Rapid adoption of internet of things solutions is driving growth in the global IT services market.
Internet of things (IoT) technology is transforming the ways machines collaborate with one another, creating the need for IT professionals to manage these complex systems.
The IoT continues to develop and evolve rapidly, creating new ways to make day-to-day operations simpler and more efficient for businesses of all shapes and sizes as well as for the average consumer. As the tech industry has developed new and innovative solutions to make life simpler, the systems themselves have become increasingly complex. As businesses and consumers come to rely more and more on IT services, issues and interruptions with these systems can be devastating to productivity. This is where the IT managed services industry comes in.
The increasing complexity of the devices and systems that businesses rely on is fueling rapid growth in the IT managed services sector as small to medium enterprises (SMEs) in particular are looking to third parties in lieu of costly and resource-intensive in-house IT management. A recent report by Research and Markets projects the global managed service market to see a compound annual growth rate of 11.23 percent from 2018 to 2022, largely driven by the rise of technology that both raises the complexity of interconnected IT systems and enables the viability of off-site management systems.
What’s driving growth in managed network services?
The rising adoption of IoT solutions is a major growth factor in the IT managed services sector. The term “internet of things” comprises a wide range of hardware devices networked together via embedded software and communication services that are managed through cloud-based applications.
Companies and consumers are adopting IoT technology rapidly. According to a 2016 Statista report, there will be more than 20 billion IoT devices connected by the year 2020. Of these, 63 percent are expected to be consumer devices while 37 percent will be used for business. The interconnectivity of the IoT is an obvious gain for businesses, creating synergies and providing metrics on all types of day-to-day operations that can be used to create further efficiencies. According to a 2017 survey by Inmarsat, 82 percent of responding companies expect to implement some sort of IoT system by 2019.
IoT systems are different enough from the IT systems that came before them, as few companies have in-house specialists with the skills required to implement the necessary infrastructure, software and security capabilities required to maintain the systems. Managed services companies, on the other hand, can specialize in the specific skills and capabilities needed for IoT networks, taking the deployment, monitoring and maintenance of the complex system off of the client’s plate entirely. The interconnected nature of IoT means that most of the work on these systems beyond the initial installation can be performed off-site, allowing managed service providers an efficient model of service with ample opportunity for scalability.
Obviously, the increasing demand for both business-to-consumer and business-to-business managed services presents a rare opportunity for IT companies to move into the space. The opportunity is particularly interesting for companies looking to deploy a franchise model. While it’s true that most of the day-to-day servicing of IoT systems can be done remotely, the initial installation and any hardware servicing or maintenance requires physical on-site service. This means that physical locations near business and residential centers or mobile entities that can easily reach multiple locations are a necessity. A franchisor company can provide the training and equipment to a franchisee who can then provide the on-site service for a particular geographic area.
The North American IT managed services space
North America makes up the largest share of the global IT managed services market. North America’s status as the world’s most advanced region for adoption of emerging technologies is due to developed tech sectors in the the US and Canada. According to Markets and Markets, the North American IT services market will be worth $261.5 billion by 2021. This is unsurprising given that North America is home to some of the industry’s key players.
Nerds On Site (CSE:NERD) is one of the emerging players in the North American managed services market. With the notable exception of its major client Canadian Tire (TSX:CTC.A), Nerds On Site is focused primarily on servicing small to medium enterprises. The company operates in 10 cities across Canada, and it is working on aggressively expanding into the United States by establishing 150 franchises across 10 US cities. The company offers a wide range of IT services to both business and residential clients, including network installation and support, PC setup and tailored software services. This expansion comes at an opportune time, as widespread rapid adoption of IoT systems is fueling major demand for services like Nerds On Site from customers in both their established Canadian markets and the company’s new US markets.
The IT managed services industry is comprised of players of all sizes. These include massive tech industry household names like IBM (NYSE:IBM), less generally recognizable but significant giants like Cognizant (NASDAQ:CTSH), mid-size companies like RMON Networks and smaller regional players like Transparent Solutions operating out of Vancouver, British Columbia.
There’s no other sector that moves forward quite so rapidly and steadily as information technology. As advancements like what we’re seeing with IoT today take hold, there is always a push from consumers and businesses of all types to keep up, and that means that there will never be a shortage of opportunity for IT managed services to make the transitions go smoothly.
This article was originally published by the Investing News Network in January 2019.
This article was written according to INN editorial standards to educate investors.
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