Direct Answer
57 SEC filers are classified under the Standard Industrial Classification codes that describe the managed it services industry, and their latest annual reports show $118.9 billion of combined revenue and a median operating margin of -5.3%. Investors should still evaluate its revenue model, industry-specific KPIs, valuation framework and the risks that can change the group's economics.
Industry Overview
Managed IT service providers operate and monitor clients' networks, servers and cloud environments on subscription contracts, usually small and mid-sized businesses. Recurring fees and renewal rates drive results. The first numbers to compare across companies here are recurring revenue, retention and gross margin.
Key Industry Metrics
- Recurring revenue: Monthly or annual fees under service contracts. A larger recurring share makes results predictable and lets providers invest in tools instead of chasing project work.
- Retention: The share of clients, or revenue, kept from one period to the next. High retention is central because acquiring new small clients is costly and churn eats growth.
- Gross margin: Revenue left after technicians, tools and licenses. Labor is the main cost, so automation and standardized tools improve margin and wage inflation reduces it.
- Revenue per seat or device: Fees earned for each user or device managed. It shows pricing and the depth of services, and rising amounts suggest security and cloud add-ons beyond basic support.
- Cross-sell: Selling additional services, such as security, to existing clients. It is cheaper than finding new customers, so a rising rate lifts revenue per client and margin.
Primary Macro Drivers
- IT outsourcing: Smaller companies that cannot staff IT teams hire providers, expanding customer count and recurring revenue.
- Security and compliance needs: Rules and cyber insurance requirements add security and monitoring work customers buy, raising revenue per seat or device.
- Cloud adoption: Companies moving to cloud tools need setup and ongoing support, adding services and cross-sell opportunities.
- Skills shortages: Scarce in-house IT talent pushes buyers toward subscription providers, supporting retention and pricing.
Major Risks
- Competition: Many providers offer similar services, pressuring pricing and win rates; watch recurring revenue growth and revenue per seat.
- Talent costs: Technicians and engineers are costly and hard to retain, so wage inflation squeezes gross margin; watch gross margin and headcount.
- Customer churn: Small business customers can cancel when budgets tighten, lowering recurring revenue; watch retention and revenue per seat.
- Security incidents: A breach at a provider can spread across many clients, causing liability and lost accounts; watch disclosed incidents and retention.
Industry Characteristics
| Characteristic | Profile |
|---|---|
| Cyclicality | Defensive |
| Capital Intensity | Low |
| Regulatory Intensity | Low |
| Industry Maturity | Mature |
| Geographic Importance | U.S. / Global |
Managed IT Services Filers in the SEC Record
57 companies with annual reports in the dataset are classified by the SEC in the Standard Industrial Classification codes 7373, 7374. Their latest fiscal years end between 2023 and 2026, and together they reported $118.9 billion of revenue. Median revenue growth over the prior year was 11.5%. Median operating margin was -5.3% and median net margin -0.6%. Median total liabilities were 57% of total assets, and 27 of 57 reported a profit in their latest year.
| Company | Revenue | Growth | Operating margin | Net margin | Year |
|---|---|---|---|---|---|
| Automatic Data Processing Inc | $20.6 billion | 7.1% | n/a | 19.8% | FY 2025 |
| Leidos Holdings, Inc. | $17.2 billion | 3.1% | 12.3% | 8.4% | FY 2026 |
| Kyndryl Holdings, Inc. | $15.1 billion | 0.2% | n/a | 1.2% | FY 2026 |
| Workday, Inc. | $9.6 billion | 13.1% | 7.5% | 7.3% | FY 2026 |
| Caci International Inc | $8.6 billion | 12.6% | 8.9% | 5.8% | FY 2025 |
| Science Applications International Corp | $7.3 billion | -2.9% | 7.2% | 4.9% | FY 2026 |
| Parsons Corp | $6.4 billion | -5.7% | 6.6% | 3.8% | FY 2025 |
| Toast, Inc. | $6.2 billion | 24.1% | 4.7% | 5.6% | FY 2025 |
The 8 largest of 57 by revenue. Source: each company's own annual report as filed with the SEC (XBRL data), figures in U.S. dollars. A company's SIC code reflects its main business as the SEC records it, so it can differ from how an index provider or analyst classifies the company, and a diversified group appears under only one code.
Where to Go Next
The Managed IT Services guide describes how the industry earns money, what to measure and what can go wrong. To see how it compares, read the neighbouring industries in the same sector, then apply the same checks to a specific company.
More in Information Technology
- Information Technology sector overview
- Memory Semiconductors
- IT Services
- Metrology & Process Control
- IT Consulting
- Microcontrollers
- Integrated Device Manufacturers
- MLOps Platforms
- Infrastructure Automation Software
Put it to work
Frequently Asked Questions
What are the main KPIs for the Managed IT Services industry?
Key performance indicators for the Managed IT Services industry include: Recurring revenue, Retention, Gross margin, Revenue per seat or device, Cross-sell. Which matter most depends on the company's model, so compare them across several companies rather than relying on one.
How cyclical is the Managed IT Services industry?
The Managed IT Services industry is generally defensive, meaning demand tends to remain relatively stable regardless of the economic cycle. Companies in this space can provide portfolio stability during recessions, though growth may lag in strong expansions.
What are the biggest risks in the Managed IT Services industry?
The primary risks for Managed IT Services companies include: Competition, Talent costs, Customer churn, Security incidents. Investors should assess each company's exposure to these factors and its track record of navigating them.