A new report from Market Research Future (MRFR) projects that the managed services market in North America will grow at a CAGR of 7.18 percent between 2025 and 2035, reaching $419.7 billion, up from $209.9 billion in 2025.
Globally, the managed services market is forecasted to rise from $441 billion in 2025 to approximately $1.2–$1.3 trillion by 2035. While much of the recent growth has been concentrated in North America, demand in Europe and Asia is expected to rebound as global IT spending continues to climb.
AI driving IT spending surge
According to IDC, worldwide IT spending surged 14 percent in 2025 to $4.25 trillion, fueled by massive investments in artificial intelligence (AI) infrastructure. Including telecommunications and business services brings total spending close to $7 trillion.
Looking ahead, IDC forecasts that AI will drive $1.3 trillion in spending by 2029, with service providers accounting for 80 percent of that total. Additionally, agentic AI applications are expected to represent nearly a quarter of IT spending by 2029, or roughly $1.3 trillion.
Implications for MSPs
While the exact percentage of that spending allocated to managed services remains uncertain, projections suggest it could be around 25 percent. As overall IT spending grows, it’s only a matter of time before global managed services spending surpasses $1 trillion.
For MSPs, this expanding market presents both opportunity and challenge. Competition will likely intensify as more IT vendors introduce their own managed services. In some cases, MSPs may compete directly with these offerings; in others, reselling vendor-provided services may be the smarter move. Either way, the size and complexity of MSP service portfolios will continue to grow.
Margin pressures in the age of AI
MSPs must also pay close attention to cost structures and profitability. As automation reduces service delivery costs, clients will expect lower prices—creating downward pressure on margins. Most MSPs target gross margins of 50–70 percent and net margins of 10–30 percent. However, maintaining those levels amid fierce competition requires discipline.
Too often, MSPs undercut pricing to win deals, only to deliver subpar service that leads to client churn. This dynamic is one reason MSPs haven’t captured a larger share of the IT market. Sustainable success depends on delivering quality services at competitive prices—not racing to the bottom.
Photo: tadamichi / Shutterstock
This post originally appeared on Smarter MSP.
