Saudi IT Managed Services Thrive, Reach $1.3B in 2023

Results from a worldwide study commissioned by Cisco (NASDAQ: CSCO) and conducted by Canalys indicate that IT channel partners concentrating on managed services are poised for significant growth in 2023. In Saudi Arabia, the managed service revenue delivered in 2022 by 1,724 channel partners witnessed a year-on-year increase of 9.2%, reaching $1.3 billion.

Despite global economic uncertainties, the projected outlook for managed services suggests a global growth rate of 12.7%, reaching a total value of US$472 billion. This growth surpasses the estimated 3.5% growth in overall IT spending.

Salman Faqeeh, Managing Director of Cisco Saudi Arabia, noted, “Customers across Saudi Arabia are progressively integrating advanced technology into their operations, leading to an almost six percent (5.8%) year-on-year increase in the total number of partners delivering managed services in the Kingdom.”

In the Middle East, expectations for managed services growth remain high in 2023, with the sector valued at $1.3 billion in Saudi Arabia. Cisco expresses confidence that the Kingdom will sustain an impressive growth trajectory in the coming years.

Key drivers behind this demand include cybersecurity concerns, expertise, and a rising demand for flexible consumption models. The pressing need for cybersecurity, coupled with a global shortage of cybersecurity and IT talent, has led organizations worldwide to turn to managed service partners for their technology expertise and support. The study indicates that 56% of channel partners expect revenues from cybersecurity managed services to grow this year.

On a global scale, buoyed by growth, confidence among channel partners selling managed services has significantly increased. In June 2023, 35% of channel partners expect growth of at least 20% in their managed services business this year, marking a notable increase from the 27% reported in 2022.

Robin Ody, Senior Analyst at Canalys, emphasized, “Managed services are the force driving the global IT industry’s adaptability and growth.” The study identifies cloud infrastructure management as another key growth opportunity, with 55% of channel partners expecting revenues in this segment to grow in the current year.

Revenue growth for managed service providers is also expected to accelerate with emerging technologies such as AI, and the growing emphasis on sustainability measures driven by IT investments. The study shows that partners delivering managed services are poised for global growth between 2023 and 2025, with double-digit Compound Annual Growth Rate (CAGR) figures anticipated across all regions. Asia-Pacific is expected to grow to 14%, Europe, the Middle East, and Africa up to 12%, Latin America to grow 11-12%, and North America to see growth between 10-12%.