By: Vinod Pahlawat, Chief Growth Officer, CMS IT Services
In today’s digital age, businesses are under increasing pressure to innovate, streamline operations, and enhance customer experience. One of the most powerful ways Indian companies achieve this is by leveraging strategically managed services. The rise of managed services has been instrumental in transforming how businesses handle their IT infrastructure, enabling them to focus on core competencies while outsourcing the complexities of technology management. This approach is particularly valuable in India, where the IT sector contributes significantly to the country’s economy, with its market expected to reach $194 billion by 2025.
The Role of Managed Services in Driving Innovation
Managed services refer to the practice of outsourcing the responsibility for maintaining a range of processes and functions to enhance operational efficiency and cut expenses. It is often viewed as a smart way to manage IT resources, enabling businesses to remain competitive without shouldering the entire burden of running IT infrastructure in-house.
Optimised IT operations: Outsourcing IT processes allows companies to tap into the expertise of professionals who ensure seamless operation of systems, improving response times and reducing downtime.
Adoption of cutting-edge technologies: Managed service providers (MSPs) are more agile in adopting the latest technologies, like artificial intelligence (AI), machine learning (ML), and automation, helping businesses stay ahead of the curve.
Scalability: Managed services offer scalability that would otherwise be difficult and costly for businesses to achieve internally.
Cost optimisation: By converting fixed IT expenses into variable costs, managed services reduce the burden of upfront investments, enabling businesses to innovate without financial strain.
Indian Market for Managed IT Services
India’s managed services market has witnessed substantial growth, spurred by the increasing digitalisation and cloud adoption across industries. The IT-BPM industry in India is one of the fastest-growing sectors, contributing significantly to the country’s GDP and employment rates. According to NASSCOM, India’s IT services sector is set to grow at a CAGR of 7-9% between 2020 and 2025.
With a burgeoning demand for cloud computing, cybersecurity, and data analytics, the managed services market in India is expected to hit $19.7 billion by 2026. This makes India one of the global leaders in IT services outsourcing, and businesses are increasingly leveraging strategic managed services to drive innovation.
Key Areas Were Managed Services Foster Innovation
Cloud Solutions and Infrastructure Management
Cloud computing is at the forefront of the digital revolution in India, with more companies adopting cloud solutions to enhance agility and scalability. Managed services play a pivotal role in ensuring that organisations can seamlessly transition to the cloud and manage cloud infrastructure efficiently.
According to IDC, over 64% of Indian enterprises are expected to increase their cloud spending by 2024. Managed service providers help these companies optimise their cloud strategy, ensuring high performance, security, and compliance.
Cybersecurity
With the rise in cyber threats, businesses must prioritise cybersecurity. Managed service providers are crucial in offering robust security services such as firewall management, data encryption, threat detection, and incident response.
The Indian cybersecurity market is projected to grow to $3.05 billion by 2025, and MSPs are leading the charge by providing state-of-the-art security solutions tailored to the specific needs of Indian businesses. Cybersecurity-managed services enable organisations to protect their digital assets while focusing on innovation and business growth.
Data Analytics and AI Integration
Data is often referred to as the new oil, and businesses that can leverage data analytics gain a competitive edge. Managed services enable businesses to integrate data analytics into their operations, helping them make informed decisions and develop new products or services.
A NASSCOM report shows that Indian enterprises are heavily investing in AI, with 60% of large enterprises expected to adopt AI-driven solutions by 2024. Managed service providers help companies implement AI technologies, driving automation and streamlining decision-making processes, leading to significant innovations.
Remote Infrastructure Management (RIM)
With the increasing trend of remote work post-pandemic, the demand for RIM services has skyrocketed. Managed service providers offer businesses the ability to monitor and manage their IT infrastructure from anywhere, allowing employees to stay connected, productive, and secure.
India has become a hub for RIM services, with a 20% growth rate in this sector annually, providing global and domestic clients with uninterrupted access to cutting-edge IT solutions. This service allows companies to innovate by ensuring seamless IT operations, regardless of location.
How Managed Services are Transforming Indian Startups and SMEs
While large enterprises have long been using managed services to drive innovation, Indian startups and small-to-medium-sized enterprises (SMEs) are now recognising the value of this approach. Startups, in particular, rely on managed services to scale operations quickly without massive infrastructure investments.
In 2023, over 55% of Indian SMEs were using some form of managed IT service, and this number is projected to grow significantly in the next few years. By outsourcing their IT needs, these businesses can focus on product development, customer acquisition, and market expansion.
For example, Indian fintech companies are increasingly outsourcing their cloud and cybersecurity needs to MSPs, which allows them to innovate with new financial products and enhance customer experience without worrying about IT infrastructure. This trend is reflective of a broader shift towards managed services as an essential tool for innovation across industries.
Challenges and Future Outlook
Despite the growing adoption of managed services, challenges remain in the Indian market. One of the key issues is talent shortage, as businesses struggle to find skilled professionals to manage complex IT systems. Another challenge is cost sensitivity, especially for SMEs, where the balance between quality and affordability needs to be carefully managed.
However, the future of managed services in India looks promising. With the increasing digital transformation across industries, the demand for services like cloud management, AI integration, and cybersecurity is expected to grow exponentially. As more companies recognise the value of outsourcing IT services, the Indian managed services market is poised for sustained growth, with innovation as a central theme.
Strategic managed services have become a critical enabler of innovation in the Indian IT landscape. By offering businesses the flexibility, security, and scalability they need, MSPs help organisations stay competitive and focus on their core competencies. With rising demand for cloud solutions, AI integration, and robust cybersecurity frameworks, managed services will continue to drive innovation across various sectors in India, fostering long-term growth and transformation.
