Managed services growth expected to balloon over next three years

The vast majority of European business leaders are anticipating managed services sales to grow in the next three years, the latest research from TD Synnex has revealed.

According to the company’s inaugural Ecosystem Benchmark Report, almost three-quarters of surveyed tech businesses expect to sell more managed services over that time, increasing the revenue stream as a result.

Conducted in collaboration with research firm Canalys, the report was developed based on an industry survey of mid-size tech ecosystem partners. It found that every category of services is expected to grow, with managed services top of the pile on 74%.

Professional services are expected to increase for 65% of respondents, followed by consumption-based anything as a service (XaaS) (50%), packaged services (44%), and product lifestyle services (38%).

The majority of European partners (63%) also forecasted that hardware resale will be fundamental to their business mix, with 25% saying the category will increase and 38% indicating no change.

TD Synnex noted that more than a third of respondents said that selling their own IP will be a bigger part of their business mix over the next two years.

The findings follow a previous report from research firm Gartner back in January, which estimated that consulting and managed services would have the second-highest spending growth in 2022 at $1.3 trillion. Even back in pre-pandemic 2019, research from Barracuda MSP highlighted managed services as offering the greatest revenue potential for channel partners.

"Channel partners are actively developing their services businesses," said Rachel Brindley, senior director of channels at Canalys. "We see that partners are looking to invest across the technology ecosystem."

Most respondents expected to report growth this fiscal year, with 43% naming security, servers, and storage as the top revenue drivers, and 40% said these technologies are the most profitable. Security topped the list as the single most profitable tech for European partners, TD Synnex added.

Businesses also signalled that collaboration is a high-priority growth strategy, with 79% ranking engagement with ecosystem partners as important or very important to future growth.

“In an environment of continued rapid technological change, European IT businesses need to bring solutions to market faster,” explained Andy Gass, chief digital officer at TD Synnex. “Ecosystem collaboration accelerates that time to market, reduces costs, and minimises technology skills gaps.”

Elsewhere, TD Synnex’s report revealed widespread hesitation over the metaverse. Less than a fifth (17%) of European tech ecosystem business leaders said they will offer augmented and virtual reality (AR/VR) solutions by 2024. That’s despite IDC’s projection of a $16 billion European metaverse market and an expected 150% increase in investments over that period.