Managed Services Market Hits $100 bn in 2023, Driven by AI and Cloud Adoption

In 2023, the global managed services market witnessed a surge, with over 1,800 deals worth more than $100 billion in total contract value (TCV), according to the latest data from the International Data Corporation (IDC) Services Contract Database. While the total number of managed services deals saw a slight decline compared to the previous year, the average deal size remained consistent.
IT managed servicesThere was a marked increase in the number of large managed services deals, with TCV exceeding $100 million, signed in 2023 compared to 2022. This trend underscores the growing significance of managed services, particularly in sectors embracing cloud and artificial intelligence (AI) technologies, IDC report on managed services market said.

The United States dominated the global managed services market, accounting for more than 45 percent of the TCV. Several high-profile contracts contributed to this, including the $14 billion agreement between AT&T and Ericsson, the Verizon Business and HCL Technologies contract valued at over $2 billion, and the CoreLogic and Cognizant deal totaling $1 billion.

Western Europe also saw substantial growth, capturing 42 percent of the global managed services TCV in 2023. Despite economic and geopolitical uncertainties, the region witnessed a surge in mega deals, such as the GBP 1.5 billion agreement between Liberty Global and Infosys, signaling a strong commitment to technological advancement.

The Nordics emerged as a hotspot for large managed services deals, with agreements like the Danske Bank and Infosys contract and the LahiTapiola Mutual Insurance and CG deal contributing to regional growth.

AI-related managed services deals experienced exponential growth, with the average deal size more than doubling compared to 2022. This reflects a broader trend of increased AI adoption across industries, particularly in manufacturing and financial services. Service providers have been proactive in upskilling their workforce to meet the rising demand for AI-enabled solutions.

Looking ahead, IDC forecasts continued growth in technology spending across all regions, with an uptick in large managed services contracts expected in 2024. Already, several mega deals exceeding $500 million in TCV have been inked in the first quarter of 2024, with AI and cloud technologies playing pivotal roles.

Approximately 3,000 managed services deals, totaling an estimated $150 billion, are slated for renewal in 2024, presenting significant opportunities for service providers. Over 200 of these deals are anticipated to surpass the $100 million mark in TCV, highlighting the continued momentum in the managed services landscape. News Desk

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