers a mix of classes of workloads. The more centralized the management of those workloads becomes, the lower the total cost of delivering those services. Today, each IT stack deployed tends to have its own control plane. Over time, MSPs will increasingly use frameworks that allow them to centrally manage workloads at a lower cost, regardless of the platform. One of the advantages that an MSP has over an internal IT team is they typically have more access to the resources and expertise needed to achieve that goal.
Regardless of the application architectures employed, MSPs will clearly continue to play a pivotal role in managing IT.
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