SA demand for managed services is growing

Issue 6 2023 News & Events, Infrastructure

A global study commissioned by Cisco and conducted by Canalys shows that South Africa’s IT channel partners increased managed services revenue in 2022 with a year-on-year growth rate of 17,7%, delivering services valued at $1,2 billion (about R22,93 billion).

The Shift to Managed Services Study surveyed 4120 partners in South Africa, including managed service providers (MSPs) (12,1%), resellers, system integrators, and other channel partners (87,9%). In 2022, there was a 0,5% year-on-year increase in the total number of partners delivering managed services in South Africa and a 6,4% year-on-year increase in the number of MSPs.

“As this study shows, South African organisations see the value of MSPs. Going it alone is difficult when investing in enterprise IT and infrastructure. Instead, organisations are accessing partners that are committed to meeting their technology needs and taking their operations to the next level. In turn, managed services become a profitable venture for channel partners, helping to grow a sector that is becoming critical for modern-day business activities,” said Hayward Rose, Partner Channel Lead for Sub-Saharan Africa at Cisco.

Despite global economic uncertainty, the projected outlook for managed services indicates worldwide growth of 12,7%, reaching a total value of $472 billion. This growth surpasses the estimated 3,5% growth in overall IT spending.

Key drivers: cybersecurity, expertise, flexibility

A key driver of this demand is the pressing need for cybersecurity, as organisations across the globe contend with a rapidly evolving threat landscape. This challenging landscape, in addition to a global shortage of cybersecurity and IT talent, has prompted many organisations to turn to managed service partners for their technology expertise and support. The study indicates that 56% of channel partners expect revenues from cybersecurity managed services to grow this year.

“Customers are integrating more technology into their operations, and they expect their IT partners to provide agility, value, and flexible consumption models to efficiently manage their growing and complex technology needs,” said Alexandra Zagury, Vice President of Partner Managed Services and as-a-Service Sales at Cisco. “The evolving ecosystem of IT partners selling managed services is adapting to meet customer needs and challenges by finding ways to modularise and package what once were customised solutions. We anticipate more innovation and specialisation from channel partners through managed services that offer distinct business outcomes and exceptional experiences.”

Global growth

Buoyed by global growth, confidence among channel partners selling managed services has surged. The study reveals that in June 2023, 35% of channel partners said they expect growth of at least 20% in their managed services business this year. This is up from the 27% reported in 2022 and points to a rapid uptake of managed services by organisations of all sizes.

The highest growth is likely to be seen in less mature markets such as Asia-Pacific and Latin America, but North America and Europe, Middle East and Africa (EMEA) will experience significant increases as well. In EMEA, where managed services revenue is currently $122 billion, the region’s managed revenue is forecast to increase by 12% between 2023 and 2025.

“Managed services are driving the global IT industry's adaptability and growth. Our research underscores the substantial potential for companies selling managed services, opening up diverse avenues for them to thrive in a post-pandemic era,” said Robin Ody, Senior Analyst at Canalys.

The study identifies cloud infrastructure management as another key growth opportunity. As organisations digitise operations and move to the cloud, they face challenges with complex cloud infrastructure spanning private and public clouds, along with distributed applications and services. This has increased the need for cloud infrastructure management and expertise, with 55% of channel partners saying they expect revenues in this segment to grow in the current year.

Emerging technologies like AI and the increasing emphasis on sustainability measures driven by IT investments are also likely to grow revenue for MSPs. According to the study, nearly six in ten partners (59%) believe AI presents a business opportunity, with 39% stating it will be ‘significant’ or ‘tremendous’. Similarly, 57% believe customers would be willing to pay a premium for sustainability products and solutions.

“At their core, managed services are about businesses getting the most from technology investments. As new technologies emerge, managed services are vital to an organisation’s digital business strategy. By specialising in specific verticals, technologies, or even geographic areas, MSPs are helping customers solve their IT challenges, remove complexity, and deliver outcomes that drive a business forward,” explained Ody.


Share this article:
Share via emailShare via LinkedInPrint this page

Further reading:

Pentagon appointed as Milestone distributor
Elvey Security Technologies News & Events Surveillance
Milestone Systems appointed Pentagon Distribution (an Elvey Group company within the Hudaco Group of Companies) as a distributor. XProtect’s open architecture means no lock-in and the ability to customise the connected video solution that will accomplish the job.

Sophos celebrates partners and cybersecurity innovation at annual conference
News & Events Information Security
[Sponsored] Sun City hosted Sophos' annual partner event this year, which took place from 12 to 14 March. Sophos’ South African cybersecurity distributors and resellers gathered for an engaging two-day conference.

Sales basics for security installers
News & Events
Being the best security business in South Africa means little if no one uses your services. Your business success is only partly linked to how good you are at security installations.

From security technician to salesperson
News & Events
Being great at security sales starts with having the right mindset. How you think informs what you say and how you act; and how you act informs the results you will achieve in your business.

From the Editor's Desk: Something old and something new
Technews Publishing News & Events
      Welcome to the 2024 edition of SMART Security Solutions’ Mining Handbook. Mining is a challenging industry for security professionals, although security is a challenge on this continent, no matter your ...

Risk management: There's an app for that
Editor's Choice News & Events Security Services & Risk Management
Zulu Consulting has streamlined the corporate risk management process with the launch of Risk-IO, a web-based app designed to consolidate and guide risk managers through the process, monitoring progress as one proceeds.

Integrated information platform for risk management
Editor's Choice News & Events Security Services & Risk Management
Online Intelligence recently launched version 7 of its CiiMS risk and security platform. Speaking to SMART Security Solutions after the launch event, the company’s Arnold van den Bout described the enhancements in version 7.

Unlocking Africa's AI potential
Editor's Choice News & Events AI & Data Analytics
Africa's AI market is set to grow exponentially; by investing in AI education, training, and ethical practices, African nations can harness the power of AI to transform the continent and create a brighter future for its people.

Linking of security officers by security businesses
PSiRA (Private Security Ind. Regulatory Authority) News & Events Security Services & Risk Management
[Sponsored] By law, all security businesses are required to declare their employees to PSiRA so that they can be accounted for administratively. Failure to link employees by security businesses is a contravention of the Code of Conduct and a criminal offence.

Milestone XPerience Day South Africa
Milestone Systems News & Events
The 2024 Milestone XPerience Day in Johannesburg took place on 01 February 2024, where the video technology sector’s brightest and best minds gathered to share information and networking.