Outsourcing Toolkit

Telcos tipped to dominate managed services

Colin Barker ZDNet.co.uk

Published: 20 Mar 2006 15:50 GMT

The managed-services market is set to triple over the next five years and will be worth around €6.2bn (£4.3bn) by 2011, according to the latest report from analysts at BroadGroup.

The forecast is based on the BroadGroup's assessment that the market is currently growing at around 20 percent per year and is "approximately equal in size to the combined revenues for Web hosting and collocation".

"2006 will be a watershed year in the provisioning of managed services in Europe," said Keith Breed, research director at BroadGroup, in a statement. "Managed Services across the region should now evolve as a distinct significant growth market, with the UK and German markets forming the nucleus of activity."

According to the report, Managed Services Europe, enterprises are increasingly interested in handing over the management of their IT infrastructure and assets to a third party.

"The main question for vendors is whether to focus on the delivery of standardised or customised solutions," said BroadGroup.

According to the BroadGroup research "evidence... suggests that telecom providers will eventually dominate the hosting market due to their business scale and customer-market presence, taking approximately 32 percent market share by 2011".

The report also suggests that the big beneficiaries of the move to managed services could be the providers of data centres, such as SunGard, who can provide carrier-neutral space to the system integrators and hosting providers.

But the report admits that data centres could also choose to provide managed services directly to the enterprise customer.