The managed services market is witnessing accelerated growth and is continuing to gain wider acceptance in the Middle East.
According to a recent report by Frost & Sullivan, Managed Services Market growth within the GCC states is set to expand from USD 1,073 million in 2012 to USD 3,112 million by 2018 year end. Organisations of all sizes are now showing increased interest in outsourcing their IT demands to third parties while focusing more on developing their core business. SMEs are also beginning to realize and embrace the benefits of delegating IT related services to service providers.
What differentiates the two segments is their outlook. While enterprises look for partners to manage their IT infrastructure more efficiently, on the other hand SMEs try to minimise their IT spending and make their business more cost effective. They do have different approaches, yet both enterprises and SMEs find the solution in the same outcome – increased dependence on managed service providers, or MSPs, as they are popularly called.
“Traditionally, large businesses have been relying on the expertise and services of Managed Services providers to offer secure, flexible and scalable solutions. However, over the last few years, we are seeing a growing trend amongst SMEs choosing to work with MSPs for their Data Center and infrastructure management requirements,” said Sachin Bhardwaj, Director Marketing & Business Development, eHosting DataFort.
Observing similar trends in the market, the Channel Leader – Middle East Theatre, at Cisco Shadi Salama explained that, “While the MSP model was limited to large enterprises earlier, we are now seeing an increased interest from SMEs for their data centre and infrastructure requirements.”
A number of factors contribute to the growing demand of MSPs in the region. Be it awareness about the importance of a strong IT backbone, or in an effort to improve business processes by reducing operating expenses and improving efficiency, the MSPs are definitely gaining footage in the IT arena.
“Given the current cost pressure and move to drive innovation, organizations are increasingly embracing managed services. IDC has sized the overall managed services in the MEA region at around $2.2 billion in 2016, and forecasts it to reach $3.1 billion by 2020, expanding at a CAGR of 9.1% which shows that the MSP market continues to grow and evolve,” says the Senior Research Manager for services in the Middle East and Africa, Saurabh Verma at IDC. “The recent past has even seen an increased preference for offshoring, and not just outsourcing in general.”
“One of the key factors driving growth of this segment is that companies are finally realizing that it is in their best interest to engage with subject matter experts, especially in the backdrop of shortage of key skills in the market,” stated Amit Roy, Executive Vice President and Regional Head for EMEA at Paladion.
A strong IT structure is essential for organisations to improve productivity and expand profitably. Apart from this, there are a number of other factors that are pushing businesses to look at the managed IT services market. Emerging market dynamics like digital interconnectivity, cloud computing and shortage of skilled security professionals, on top of rising cyber threats have all contributed to the growing demand for MSPs.
According to Cisco, improved business process efficiency, financial budget optimization, reliability of services, agility and future scalability of the business, security and compliance issues, round-the-clock support and enhanced customer satisfaction, are some of the driving influences for organizations adopting managed services.
Many organizations are just not influenced by the cost benefits offered by managed print services but also environmental benefits such as reduction in paper wastage and efficient use of energy. Commenting on the adoption of managed print services, Stephane Rogier, Head of the Print Business Unit at HP said, “Companies in the region are investing in integrated printing solutions that take the administrative and financial pain out of document production and turn it into a scalable and manageable service fit for evolving workplace environment.”
Stephan Berner, CEO at Help AG says that the primary driver for Managed Services Providers in the region is the lack of expertly qualified in-house resources which often results in implemented security solutions not being leveraged to the best of their potential.
The growing market is not without its own set of challenges and some of the key issues that MSPs face are security concerns, resistance to change, and budget limitations. As per Bhardwaj, to overcome this, MSPs should ensure that they have the best in class security technologies and practices in place, offer round-the-clock monitoring and management of the IT infrastructure and customizable Managed Security Services – all with a guaranteed Service Level Agreement that meets international industry standards.
Commenting on the customers concerns surrounding adoption of MSPs, Graham Porter, Channel Sales Manager MENA at NetApp explained, “Even when MSPs deliver better security and compliance, clients are worried about maintaining privacy for their data. Organizations are at times reluctant to give up a certain degree of control, change business processes, and revaluate their staffing requirements.”
Just as enterprises, find it difficult to cope up with skills in their organisations, MSPs also find it difficult to find the right talent locally. Global MSPs like Paladion can utilize their bench strength and dip into their global pool of skill professionals to manage such scenarios as Roy explains “Availability of skills and talent within the region is also a concern, and the gap is usually filled by sourcing people from other regions. In the high skill areas of advanced cyber security the skill gap is more apparent.”
Despite all challenges, the future holds great growth potential for managed service providers in the region. That being said, the MSPs still need to stay on their toes and continue to enhance their service offerings while focusing on catering to the ever evolving demand of their customers.
