Cisco: UAE IT Services Surge, Global Growth to $472B in 2023

Cisco’s latest study, conducted by Canalys, sheds light on the increasing dependence of companies on IT Managed Services in the United Arab Emirates (UAE), with the sector valued at a substantial US$1.5 billion. Despite global economic uncertainties, the study anticipates a remarkable 12.7 percent global growth in managed services in 2023, reaching a total value of US$472 billion—outpacing the estimated 3.5 percent growth in overall IT spending.

In the UAE, the revenue from managed services delivered by 3,554 channel partners in 2022 experienced a noteworthy year-on-year growth of 9.7%, reaching the impressive figure of $1.5 billion. This surge is attributed to key drivers such as the escalating demand for cybersecurity, the need for specialized expertise, and the increased desire for flexible consumption models.

The pressing cybersecurity needs stem from the constantly evolving threat landscape globally, coupled with a shortage of cybersecurity and IT talent. Consequently, many organizations are turning to managed service partners for their technological expertise and support. According to the study, 56 percent of channel partners expect revenues from cybersecurity managed services to witness growth in the current year.

Ossama Eldeeb, Regional Director of Partner Organization at Cisco Middle East and Africa, noted, “The managed services sector has become a thriving market in the Middle East, generating revenue exceeding $6.5 billion. Notably, the UAE contributes nearly a quarter of this total.” Eldeeb highlighted the changing dynamics in the region, with customers increasingly integrating advanced technology into their operations and, in response, raising their expectations from IT partners for agility, value, and flexible consumption models.

Globally, the confidence among channel partners selling managed services has surged, with 35 percent expressing expectations of at least 20 percent growth in their managed services business in 2023—marking a significant increase from the 27 percent reported in 2022.

The study also identifies cloud infrastructure management as a key growth opportunity, driven by the digitization of operations and the migration to the cloud. Complexities arising from cloud infrastructure spanning private and public clouds, along with distributed applications and services, have intensified the need for cloud infrastructure management and expertise. About 55 percent of channel partners anticipate revenue growth in this segment in the current year.

The future outlook for managed service providers is promising, with revenue growth expected to accelerate through emerging technologies like AI and a growing emphasis on sustainability measures propelled by IT investments. The study reveals that 59 percent of partners see AI as a business opportunity, with 39 percent considering it “significant” or “tremendous.” Additionally, 57 percent believe customers are willing to pay a premium for sustainability products and solutions.

Looking ahead to 2023-2025, the study forecasts global growth for partners delivering managed services, with double-digit Compound Annual Growth Rate (CAGR) figures anticipated across all regions. In Asia-Pacific, the sector is expected to grow to 14 percent from US$95 billion. In Europe, the Middle East, and Africa, where managed services revenue currently stands at US$122 billion, the sector is projected to grow by up to 12 percent. Latin America is anticipated to experience growth between 11-12 percent from US$11.5 billion, while North America is expected to see growth between 10-12 percent from US$190.6 billion.