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Asia Pacific's managed services market hits record US $4.4 billion in 2024, fueled by IT outsourcing and AI demand.
Asia Pacific's managed services market had the most significant growth in the fourth quarter of 2024, which was an all-time high. The annual contract value (ACV) for this quarter grew by 33%, reaching US $1.1 billion. This is 45% more than the previous quarter and has been driven by increasing demand for IT outsourcing (ITO) and business process outsourcing (BPO), especially customer engagement and research and development services.
The strong managed services performance was part of a larger growth trend in the outsourcing sector of the region, since the combined market for cloud-based XaaS and managed services experienced 23% year-over-year growth, reaching US $5.5 billion during the fourth quarter. Throughout the last year, Asia Pacific maintained its upward trajectory with an average of over 16% quarter-over-quarter growth. Indeed, 2024 was the fourth successive quarter in which year-over-year growth for this aggregated market occurred.
Managed services have been driven by enterprises’ increasing need for specialized expertise to navigate the complexities of digital transformation. ISG partner and regional leader, Michael Gale, highlighted the role of AI in propelling demand for cloud services, as businesses migrate workloads to the cloud to optimize their digital capabilities. “The extraordinary growth in managed services in 2024, with ACV exceeding US $1 billion in three of the four quarters, has never happened before,” said Gale.
Full-year results show that the managed services sector achieved a record-breaking ACV of US $4.4 billion in 2024, up 26% from the previous year. This was a new milestone, surpassing the previous record set in 2012. The demand for ITO and BPO services, especially in sectors like customer engagement and HR outsourcing, contributed to this record-breaking performance.
Managed services are expected to be a major growth area in the Asia Pacific market for 2025 as businesses continue to prioritize digital transformation and AI adoption.
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