The Managed Service Provider (MSP) market is flourishing, logging a robust growth rate of 11 to 16 percent in 2014 to reach US$85-90 billion. According to research recently published by Everest Group—a consulting and research firm focused on strategic IT, business services, and sourcing—the current market size, in terms of Net Fee Income (NFI), is approximately US$1.5 billion.
Everest Group also reports that fundamental changes are altering the solution dynamics of the global MSP market. For example, service providers are tapping a wider scope of talent, with the management of Statement of Work (SOW) consultants tripling. Moreover, offshoring is growing rapidly, multi-country and multi-continent engagements are accelerating and direct sourcing is on the rise.
“MSP buyers have already picked the relatively low hanging fruits, and now they are are looking for additional strategic gains from their MSP programs,” adds Rajesh Ranjan, partner at Everest. “This, in turn, has provided an opportunity for service providers to differentiate themselves by bringing in innovative solutions and adopting best practices from allied industries in the broader Business Process Outsourcing area, including Recruitment Process Outsourcing, Human Resource Outsourcing, and Procurement Outsourcing.”
These findings and more are discussed in more detail in “Managed Service Provider (MSP) – Annual Report 2015: Moving Beyond the Horizon.”
This research provides comprehensive coverage of the MSP market and analyzes it across various dimensions such as market overview, key business drivers, and shifting market dynamics across buyer adoption trends, solution & transaction trends, and service provider landscape.
Other Key Findings
As the MSP market is flourishing into a big-dollar space, three categories of service providers have clearly emerged: staffing-legacy MSP, pure-play MSP, and new providers from a variety of backgrounds.
- Service providers are increasingly focusing on the emerging Statement of Work (SoW) and independent contractors space beyond the traditional temporary workforce arena.
- New and innovative sourcing solutions are being devised, which include greater leverage of buyer networks and direct sourcing, in order to optimize cost and improve talent quality.
- There has been a significant increase in multi-country deals, including global multi-continent deals, indicating increased buyer confidence and growing maturity of the MSP market.
- Mid-market buyers are neck-to-neck with large-market buyers when it comes to MSP adoption.
- Nearly 75 percent of all the MSP deals are less than US$50 million in managed spend. Nonetheless, there is a visible increase in large- and mega-sized deals, and together they account for more than 25 percent of the global MSP market.
- Vendor management and transaction-intensive processes are the most frequently included processes in MSP contracts.
High-resolution graphics illustrating the report’s key takeaways may be included in news coverage, with attribution to Everest Group. Graphics include:
- Innovative talent sourcing solutions
- Global MSP market share and growth
- Use of MSP to manage SOW consultants has tripled
- The MSP market: shifting solution dynamics
- MSP deal scope is increasingly global