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Managed services is the practice of outsourcing the responsibility for maintaining, and anticipating need for, a range of processes and functions, ostensibly for the purpose of improved operations and reduced budgetary expenditures through the reduction of directly-employed staff.[1][2][3] It is an alternative to thebreak/fix oron-demand outsourcing model where the service provider performs on-demand services and bills the customer only for the work done.[4][5] The external organization is referred to as amanaged service(s) provider (MSP).[6]
A managed IT services provider is a third-party service provider that proactively monitors & manages a customer's server/network/system infrastructure,cybersecurity and end-user systems against a clearly definedService Level Agreement (SLA).[7]Small and medium-sized businesses (SMBs), nonprofits and government agencies hire MSPs to perform a defined set of day-to-day management services so they can focus on improving their services without worrying about extendedsystem downtimes or service interruptions. These services may include network and infrastructure management, security and monitoring.[6][8] Most MSPs bill an upfront setup or transition fee and an ongoing flat or near-fixed monthly fee, which benefits clients by providing them with predictable IT support costs. Sometimes, MSPs act as facilitators who manage and procure staffing services on behalf of the client. In such context, they use an online application calledvendor management system (VMS) for transparency and efficiency. A managed service provider is also useful in creating disaster recovery plans, similar to a corporation's.[9]
The managed services model has been useful in the private sector, notably amongFortune 500 companies,[10] with potential future applications in government.[11]
The evolution of MSP started in the 1990s with the emergence of application service providers (ASPs) who helped pave the way for remote support for IT infrastructure. From the initial focus of remote monitoring and management of servers and networks, the scope of an MSP's services expanded to include mobile device management,managed security, remote firewall administration and security-as-a-service, and managed print services. Around 2005,Karl W. Palachuk, Amy Luby, Founder of Managed Service Provider Services Network acquired by High Street Technology Ventures, andErick Simpson, founder of Managed Services Provider University, were the first advocates and the pioneers of the managed services business model.[12][13]
The first books on the topic of managed services:Service Agreements for SMB Consultants: A Quick-Start Guide to Managed Services[14] andThe Guide to a Successful Managed Services Practice[15] were published in 2006 by Palachuk and Simpson, respectively. Since then, the managed servicesbusiness model has gained ground among enterprise-level companies. As thevalue-added reseller (VAR) community evolved to a higher level of services, it adapted the managed service model and tailored it to SMB companies.
In the new economy, IT manufacturers are currently moving away from a "box-shifting" resale to a more customized, managed service offering. In this transition, the billing and sales processes ofintangible managed services, appear as the main challenges for traditional resellers.
The global managed services market is expected to grow from an estimated $342.9 Billion in 2020 to $410.2 Billion by 2027, representing aCAGR of 2.6%.[16]
Adopting managed services is intended to be an efficient way to stay up-to-date on technology, have access to skills and address issues related to cost, quality of service and risk.[17][18][19] As theIT infrastructure components of manySMB and large corporations are migrating to the cloud,[20] with MSPs (managed services providers) increasingly facing the challenge ofcloud computing, a number of MSPs are providing in-house cloud services or acting as brokers with cloud services providers.[21][22] A recent survey claims that a lack of knowledge and expertise in cloud computing rather than offerors' reluctance, appears to be the main obstacle to this transition.[23][24] For example, in transportation, many companies face a significant increase of fuel and carrier costs, driver shortages, customer service requests and global supply chain complexities. Managing day-to-day transportation processes and reducing related costs come as significant burdens that require the expertise of Transportation Managed Services (or managed transportation services) providers.[25][26]
| Name | Functions | Providers |
|---|---|---|
| Information services / Cloud | * Software – production support and maintenance *Authentication *Systems management *Data backup andrecovery *Data storage,warehouse andmanagement *Cloud transformation *Network monitoring,management andsecurity *Human Resources andPayroll | managed IT services provider, managed security service provider, HCM software |
| Business-to-business integration | *Supply chain management * Communications services (mail, phone,VoIP) * Internet *Videoconferencing | Internet service provider, Video managed services provider |
| Supply chain managed services[27] | * Supply chain planning, monitoring and control * Sourcing and procurement *Logistics anddistribution | Supply chain managed services provider |
| Transportation[28] | * Daily transportation planning * Process execution and enforcement (freight audit/accounting & payment) | Managed transportation services provider |
| Marketing | * Marketing strategy, planning * Integrated marketing / advertising agency services (graphic design,copywriting,PPC,social media,web design,SEO) | Marketing managed services provider, outsourced marketing providers |
| Media | * Systems operation and support services * Broadcast managed services | Media managed services provider |
| Water[29] | * Water quality testing * Water storage and transfer systems management * Smart irrigation monitoring, scheduling | Water managed services provider |
| Power[30] | *Advanced metering infrastructure *Smart grid deployments | Power managed services provider |
In the IT industry, the most common managed services revolve around connectivity andbandwidth,network monitoring,security,[31]virtualization, anddisaster recovery.[18] Beyond traditional application and infrastructure management, managed services may also include storage, desktop and communications, mobility,help desk, cloud solutions andtechnical support.
Main managed service providers originate from the United States (IBM,Accenture,Cognizant), Europe (Atos,Capgemini) and India (TCS,Infosys,Wipro).
| Company | Country | 2017 revenue[needs update] |
|---|---|---|
| IBM |  United States | $79bn |
| Accenture | United States | $35bn |
| Cognizant | United States | $18bn |
| Tata Consultancy Services |  India | $18bn |
| Atos |  Europe | $16bn |
| Capgemini |  France | $15bn |
| Infosys | India | $10bn |
| Wipro | India | $8.5bn |
| HCL Technologies | India | $7bn |
| ATEA | Europe | $4.7bn |
| Computacenter |  United Kingdom | £4.4bn |
| Datapipe | United States | $2.4bn |
| ALTEN | France | $2.4bn |
Amid the COVID-19 crisis, the global market for IT Outsourcing estimated at US$342.9 Billion in the year 2020, is projected to reach a revised size of US$410.2 Billion by 2027, growing at a CAGR of 2.6% over the analysis period 2020-2027.
