Back in January, Robin Ody, an MSP and channel analyst with research firm Canalys, wrote a research note that described how he was “seeing a significant rise in the different types of partners involved in managed services.”
Even smaller MSP and MSSP partners, he wrote, “can offer managed services to large customers across a broad geographical range.”
Now, some 10 months later, Ody told ChannelE2E that he sees this growth continuing as 2025 approaches and believes it is being fueled by the constantly increasing technology needs and demands of MSP and MSSP customers.
The rise of the managed services model inside MSPs and other IT services shops is growing because SMB and other customers simply do not have their own expertise and background in many broad and critical technologies today, leaving them to rely on trusted partners to help them keep their business operations rolling efficiently, said Ody.
“Where there is complexity, there is money,” he said. “As technology becomes more complex, and its revenues attract more vendors into the top of the funnel, customers need advisors and services to navigate this complexity. From a simple mathematical point of view, this means managed services spend takes up a larger part of the customer wallet share.”
Growth is Continuing for MSPs
In his original post on the 2024 MSP business outlook back in January, Ody wrote that Canalys estimated that managed services revenue in the channel would grow by at least 12% for the year, driven by customer demand for cybersecurity management, cloud infrastructure, application development, AI solution consulting and compliance requirements, and more.
He concluded at that time that managed services were outgrowing many other areas of the channel and that more competitors in the MSP space would be joining the growing MSP marketplace from within a broader set of partners to try to serve the specialized needs of customers.
Today, Ody said that these words are coming to fruition, bolstered by self-reports at the time from 50% of the responding MSPs who were saying that they expected to be working in 2024 using managed services hybrid delivery models with other partners, vendors, and customers’ IT teams, to better serve customer needs.
“This, in turn, has attracted partners that are seeking to capitalize on this reality,” Ody told ChannelE2E. “So, from both a passive and active perspective, managed services will continue to grow, as will the percentage of partners offering managed services.”
Digital Technology Risks Contribute to MSP Growth
Also fueling the steady growth of MSPs are the cybersecurity attacks and risks that are always facing SMBs and other businesses every day, Ody added.
“All of this can be added to the fact that digital technology is as much about risk as reward,” he said. The cybersecurity war against bad actors “means that [SMBs and other companies] need specialists to help them to protect their operations, giving MSPs broader revenue opportunities, he said.
At the same time, cybercriminals are not resting on their laurels, said Ody. “[Bad guys] with their own improvements in technology and processes means we exist in a tit-for-tat world and will continue to do so for the foreseeable future unless we unplug everything and start again.”
Since that will not happen, he said, the growing MSP marketplace will continue to be an attractive business opportunity.
“Now that regulators and insurers are increasingly involved in scrutinizing the deployment and management of digital technology, the breath of different companies involved in the managed services ecosystem has grown to a dizzying degree,” he said.
