The Future of Managed IT Services

As the scope of tech in business expands, more businesses find it convenient and cost-effective to entrust their IT infrastructure to third parties who specialize in managing complex IT systems.

It’s against this background that the demand for managed IT services has grown tremendously in the last couple of years and the momentum looks steady. In fact, the latest reports project the Managed Services Market to reach  $393.72 Billion by 2028 with over 60% of organizations expected to be depending on managed service providers by then.

This is all good news. However, if you are keen to start a business in the MSP industry or are already running one, you always want to have a sneak peek into the future. And so the question “What is the future of Managed IT Services” may have crossed your mind from time to time. What will the market look like in future? 

We at IT Companies Network have been privileged to work in the Tech Scene for many years now, and Managed IT Services is one of our core focus areas. We’re happy to use this immense exposure to highlight what in our observation the future of managed IT services is likely to shape up to.  

Even if you are a typical business that is relying on Managed IT Service Providers, this report will help you get a better view of the road ahead: What should you expect from the managed IT provider of tomorrow? 

Here is a summary of the main talking points for this report:

• Growth. How will the sector grow, generally? Are more organizations going to rely on MSPs? Are we going to experience a drop in demand?
• Opportunities. What new opportunities will emerge in this market?
• Security. Cybersecurity is huge now. We've had a couple of providers attacked, and this is raising big concerns. How will this evolve going forward?
• Lessons. What lessons has the industry learnt that could guide the future of this market?
• Pure Play or Hybrid? Which model will be more prevalent?
• Challenges. What are the key challenges we should expect?
• Artificial Intelligence. There is a lot of talk about how AI will shape many industries. So, how will it impact the future of Managed IT Services?

Also Read: Benefits of Managed IT Services

The future of managed IT services

As indicated above, we would like to look at the future from the angles of growth, opportunities, security, lessons learnt, pure play/hybrid, challenges and how AI will influence this future.

Growth

As we hinted in the introduction, the Managed IT Services industry is expected to continue on a positive growth trajectory over the next decade and beyond. This growth can be attributed to the increasing demand for advanced IT systems, cloud computing, big data, mobile devices, and the need for organizations to reduce costs and improve efficiency.

Also Read: Important MSP Trends

The rise of remote work and the increasing need for cybersecurity measures are also making a major contribution to this growth. The COVID-19 pandemic accelerated the trend of remote work, making it essential for businesses to invest in secure and reliable IT infrastructure to support remote employees. This has increased the demand for managed IT services that offer remote support, disaster recovery, and cybersecurity solutions..

This trend is expected to continue as remote work becomes more widespread.

In summary, these are the key factors that will drive the MSP industry over the next decade and beyond:

Opportunities

The future promises to bring even more exciting opportunities for Managed Service Providers — the possibilities are endless. Here are five game-changing opportunities that are already beginning to emerge, and equally expected to growth even stronger into the future.

1. Sustainable Technology

Sustainability is becoming an increasingly important concern for businesses and consumers alike, and MSPs can play a critical role in helping their clients adopt sustainable technology. This opportunity is so huge that the global sustainable technology market is expected to reach USD 417.35 billion by 2030. 

MSPs can offer sustainable technology solutions, such as energy-efficient servers and renewable energy systems, to help their clients reduce their carbon footprint.

Here are more ways in which sustainable technology can shape the future of managed IT services:

• Green procurement: Managed IT services providers can adopt sustainable procurement practices to reduce their impact on the environment. This includes using environmentally friendly products and materials in their operations, reducing packaging waste, and reducing energy consumption through the use of energy-efficient products.
• Circular data centers: Derived from the concept of the circular economy, circular data centers are designed to be dismantled, refurbished, and reused at the end of their life cycle. In future, we could see more MSPs moving to these types of data centers in order to reduce waste and environmental impact of their services.  
• Sustainable software development: Sustainable software development focuses on creating programs which use less natural resources, especially energy — like less battery consumption. So the question MSPs will be asking is «how can we ensure that our systems, for example, conserve battery life on our clients’ devices?». The goal is to reduce the carbon footprint of software development and deployment.

2. VR & AR 

Virtual Reality and Augmented Reality are becoming increasingly important tools for businesses and consumers, and MSPs can build opportunities here. Businesses starting to use advanced VR & AR solutions will need help through deployment and maintenance. 

The global VR & AR market is projected to reach US$52 billion by 2027, reflecting the growing adoption of VR and AR technologies across various industries such as gaming, entertainment, healthcare, education, and retail.

This gradual growth presents a significant opportunity for Managed IT Service Providers (MSPs) to expand their portfolio of services.

3. Quantum Computing

The global managed quantum computing services market is expected to grow to over USD 18 billion by 2030, at a CAGR of about 34%. This growth is being driven by an increasing need for advanced computing capabilities, as organizations increasingly move to turn to managed service providers to help them leverage quantum computing technologies. 

Here are some quantum opportunities we can expect to see going forward:

• Quantum Cybersecurity: MSPs can leverage the power of quantum computing to provide advanced cybersecurity services to their clients. An example is the use of quantum algorithms to help clients protect sensitive information.
• Quantum Optimization: MSPs can use quantum computing to solve complex optimization problems in industries such as transportation and logistics. This can help clients find the most efficient routes, reduce costs, and improve delivery times.

4. Edge Computing

Edge computing is a new and rapidly growing field that promises to revolutionize the way we process and store data. According to a report by  Grand View Research, the global edge computing market is expected to surpass USD 155 billion by 2030.

MSPs can, for example, use edge computing to develop and deploy decentralized applications (dApps) that run at the edge of the network. This opens up a new world of possibilities  to create innovative applications. 

5. Space Technology

Space technology is becoming more prevalent, and players in the managed IT services sector may need to provide services for space-based systems and devices. Advancements in space-based technologies and the increasing number of space-based missions are the key drivers of growth in this field.

We might start to witness the emergence of MSPs that provide support for space-based remote sensing systems, such as earth observation satellites, weather satellites, and reconnaissance satellites. These systems collect data that is critical for many applications, including weather forecasting, disaster management, and environmental monitoring. 

Amazon Web Services (AWS) and Microsoft Azure are already offering a range of products and services that are focused on space technology. They include:

• AWS Ground Station: A fully managed service that allows the control of satellites and processing of satellite data using a global network of ground station antennas.
• Azure Orbital: A cloud-based service that provides satellite operators with access to ground stations, cloud-based data processing and analytics capabilities.

As more MSPs emerge to specialize in these new areas, businesses will have a wider pool of expertise to draw from, enabling them to gain the most from this exciting technology. 

Also Read: Marketing Guide for MSPs

Security

Cybersecurity is huge now. We've had a couple of managed service providers hacked in the recent past, and this is raising serious concerns. How will this evolve going forward?

The cyber attacks have raised concerns among clients about the security of their data, which could lead to a decrease in demand for managed IT services. This could potentially damage the reputation of the MSP industry, as clients become more wary of entrusting their sensitive information to third-party providers.

However, the response to these attacks could also be positive for the industry, as clients become more proactive in seeking out managed IT services providers with robust security measures in place. This could lead to increased demand for MSPs who are able to demonstrate a commitment to security, and the industry as a whole could see a shift towards a more security-focused approach.

The security challenges surrounding the sector are also likely to draw the attention of regulators, who may consider creating specific compliance guidelines for providers. This could be beneficial for the industry, as it would provide a clear set of standards that MSPs would need to meet in order to operate. This could lead to increased confidence in the industry, and this will benefit all players. 

Here are a few examples of notable cases:

• Rackspace: In 2022, Rackspace suffered a ransomware attack  that resulted in the theft of sensitive customer data. The hackers used a vulnerability in Rackspace's systems to gain access to sensitive information, such as login credentials, financial information, and personal data. The breach prompted increased scrutiny of the managed IT services industry and raised questions about the security measures in place to protect customer data.
• SolarWinds: In 2020, SolarWinds was hacked, leading to a major breach of multiple government agencies and corporations. The hackers used a supply chain attack to infiltrate the SolarWinds software update process, allowing them to gain access to sensitive data.
• Accellion: In 2020, Accellion was hacked, resulting in the theft of sensitive data from multiple organizations, including financial information and personal data. The hackers exploited a vulnerability in Accellion's file-sharing software to gain access to the data.

Also Read: How to Handle Ransomware Attacks

Authorities Are Taking Note: In early May 2022, the Cybersecurity and Infrastructure Security Agency (CISA)  issued alarm over heightened cases of attacks aimed at managed service providers. They then gave a detailed advisory consisting recommendations that MSPs should take to stay safe from the rising attacks. Some of these recommendations include:

• Preventing initial compromise
• Improving monitoring processes
• Segregating networks
• Deprecating obsolete accounts
• Enhanced transparency
• Etc

Perhaps going forward, players in the sector may need to start thinking about consolidating existing alliances into bigger ones to collectively help tackle the rising attacks in the industry? Food for thought. 

Lessons

Lessons make us better, and the Managed IT services market is no stranger to lessons. The following lessons have been the major highlights of the past and present. How can you leverage them as you look into the future? 

1. The value of proactive IT support

As businesses became more dependent on technology, it became clear that waiting for problems to arise before addressing them was no longer sufficient. Instead, MSPs soon realized that they needed to take a proactive approach in order to prevent problems and ensure maximum uptime for clients.

This shift was driven by a number of factors, including the growing sophistication of cyber-attacks, the increasing complexity of IT systems, and the need for organizations to be able to operate 24/7. This approach has since become the industry standard, and continues to be a core aspect of the managed IT services offering.

Going forward, managed IT services providers (MSPs) can leverage the lesson of proactive IT support in several ways, including:

• A robust monitoring and management system: Invest in technology that makes it possible to monitor clients' IT systems in real-time, identify and resolve potential issues before they become full-blown problems. This could include network monitoring tools, software update management systems, and security scanners. Check out these best remote monitoring and management tools for MSPs. 
• Emphasize the benefits of proactive IT support: As you may need to charge a little more for proactive offerings, you need to communicate the benefits to clients, and educate them on why it's important for their business. This could involve sharing real-world examples.

2. The need for personalized solutions

The traditional approach to IT support has been to offer generic, one-size-fits-all solutions, but this approach is no longer effective in today's fast-paced and highly competitive business environment. MSPs are acknowledging that no two businesses are exactly alike and will increasingly offer personalized IT solutions that are tailored to each client's unique needs.

Here are a few scenarios where this lesson could shape MSP offerings in the future:

• Increased emphasis on consultation: More MSPs may place a greater emphasis on consultation. This means spending more time talking to clients to understand their needs and goals, before offering tailored IT solutions.
• Focus on outcomes, not just technology: Instead of only providing technical solutions for hardware, software, and networks, MSPs may start to focus on delivering measurable outcomes such as percentage increase in efficiency and revenue.

3. The significance of flexible and scalable services

As businesses grow and evolve, their IT needs will always change, and managed IT services providers need to be able to accommodate these changes.

In the past, many MSPs struggled to accommodate their clients’ fast changing needs and found themselves unable to support them as they grew. This resulted in clients having to seek solutions elsewhere, leading to lost business and revenue for affected MSPs.

To address this challenge, a good number of MSPs are likely to adopt technologies such as containers and microservices. Containers and microservices architectures allow for the deployment of modular and scalable applications, which can be managed and scaled more efficiently than traditional monolithic applications.  

Further Reading: Understanding Containerization — What is It?

4. The importance of innovation

As new technologies and solutions have emerged, MSPs that have not kept pace with these advancements have likely found it increasingly difficult to compete with those that have. This is because customers have come to expect a high level of technical expertise and innovative solutions from their MSP partners. Providers that have not invested in innovation risk falling behind in the market and losing clients to more proactively innovative competitors.

In future, MSPs will continue to place greater emphasis on gathering feedback from clients and developing innovative solutions that meet their customers' evolving needs. They will invest in the latest technologies and provide their clients with the most advanced services. In other words the focus will be on leveraging innovation to improve service provision.

5. The significance of long-term vision

Across any industry, the companies that survive are those that take care of the present while being guided by an intelligent long term vision. Business history is littered with example upon example of once flourishing companies that became obsolete simply because they failed to adapt a long term vision to guide them even as they shined in the present. 

The managed IT services industry is no different. Everywhere you look, you will come across an MSP that went out of business because of neglecting long term thinking. These companies may have focused solely on short-term gains, neglecting the need to invest and plan for the future. As a result, they were unable to adapt to the changing market conditions and eventually lost ground to their competitors.

But on the other side of the coin, we also have successful companies that took a long-term view and invested in the future. These companies understood that to succeed in a constantly evolving industry, they needed to always think long term and start investing gradually in new technologies and solutions, build strong relationships with their clients, and develop a clear and comprehensive strategy for growth.

This is what every MSP must start doing now. The future belongs to those who imagine it and take steps to prepare for it. 

Artificial Intelligence

The Managed IT Services industry has come a long way from the days when providers were just about fixing computer issues and maintaining hardware. Today, the services encompass a wide range of functions, from managing infrastructure and security to providing expert technical support and enabling organizations to take advantage of the latest technologies. 

This evolution has been made possible by the emergence of robust technologies. And now that we are right in the early days of Artificial intelligence, it’s important to look forward and ponder how AI is likely to impact this sector. 

AI is set to play a critical role in transforming the way managed IT services are delivered. 

For example, AI-powered tools and algorithms will allow service providers to monitor clients' IT systems in real-time, identify potential issues before they arise, and resolve problems faster and more accurately. This will result in improved service quality, increased efficiency, and reduced downtime, making businesses more productive and competitive.

In addition to improving existing services, AI will also open up new opportunities for managed IT service providers. AI can be used to automate routine tasks, freeing up valuable resources that can be reallocated to more strategic initiatives. It can also be leveraged to analyze vast amounts of data and provide insights that can inform business decisions.

Moreover, as AI continues to evolve, it will enable MSPs to offer even more advanced and specialized services. This will result in a more competitive market, with providers offering a wider range of services and better value to their clients.

Take something like digital assets in the context of e-Commerce. Providers who currently manage e-Commerce companies’ digital assets systems may need to start reorienting their skills and tools to be able to deal with AI generated digital assets.

There are some concerns worth noting though: 

• Security Concerns: AI-powered systems can be highly vulnerable to cyber attacks and hacking, making it important for providers to implement robust security measures to protect their clients' data.
• Ethical Concerns: AI's reliance on data and algorithms raises questions about fairness, bias, and accountability, as decisions made by AI systems may have significant consequences for MSPs and their clients.

Also read: Machine Learning and Artificial Intelligence in Cybersecurity

Pure Play or Hybrid?

We rarely see much talk of pure play vs hybrid in this industry. But if you are keen, you may have noticed that we have both pure play and hybrid providers. We don’t have enough data yet to say with certainty which among these two will have more players in future. What we can say for sure is that both pure play and hybrid will continue to play side by side. 

A pure play managed IT services provider offers a single type of service, such as cloud computing, managed security services, or disaster recovery services. These providers specialize in a particular area of IT and are often able to offer a high level of expertise. Pure play could also mean that a provider focuses on managed services only, and no other services/products. 

Hybrid managed IT services providers, on the other hand, offer a combination of IT services, including hardware and software solutions, as well as traditional IT support. These providers are able to offer a broader range of services and can be especially useful for businesses with complex IT requirements. Hybrid could also refer to providers who offer other types of services/products in addition to managed offerings. 

In the future, it is likely that the managed IT services industry will continue to consolidate, with larger providers acquiring smaller players to broaden their service offerings and reach. This could result in the growth of hybrid managed IT services providers, as businesses seek providers that can offer a comprehensive range of IT services.

At the same time, the trend towards cloud computing and other digital transformation initiatives is likely to continue, driving demand for pure play managed IT services providers that specialize in these areas.

Challenges

These are the key challenges that we reckon will grace the managed IT services market in future. 

1. 5G Security

The integration of 5G technology in networks elevates the risk of data breaches and cyber attacks due to its increased speed and reduced latency, which allows for larger amounts of data to be transmitted in a shorter amount of time.

This increase in data transmission can lead to an increase in the volume and complexity of attacks, making it more difficult to detect and prevent them. 

And as 5G networks rely on a complex infrastructure with multiple components that must work seamlessly together, even a small vulnerability in one component could lead to a widespread breach, making the security of these networks a critical concern.

Managed IT service providers could face increased pressure to provide reliable and secure 5G services to their clients. This means that they must be equipped with the necessary resources, and tools to handle the growing demand for 5G services. 

2. Sustainability

With growing concerns about sustainability, MSPs will be forced to find ways to reduce their carbon footprint and promote sustainability in the IT industry.

We might be heading to a future where MSPs will have to assess their energy usage and identify areas where they can reduce their energy consumption. This could include implementing more energy-efficient hardware, implementing virtualization, implementing recycling programs for electronic waste and utilizing reusable or recyclable materials in their operations.

We could also see the emergence of a trend where more providers will champion sustainability in the IT industry. This could include advocating for more environmentally-friendly solutions and educating their clients on the importance of sustainability.  

3. Talent Retention

With the high demand for skilled IT professionals, managed IT services providers must continuously seek ways to retain top talent. They must also ensure that their employees are not only satisfied but also motivated.

One of the key challenges that managed IT services will face in retaining top talent is the need to provide competitive salaries and benefits packages that match the expectations of skilled IT professionals. 

4. Ethical AI

As artificial intelligence becomes more advanced, managed IT services providers will increasingly need to find ways to ensure that AI systems are ethical and aligned with human values.

As an MSP concerned about the future, you would probably be thinking about starting to get a deep understanding of the ethical implications of the AI tools you use in your routine service provision. How can your AI systems be designed to respect human rights and dignity?

This may involve implementing robust data governance and privacy policies, as well as implementing measures to prevent your AI systems from being used for malicious purposes.

5. Neurotechnology

The development of neurotechnology, which involves the creation and use of technologies that interact with the human nervous system, will bring new challenges for managed IT services, and they must be prepared to manage these new technologies.

For example, regulations and standards surrounding the use of this technology are likely to change rapidly. MSPs will need to stay informed about these changes and ensure that their use of neurotechnology is compliant with relevant regulation. .

6. Cyberpsychology

As cyber attacks become more sophisticated, providers must understand the psychology behind these attacks in order to better defend their clients against them.

This information is important because it enables you to gain a better understanding of the social and cultural factors that influence the motivations of attackers. This knowledge can then be used to address the root causes of cyber attacks and to design security solutions around the root causes. 

So what’s the challenge? The skills and expertise required to understand cyberpsychology are specialized and may not be readily available, MSPs will need to invest more to prepare for a future where these skills will become instrumental. 

Where will you be?

Have you ever wondered whether there are industries that «die»? Is there such a thing as an industry «dying»? Could it be that most people confuse this with the evolution of the business landscape? Some of the earliest industries like Food & Agriculture are still with us today. Manufacturing, which always serves as the best example when talking of traditional and rigid industries, is still here with us. And where will it go, anyway? Where will the cars come from, the clothes?

The point we are trying to make here is that when thinking about the future of your industry, always think evolution. What will change, where will the disruptions come from? How can you start preparing for the disruption? Or how can you disrupt it yourself? 

This is also true for the managed IT services sector. Remember it started with the break fix model, then gradually evolved to the MSP model. Same concept, different phases. It doesn't matter where you are now. You could be big, small, medium or just starting. But where will you be in the next decade and beyond? 

Again, think evolution. Take advantage of the raging disruptions, or  be the disruptor.