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IDC: Number of MSP Deals Declined in 2022, But Deal Values Increased

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According to IDC research from its Services Contracts Database, more than 1,700 managed services deals were signed in 2022 worth more than $125 billion in contract value. While the total number of deals declined compared to 2021, the average deal size increased by more than 22%, IDC said.

Fewer Deals, But Bigger Deal Values

Despite a global economic slowdown, IT spending across organizations seems to be steadily increasing, IDC found. There was an increase in larger deal signings (meaning total contract value, or TCV, was above $100 million) in 2022 compared to 2021.

More than 60% of the total TCV was signed in the U.S., an 8% increase over 2021. This growth was mainly driven by many large deals awarded to hyperscalers involving higher-level cloud implementation, IDC said. This includes deals such as that between Snap and Google, estimated at more than $700 million, and a deal between Boeing and AWS, estimated to be worth around $400 million. Western Europe accounted for 28% of the TCV in 2022, an almost 6% decrease over 2021.

Due to high inflation, skills shortages and disruption in the supply chain because of geopolitical reasons, this slowdown in Western Europe is expected to continue over a few quarters. Notable deals in that region include one between the London Stock Exchange and Microsoft, worth $2.8 billion, and between UBS and Microsoft, estimated to be around $750 million, according to IDC.

"As technology is increasingly becoming the backbone of organizational growth strategies, we are seeing more and more organizations upgrading their IT infrastructure leveraging cloud, artificial intelligence (AI), and security. The pandemic also forced organizations to become digital-first. The after-effect of this paradigm shift is evident in the increased IT spending trend observed in 2022," the IDC report said.

IT Spending Will Remain Steady

While many are pessimistic about 2023's outlook due to the economic slowdown and overall spending by organizations is expected to decline, IT spending is not expected to be as heavily affected. IDC's Services Contracts Database lists more than 2,300 managed services deals worth more than an estimated US$122 billion that are up for renewal in 2023. This number includes about 130 deals above TCV of $100 million, and IDC also said it expects many more large cloud transformation contracts to be signed in 2023.