Managed cloud services are set to outpace and replace outsourced IT services, according to analysis by IDC New Zealand.
Revenue from managed cloud services is forecast to finish 2019 at approximately $582 million and reach $1.01 billion in 2023 according to Chayse Gorton, A/NZ market analyst for IT services.
IDC's forecast represents a five-year compound annual growth (CAGR) rate of 15 per cent for 2019-2023.
In contrast, the revenue for New Zealand non-cloud managed services is forecast to decline at a five-year CAGR of 4 per cent to 2023.
Managed cloud services revenue share will increase from 34 per cent in 2019, to 53 per cent in 2023, IDC said.
"Organisations are turning to managed cloud-services providers to help manage increasingly complex cloud environments, provide solutions for legislative and industry compliance – especially security - support technology adoption, and access new business services to deliver business outcomes,"Gorton said.
Adoption of cloud services and technology across New Zealand is driving workload migration to the new delivery platforms and providing opportunities for IT services providers as enterprises seek to fill their skills gaps.
IT services providers are increasingly embedding cloud-related services within project-oriented services such as application modernisation, workload migration, and application and data integration to provide an on-ramps to managed cloud services.
IDC's New Zealand Cloud Heatmap report indicates that organisations shifting from legacy infrastructure to cloud environments will be the primary driver of cloud managed services revenue in the short-term, as organisations partner with managed cloud services providers that can play a role in modernising and transforming IT infrastructure and applications.
Competition will intensify in 2020, Gorton predicts.
Managed cloud services providers will increase their focus on strengthening partnerships with multiple cloud providers.
They will also develop capabilities for cross-cloud migration and efficient service provisioning to tap into managed cloud-related opportunities."