Dive Brief:
- The average managed services contract value increased more than 22% year-over-year in 2022, a sign of ongoing enterprise technology investment in this category, according to an IDC report released Thursday.
- The analyst firm's Services Contracts Database showed more than 1,700 managed services deals were signed in 2022, reaching $125 billion in contract value. However, the number of deals contracted from last year, according to the company.
- Despite economic concerns, IT spending in this category is expected to continue to grow this year, with more than 2,300 managed services deals worth around $122 billion coming up for renewal.
Dive Insight:
The technology sector has grappled with more conscientious spenders in recent months, who are looking to rationalize budgets and cut waste where possible.
Spending in the managed services category brings potential long-term savings when compared to the costs of handling IT management or the execution of large scale transformation internally.
Among the drivers of growth in the category is the persistent need for cloud computing, now viewed as table stakes for modern businesses.
"We expect many more large cloud transformation contracts to be signed in 2023, which will be instrumental in driving growth and sustainability," the company said in a release.
But cloud isn't the only driver of MSP spend. One in 3 CIOs say their company currently outsources digital services, according to a Logicalis survey of 1,000 CIOs. Nearly three-quarters of respondents say they expect to increase MSP spending this year.
CIOs point to skill access, freeing up of resources and improved visibility of cost and performance as key drivers to their MSP relationships, the Logicalis survey found.
Spending on the broader IT services category — which includes managed services — is set to grow 9% this year, reaching $1.4 trillion in global spending, according to Gartner projections. The analyst firm expects the category will grow another 10% next year.
