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Managed Service Market Forecast to $34B

The managed network services market is forecast to grow to over $34 billion by 2013, according to the latest market study by Informa Telecoms & Media.

The developing regions such as the Middle East and Africa are expanding particularly strongly as new services are launched, while the established markets such as Western Europe are driven by the need to differentiate through marketing support and customer service.

According to the Informa report author, Richard Jesty, one major trend which is currently emerging is the willingness of operators of all sizes to consider using managed services.

He said "The future for managed services is vibrant, with new strategic deals now being struck with Tier 1 operators, and consultancy becoming a significant factor. But what makes this trend so exciting are the implications it has for the changing nature of the telecoms operator's business model and the opportunities this creates for service providers."

External services already represent around 30 percent of operator's total spending on services worldwide, including both internal and third party services. These services cover not only managed services but also activities such as market and technical research, training, IT systems integration and business support.

By 2013 the proportion of these services which are handled by external managed service providers is expected to increase, indicating that the growth of external spending will be faster than that of internal spending on equivalent business and technical support.

Against this background, it is clear that the addressable market for managed services in telecoms offers excellent potential over the next five years.

Informa's market study identified three sectors in the market:

- Network-led: these services focus primarily on creating greater efficiency in managing the network.

- Service-led: these functions typically include content hosting and can cover new services such as payment and partner management systems which allow fixed, mobile and convergent telecoms players to deliver competitive offerings in a cost-effective way.

- Consultancy-led: these are newer services which respond to the need for business transformation in the telecoms market, and which include a higher degree of strategic involvement on the part of the service provider.

The services market is evolving as a result of the convergence of the specialist managed network services and the generalist professional services sectors, and this means that key players now include the larger management consultancies and IT systems integrators -- such as Accenture, Capgemini, IBM -- as well as the major network vendors.

Future growth in managed services will be driven by a number of factors, some of which are global and some which apply more in the mature markets or in the developing regions. For example the incumbent operator outsourcing services in its home territory may be the exception at present, but this may well become a feature of the market over the next five years.

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