The overall size of the global managed services market will be somewhere between $468.7 and $520.54 billion by 2032, depending on which market forecast you prefer. This represents a roughly 8 percent compounded annual growth rate (CAGR).
While both Research and Markets and Business Research Insights agree on the percentage growth rate, they start from very different assessments of the current size of the market. The former values that managed services market at $258.24 billion in 2023, while the latter values the market for that year at $219.1 billion.
Competing and thriving in a crowded market
There are a few large players, but the bulk of the market is still made up mainly of smaller providers. If they hope to keep pace with rivals, each will need to increase revenues by roughly 8 percent or more each year for the next eight years. Fortunately, the number of organizations consuming more managed services should steadily increase. Still, any managed service provider (MSP) looking to increase revenues by 8 percent or more each year will either need to take market share away from rivals or grow inorganically by acquisition.
Acquisitions cost a lot, and companies cannot guarantee that customers will stay after completing the deal. Many MSPs have found that efforts to rationalize headcount after a merger often lead to former employees joining rival companies. In some cases, these former employees even start new companies that attempt to poach customers by any means necessary.
Most leaders of MSPs would prefer to drive as much organic growth as possible. Ideally, that growth will come in areas where the MSP already competes, but more often, the MSP will find it needs to add additional services in adjacent areas to fuel that growth. Either way, companies must make additional investments to remain competitive.
Navigating MSP growth pressures
An 8 percent growth rate would be welcome, but failing to achieve it doesn’t mean the MSP is at risk of failing. MSP management teams with investors will face much more pressure to drive growth, or they risk replacement by an executive team promising not just increased revenues but also higher profit margins. All things considered, leading an MSP is clearly not for the faint of heart.
No one knows what percentage of MSPs might be able to maintain consistent levels of growth in the years ahead. There will always be unforeseen so-called Black Swan events that impact demand for IT services. With the rise of artificial intelligence (AI), many IT services will increasingly be automated. This automation may eliminate the need for some functions altogether. Investors in MSPs must remember they are betting on future outcomes that no leadership can guarantee.
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