Why Managed Services Are Powering the Next Wave of Growth for Service Providers

Across industries, enterprises are rethinking how they consume technology. Rather than owning, operating, and maintaining every piece of infrastructure, they increasingly turn to managed service providers (MSPs) for flexibility, expertise, and cost efficiency. The appeal is clear: MSPs allow organizations to focus on their core business while delegating technology management to specialists. But what’s driving this accelerated demand isn’t just economics, it’s the sheer pace of technological change and the growing scarcity of skilled talent.

As technology cycles shorten, it’s almost impossible for most enterprises to continuously re-skill or expand their teams to keep up. They need partners who live and breathe technology, and can integrate emerging innovations, while ensuring performance, security, and compliance. That’s where MSPs step in, not merely as cost savers but as strategic enablers. They’re helping organizations improve productivity, strengthen resilience, and even grow top-line revenue through better digital experiences.

The numbers reflect the scale of this transformation. In APJC alone, the managed services market tied to product sales stands at roughly $38 billion (by 2027), and when you include the services layered on top, that number easily doubles. Service providers that capture this opportunity aren’t just selling technology, they’re managing risk, performance, driving business outcomes and innovation on behalf of their customers.

From Custom Projects to Scalable Platforms

Typically, service provider’s managed services journey begins with large, bespoke projects. These are high-touch, high-value engagements tailored for major enterprises. While the top-line growth is strong, the heavy customization makes it difficult to scale or sustain margins. Over time, providers have realized that the future lies not in custom builds, but in catalog-based offerings, standardized services with defined pricing, minimal customization, and faster deployment.

Catalog-based models allow service providers to serve a much broader market, including small and mid-sized businesses, with greater efficiency. However, as competition grows, differentiation shifts from standardization to agility and innovation. That’s where platform-based managed services come in. A platform strategy enables service providers to rapidly build, integrate, and launch new offers, reducing time to market from months to weeks.

This shift also allows service providers to integrate capabilities from trusted vendor ecosystems, whether in connectivity, security, or observability, and deliver comprehensive solutions. Increasingly, leading providers are embedding AI capabilities into their operations through AIOps, automating issue detection, optimization, and response. It’s not just about keeping systems running, but also about running them smarter. Service providers are increasingly gravitating towards building strategic partnerships with technology providers who have an AI-enabled integrated platform strategy and bring security, networking, and observability together.

Beyond Uptime: Managing for Business Outcomes

Managed services used to revolve around SLAs for uptime, latency, and availability. Today, the conversation is shifting toward business outcome–based Service Level-Linked Agreements (SLLAs), commitments that link technical performance with measurable business impact. Sophisticated MSPs are now helping clients quantify outcomes like reduced cyber risk, higher workforce productivity, or faster time to market for digital services.

This evolution has redefined the lifecycle of managed services. Providers are managing systems and going a level deeper to enable technology adoption. By helping customers’ employees use digital tools effectively, they turn technology investments into tangible results. The most advanced MSPs now embed this approach directly into their managed services agreements, ensuring that both sides measure success through shared outcomes.

Connectivity as the Anchor of Differentiation

For service providers, connectivity is just as much a part of their heritage as it is their strategic edge. In a landscape where every enterprise is becoming digital-first, the ability to combine network intelligence with managed IT, security, and AI-driven operations is what sets leading service providers apart. Connectivity remains the foundation on which every digital experience is built, whether that’s a remote workforce connecting to cloud applications, a retailer managing IoT-enabled inventory systems, or a logistics company tracking fleets across continents.

The strength of a service provider lies in this integration. Unlike traditional IT integrators, service providers don’t operate in isolation from the network; they are the network. That advantage allows them to bundle connectivity with managed IT services, creating holistic offerings that deliver not only operational efficiency but also business agility. A service that starts as SD-WAN or secure access (SASE) can quickly evolve into a platform for innovation, extending into areas like observability, cybersecurity, AI analytics, and IoT orchestration. By managing these layers as one ecosystem, service providers can give customers visibility, control, and performance they simply couldn’t achieve with fragmented vendors.

This integration also translates into revenue depth. Connectivity-based managed services create opportunities to increase average revenue per user (ARPU) without expanding the customer base. By layering higher-value services such as AI-driven threat detection, network optimization, or industry-specific analytics, on top of core network offerings, service providers can capture more share of the customer’s technology spend. It’s a model that turns traditional bandwidth and uptime into business resilience and intelligence.

Service providers who do this well invest time and money in building their operating model and enhance their processes, tools and people skills to drive an effective and efficient operation. Building the ServCo muscle in this respect, serves them well to drive better business outcomes for their customers and themselves.

The Future Is Intelligent, Integrated, and Outcome-Driven

The managed services market is no longer about maintenance. Today, it’s about momentum. Service providers that move from project-based delivery to platform-led innovation will define the next phase of growth. Those that embrace AI and automation will not only run more efficient operations but also deliver predictive, personalized customer experiences.

In this new landscape, the leaders will be the ones who see managed services not as a transaction, but as a transformation. By aligning technology performance with business success, they will manage change and enable their customers to thrive with it.