Managed services market on strong growth curve

The strong growth in managed services that the telecoms industry has witnessed in recent years looks set to continue, with the market forecast to grow to over $34bn by 2013.

According to figures released by analyst house and telecoms.com parent Informa Telecoms & Media this week, the key driver of this trend is that operators of all sizes are willing to consider using managed services.

There is ample opportunity for managed services providers in developing regions such as the Middle East and Africa, which are expanding particularly strongly as new services are launched. While established markets such as Western Europe are driven by a need to differentiate through marketing support and customer service.

Associate analyst with Informa, Richard Jesty, said: “The future for managed services is vibrant, with new strategic deals now being struck with Tier 1 operators, and consultancy becoming a significant factor. But what makes this trend so exciting are the implications it has for the changing nature of the telecoms operator’s business model and the opportunities this creates for service providers.”

The analyst reports that external services already represent around 30 per cent of operators’ total spending on services worldwide, including both internal and third party services. These services cover not only managed services but also activities such as market and technical research, training, IT systems integration and business support.

By 2013 the proportion of these services which are handled by external service providers is expected to increase, indicating that the growth of external spending will be faster than that of internal spending on equivalent business and technical support.

Jesty also notes that the services market is evolving as a result of the convergence of the specialist managed network services and the generalist professional services sectors, and this means that key players now include the larger management consultancies and IT systems integrators such as Accenture, Capgemini and IBM, as well as the major network vendors like Ericsson and Nokia.

In its latest report, ‘Managed Services: New Strategies for Outsourcing, Network Sharing, Hosting and Consultancy (2nd edition)’, Informa has identified three main sectors in the managed services market: Network-led services, which focus primarily on creating greater efficiency in managing the network; Service-led functions, which typically include content hosting and new services such as payment and partner management systems; and Consultancy-led services, which respond to the need for business transformation in the telecoms market, and which include a higher degree of strategic involvement on the part of the service provider.

“Many operators have already realised that they must modify their strategies, processes and organisations in order to adapt to changing market conditions. It will be interesting to see how far this trend goes, and which activities operators regard as truly core business,” said Jesty.