Managed Services Market Landscape

Part
01
of four
Part
01

IT Managed Services in the US - Market Size

The U.S. market size for IT Managed Services was $62 billion in 2017. As of 2015, North America held the largest market share of the global IT Managed Services market. The U.S. market is projected to grow to $94.5 billion by 2021, at a CAGR of 11.1%. Much of this growth is expected to come from Security Services, network management within the Internet of Things, and Cloud Managed Services.

Segments of IT Managed Services Market

There are three sub-segments of IT Managed Services:
• Infrastructure Services
• Network Services
• Security Services and other services.
Of the total U.S. market size for IT Managed Services in 2017, the Security Services and other services segment constituted 12.3% of the U.S. market in 2017, or $7.6 billion. Security Services is expected to grow faster than all other segments over the next five years because of rising cyber attacks and increasing demand for threat protection services to deal with them.

For the other segments, Infrastructure Services and Network Services, the U.S. market size in 2017 was $54.4 billion. We searched for market reports, articles, and any news on the other two segments, Infrastructure Services and Network Services, but specific data was unavailable. Therefore, we calculated the remaining market size for Infrastructure Services and Network Services by subtracting the Security Services segment from the total, to get $54.4 billion:
100% - 12.3% = 87.7%
87.7% * $62 billion = $54.4 billion.

Projected Growth of the IT Managed Services Market

In 2015, North America held the largest market share of IT Managed Services in the world. The North America market is home to tech giants such as Google, IBM, Cisco, and Verizon, and this influence is predicted to drive significant growth in the IT Managed Services market. Federal government initiatives are also leading to increased demand for IT cloud managed services.
As mentioned previously, the IT Managed Services market is projected to grow at a CAGR of 11.1% by 2021. One of the largest services that is expected to grow within IT Managed Services is network management within the Internet of Things (IoT) market; this sub-segment is projected to grow at a CAGR of 24.35% from 2018 to 2022.
Another sub-segment of the IT Managed Service market is Cloud Managed Services, in which IT infrastructure is managed via the cloud. The U.S. market size for Cloud Managed Services was valued at $6.22 billion in 2015, and there was approximately a 10% growth rate to 2016, making the market size for U.S. Cloud Managed Services in 2016 an estimated $6.84 billion.

Conclusion

The total U.S. market size for IT Managed Services in 2017 was $62 billion, and it is projected to grow to $94.5 billion by 2021. The IT Managed Services Market is composed of three sub-segments: Infrastructure Services, Network Services, and Security Services and other services. In 2015, North America held the largest market share overall for the global IT Managed Services market, and its market is projected to continue growing thanks to increased demand for Security Services, network management for the IoT, and Cloud Managed Services.

Part
02
of four
Part
02

IT Managed Services in the US - Growth

The United States IT managed services market is projected to "grow from $62.0 billion in 2017 to $94.5 billion in 2021 at a CAGR of 11.1% for 2017-2021," with infrastructure services constituting the "largest segment of the managed IT services market at 47.1% of total sales, followed by network services and security services." No additional figures were published specifically representing the United States market, however I did find that the United States market had a negative .4% variance from the global market from 2017-2021. I also found that between 2014-2015 the global CAGR was 12.5%. I assumed that the variance held true for previous years, therefore I calculated 2014-2015, by using a negative 12.1% CAGR. Since no information was published for 2012 and 2013, I also used a negative 12.1% to give the most accurate estimate possible. Calculations were preformed using a CAGR calculator and a reverse CAGR calculator. Below you will find a deep dive of my findings.

CALCULATIONS

We can calculate the market size for 2017-2021 using a 11.1% CAGR for 2017-2021

2017 $62 billion
2018 $68.9 billion
2019 $76.5 billion
2020 $85 billion
2021 $94.5 billion

For 2016, the global CAGR was $149.1 billion in 2016 and $166.7 billion in 2017. By using a CAGR calculator we can determine this is an 11.8% CAGR. Since the global CAGR is estimated at 11.5% from 2017-2021 and the US CAGR is estimated at 11.1%, we can also assume a .4% variation in our calculations (11.5-11.1=.4) and estimate the reverse CAGR from 2017 to 2016 at 11.4% (Global 11.8- a variance of .4= 11.4%)

2016 - 54.9 billion

We can also calculate 2022 if we assume the CAGR to remain consistent at 11.1%

2022- $105 billion

The global CAGR was 12.5% from 2014-2016. If we assume the United States remained at a -.4% variance, we can use - 12.1% (12.5-.4) to calculate 2014 and 2015. Since there was no data published regarding 2012 and 2013, we can assume the CAGR remained consistent and use -12.1% for the remaining calculations.


2016- $54.9 billion
2015 -$49 billion
2014- $43.7 billion
2013- $39 billion
2012- $34.8 billion

CONCLUSION

To wrap things up, I have provided you with the historical and future growth of IT Managed Services in the US. I hope that you find this useful!
Part
03
of four
Part
03

IT Managed Services in the US - Spend on Offerings/Categories

The market value of IT managed services in the US in 2017 was $62 billion. The largest segment of managed IT services market was for infrastructure services at an estimated $29.90 billion in sales for the category alone, followed by network services and other managed IT services at $25.17 billion, and security services at $7.63 billion. While the largest revenue of services was for infrastructure services, it is estimated that security services will see the largest growth in the next five years.

Methodology

The IT managed services industry in the U.S. in 2017 had a market worth $62 billion. It is assumed that the 47.1% of total sales for infrastructure services rendered is for the U.S. only.

As per market research from BCC Research, the percentage of sales for security services within the U.S. market is estimated to be 12.3%.

With 47.1% and 12.3% for infrastructure and security services respectively, this leaves 40.6% for network services and other managed IT services.
100%- (47.1%-12.3%) = 40.6%

Given the estimated percentage of 40.6%, and the overall IT managed services to be valued in $62 billion, this leaves the managed network services and other managed IT services to be estimated at $25.17 billion.
($62billion)X(47.1%) = $29.20 billion.

The calculation for the managed infrastructure services therefore is
($62billion)*(47.1%) = $29.2 billion.

The calculation for the managed security services therefore is
($62 billion)*(12.3%) = $7.63 billion.

Overlap in IT services

While there are available market values for specific IT related services, a part of the discrepancy in being able to identify different categories or segments of services is the overlap in services provided by the same company. Most companies offer a variety of services and are hired to do a number of IT-related management services, and may not necessarily project the cost for these services separately.

Growing security services

The largest growing segment of IT managed services is the managed security services market. In North America alone, these services include asset monitoring and management; threat intelligence, research, detection, and remediation; risk and compliance; and advanced and emerging managed security services.

There is a growing consumer base for these services that may be contributing to the projected growth in this area of the market including health care organizations, government institutions, banking, financial and insurance sectors.
Part
04
of four
Part
04

IT Managed Services in the US - Key Competitors

Through our research, we found that the key competitors for IT managed services in the US are IBM, Cisco and DXC. The market shares of IBM is at 24% and DXC is at 15% for IT managed services. Cisco has a 33% share for infrastructure segments alone. IBM and DXC segments are infrastructure, security, and other IT services. The segments for Cisco are network, security and other IT services.

RESEARCH METHADOLOGY
Based on the report provided, the main segments of the IT managed services are: Infrastructure services, network services, security services and other services. We also found the market shares of both IBM and DXC on that report. We then tried looking for a specific number of shares but almost all websites or reports required payment/subscription to view them. Our researchers then used Linkedin and the individual company websites to determine the segments of each company.
We tried to look for Cisco's specific market share for IT managed services but the information was not available or required subscription payment to obtain that information. Our researchers were able to find the specific market share for the infrastructure segment alone. As part of our research, we have read previous requests to determine the major companies for IT managed services in the United States.

UNDERSTANDING THE MARKET
The classification of IT services is based on the type of service that is being offered. During our research, we learned that the main segments of IT managed services were managed infrastructure, network, security services, and other IT services. We found that infrastructure services was the largest segment of the market with approximately 47.1% of the total sales. This can be partially attributed to the increasing demand of managed cloud based services from insurance and healthcare, financial services, and technology industries.

In terms of the United States market, managed IT services accounted for 37.2% of the market in 2016. It is predicted that the market will grow from $62.0 billion in 2017 to $94.5 billion in 2021. The predicted CAGR is 11.1% for 2017-2021. Improving economic growth and increasing digitization are expected to drive the demand for managed IT services in the near future. These numbers can in part, be attributed to the demand for services such as data center and dedicated cloud services. North America is considered to be the largest contributor to the managed services market (infrastructure, network, and security services) with about three-fourths of the market share.

MAJOR COMPETITORS IN THE MARKET
Our researchers found that in the United States, the top 3 companies that are major vendors for IT managed services are IBM, Cisco, and DXC Technology.

IBM
IBM (International Business Machines) is one of the largest technology and consulting companies in the world. IBM is currently headquartered in Armonk, New York. They employ approximately 380,000 employees worldwide. With an estimated value of nearly $160 billion U.S. dollars in 2015 and around $80 billion U.S. dollars in annual revenue, IBM is considered to be one of the most valuable companies in the world. IBM's biggest business earner is their technology services, accounting for 40% of their total revenue.

IBM currently provides managed IT services in the following segments: analytic services, cloud, commerce, cognitive, consulting, experience design, financing, IT infrastructure, industry solutions, technology support, security, and systems services, to name a few. In regard to categorized, managed IT services offered by IBM, they provide infrastructure, security and other IT services. IBM holds a commanding 24% of the managed IT services market share.

DXC TECHNOLOGY
DXC Technology has grown to become a $25 billion company with clients in more than 70 countries worldwide. DXC Technology has headquarters in Tysons, VA. They employ more than 50,000 employees worldwide. DXC is responsible for 15% of the IT managed services market.

The managed IT services segments that DXC offers services in are application services, banking, business services, cloud services, cybersecurity, healthcare, insurance, manufacturing, and travel and transportation, to name a few. With regard to this research, DXC Technology offers managed IT services in the infrastructure, security and other IT services segments.

CISCO
Cisco engineers have been considered to be leaders in the development of Internet Protocol (IP)-based networking technologies. Today, Cisco employees more than 73,000 employees worldwide. The company's core development areas are routing and switching. They also provide services in advanced technologies such as home networking, optical networking, IP telephony, security, wireless technology, and storage area and networking. Their segments include networking, collaboration, wireless, security, unified communication, cloud, virtualization, data center, and unified computing systems.

Cisco has announced revenues of $12.13 billion U.S. dollars in the final quarter of 2017, and a revenue of $48 billion U.S. dollars. The most lucrative product segment for Cisco is switching, which has accounted for over $13.9 billion U.S. dollars in 2017, which is almost 30% of the company’s total revenue. In regard to managed IT services, Cisco has a 33% share of the infrastructure segment alone, however, Cisco provides services in the network, security and other IT service segments.

CONCLUSION
Through our research, we found that Cisco is a major vendor for managed IT services in the segments of infrastructure, network, security, and other IT services. IBM and DXC Technology are the number one and two vendors in the United States in the segments of infrastructure, security, and other IT services.
Sources
Sources