Dive Brief:
- Managed service providers saw break-fix revenue increase 11% year-over-year, reflecting increased preference for purchasing individual IT services separate from long-term vendor contracts, according to a new report commissioned by Datto, the security and cloud software company acquired by Kaseya in June.
- Managed security services are offered by nearly all of the more than 1,800 MSPs surveyed; 83% provide cloud infrastructure design and management and office productivity software services.
- One-off projects, such as cyber audits and hybrid cloud data integrations, help MSPs get a foot in the door and cultivate relationships with companies and IT departments pressed for tech talent but reluctant to sign on with new vendors.
Dive Insight:
With employment numbers still strong for tech workers, the skills gap affecting businesses is also a challenge for MSPs. Roughly one-quarter of respondents listed talent recruitment as a top concern. The same number — 24% — pointed to new customer acquisition.
Competition in the MSP market topped the list at 29%.
Enterprise spending on managed services reached $1.3 trillion this year, according to Gartner, and competition for those dollars is driving MSPs to get creative with their partnering strategies.
Delivering IT services on a project-by-project basis traditionally solved two problems: allowing companies under contract to add services as needed, while providing MSPs with supplemental revenue.
Now, the break-fix framework is evolving to address new issues — competition over clients and the skills gap.
As MSPs jockey for position in a crowded field and companies tighten budgets, one-off cyber and cloud projects are a matchmaking opportunity.
In this paradigm, MSPs showcase their capabilities to potential long-term clients, and companies purchase temporary relief from tech talent woes.
Despite economic downturn, spending on managed services is forecast to increase in 2023, according to Spiceworks Ziff Davis.
MSPs expect enterprise investments to remain strong in cyber and grow in cloud services, Datto said.
Nearly all of MSPs surveyed, anticipate new market opportunities as clients turn to cloud for better storage design, productivity gains and collaboration tools, and all report their clients are already using cloud in some capacity.
The most common public cloud workloads MSPs support are email servers, databases and application servers, the report said. That trend is expected to continue for the next three years.
In keeping with current industry estimates of cloud market share, respondents named AWS, Microsoft Azure and Google Cloud as the top three providers.
More than three-quarters of MSP clients have shifted at least half of their workloads to the cloud, the report said, an increase of 25% year over year.
