The worldwide public cloud services market is projected to grow 17.5% in 2019 to total $214.3 billion, up from $182.4 billion in 2018, according to Gartner, Inc.

The fastest-growing market segment will be cloud system infrastructure services, or infrastructure as a service (IaaS), which is forecast to grow 27.5% in 2019 to reach $38.9 billion, up from $30.5 billion in 2018 (see Table 1). The second-highest growth rate of 21.8% will be achieved by cloud application infrastructure services, or platform as a service (PaaS).

“Cloud services are definitely shaking up the industry,” said Sid Nag, research vice president at Gartner. “At Gartner, we know of no vendor or service provider today whose business model offerings and revenue growth are not influenced by the increasing adoption of cloud-first strategies in organizations. What we see now is only the beginning, though. Through 2022, Gartner projects the market size and growth of the cloud services industry at nearly three time the growth of overall IT services.”

Table 1. Worldwide Public Cloud Service Revenue Forecast (Billions of U.S. Dollars). BPaaS = business process as a service; IaaS = infrastructure as a service; PaaS = platform as a service; SaaS = software as a service Note: Totals may not add up due to rounding. Source: Gartner (April 2019)

According to recent Gartner surveys, more than a third of organizations see cloud investments as a top three investing priority, which is impacting market offerings. Gartner expects that by the end of 2019, more than 30% of technology providers’ new software investments will shift from cloud-first to cloud-only. This means that license-based software consumption will further plummet, while SaaS and subscription-based cloud consumption models continue their rise.

“Organizations need cloud-related services to get on-boarded onto public clouds and to transform their operations as they adopt public cloud services,” said Nag. Currently almost 19% of cloud budgets are spent on cloud-related services, such as cloud consulting, implementation, migration and managed services, and Gartner expects that this rate will increase to 28% by 2022.

“As cloud continues to become mainstream within most organizations, technology product managers for cloud related service offerings will need to focus on delivering solutions that combine experience and execution with hyperscale providers’ offerings,” said Nag. “This complementary approach will drive both transformation and optimization of an organization’s infrastructure and operations.”

Gartner clients can read more in the report Forecast: Public Cloud Services, Worldwide, 2016-2022, 4Q18 Update.