8 Managed Services Provider (MSP) Industry Trends

The IT industry has encountered numerous challenges and opportunities in the last few years. The whole world was turned upside down, and no one was more affected than the tech companies. While some were fighting just to stay alive, others used this chance to grow their business.  

MSP was especially affected by the COVID crisis. Businesses within this niche had to face numerous operational challenges, all of which were caused by the «new normal». Regardless, this shift has brought some much-needed, positive changes.

The need for remote work forced companies to invest heavily in their IT departments. As a result, Managed Services Providers were able to establish better relationships with their clients and other stakeholders. Aside from introducing new tendencies, we saw a faster spread of trends that were on the rise even pre-COVID.

In this article, we will take a look at the biggest trends within the MSP industry.

8 Biggest MSP industry trends

If we were to sum things up, most of these trends would revolve around flexibility and security. In just the last few years, Western businesses had to face challenges caused by COVID, the Russian-Ukrainian war, and rampant recession. As a result, MSP companies are forced to make fast, drastic changes to accommodate clients' needs.

The good thing for MSP providers is that the companies now realize the benefits of their services. Without further ado, here are the 10 major MSP industry trends you should look for:

1. Consolidation

MSP is an industry that is constantly on the rise. It was valued at 269 billion dollars in 2022, potentially growing to 299 billion in 2023 and 330 billion in 2024. A staggering 70% of the companies working within this field considered being acquired by another business.

Consolidation is a common practice that is prevalent in mature, steady-growing markets. This is probably the best way to remain competitive, by joining resources with other entities.

The majority of MSPs are looking forward to consolidation as a way of improving their offer. With this method, they can provide an umbrella of IT services which would include cyber security, maintenance, cloud solutions, and application integration.

For some entities, this is a way of continuing growth and entering later stages of development. They might also decide to use this approach to penetrate new markets or increase their current market share. Except for the companies, clients are also profiting from consolidations as they can now get better service at a lower price.

2. Cloud-based technology

Most experts will agree that the cloud trend isn't anything new. However, the need for the cloud technology has become even more apparent in the last few years. Even if you were against storing data on a cloud, the recent crisis shows why cloud-based services and servers are essential in modern business.

Basically, cloud-based services and servers are the main reason why companies were able to run without a hitch during COVID. Traditional operations were relocated to the internet, whether we were talking about file-sharing, team communication, or delegation of tasks.

Even though society isn’t fully ready for remote work, businesses should get accustomed to doing things online. Among others, cloud technology has become vital for MSP organizations. Given that companies are transferring everything online, Managed services providers are heavily reliant on the cloud for performing scheduled maintenance.

Experts believe that MSPs need to adopt a multi-cloud solution approach even faster. Even if they're using the cloud for daily activities, they will have to introduce cloud services from other companies to make their offer more inclusive. 

3. Data utilization

For a while now, companies have been focusing on amassing data instead of using it qualitatively. One of the biggest flaws within this field, but also in other industries, is the interpretation of said data. That being said, MSPs are making the biggest strides in using information for commercial purposes.

To stay on top of their game, service providers will have to invest in high-tech analytic tools while enhancing data capabilities and data interpretation. Previously, these businesses were struggling to contextualize massive amounts of data, which couldn't be correctly interpreted with the older analysis tools.

In the following years, MSPs will start using robust but more precise tools. They will also start hiring commercial experts that could help them understand consumers' intent. If done right, these practices should increase the client base while enabling better service.

4. ITSA

ITSA, or automated IT service alerting, is another trend that MSPs should pay attention to. Nowadays, almost every industry can benefit from automation. These solutions can replace the traditional workforce and help with mundane, repetitive tasks that cost companies a lot of money.

Not only is automation cheap, but it also prevents human errors. You can use it for just about any business operation. Among others, companies can use ITSA to receive an alert whenever something happens with their clients. They also provide assistance during critical company-wide events by sending notifications across teams.

To help automated altering, MSPs are introducing IT service management, modern cybersecurity suites, and remote monitoring. All these features increase response time and, thus, the overall company efficiency.

5. Cybersecurity

Speaking of advanced cybersecurity tools and services, they are quickly becoming a necessity not only for MSPs but for other organizations as well.

In the last few years, entities have significantly changed their modus operandi, turning toward a remote workforce. In turn, this has created a window of opportunity for cyber attackers. Instead of going for minor companies, these virtual criminals now have the option of targeting infrastructure, governments, and large businesses.

The security risk has significantly increased with the “new normal.” As more and more people are working from their homes, companies have become increasingly exposed to cybersecurity threats.

Despite MSPs' best efforts, the current security measures aren't enough to tackle this threat. According to the experts, the entire sector will have to rethink its approach. MSPs will likely have to provide antivirus protection for the whole workforce coupled with multi-factor authentication, remote connection, and backup solutions.

Aside from these measures, the future cybersecurity suite will contain patch updates and management, disaster recovery, firewall updates and management, filtering of spam, etc. The need for advanced web protection favors MSPs, most of which have excellent multi-level security solutions.

6. Workforce management

MSPs encounter various operational challenges whenever a client’s regular daily activities get disrupted. For example, in the last few years, a lot of companies have asked their MSPs to continue working from home. This was a major hit for all service providers as they’re now forced to install VPNs, webcams, remote communication tools and solutions, and continuous support for employees.

As a result, we’ve seen a brand new trend in this already flexible niche. One of the biggest innovations is the introduction of advanced remote workforce management solutions.

If we’ve learned anything in the last few years, it’s the fact that remote employees have to be properly steered. Whether we’re talking about workload management and monitoring or task delegation, there are various things that can be done better. All companies that introduce these remote employee solutions will have a distinct edge over the competition.

7. Machine learning

Most IT experts will agree that machine learning is the future of the entire economy. According to the early prediction, this technology will have an enormous effect on data management, among other things. Machine learning will allow organizations to automatically analyze complex data without having to rely on human input.

By the year 2025, service providers will rely on this technology to discover potential operational issues and outside threats in advance. Most MSPs have realized this already; according to a recent inquiry, 63% of providers would use machine learning to their advantage.

8. Budgeting

Cutting costs by reducing budget and the number of employees is a common thing in the modern economy. It’s just that some industries face it sooner rather than later, which is the case with MSPs.

As the entire niche becomes more competitive, the most successful MSPs are those that manage to reduce their IT budgeting without sacrificing quality. An increasing number of managed service providers are using revenues to build their own infrastructure. That way, they can charge clients for the use of customized private clouds, thus increasing overall profitability.

During the COVID, MSPs faced another challenge. As IT wages started increasing, it became harder for providers to recruit and retain top experts. Since then, there has been an increased emphasis on IT staff augmentation.

Conclusion

The majority of MSP trends are, in one way or another, connected to COVID and its impact on the global economy. The pandemic presented a new set of challenges for the entire niche eliminating providers who were slow to adapt.

Other Managed services industry trends were related to the industry's maturation. A lot of companies were forced to consolidate and join forces with other providers so that they could stay afloat. At the same time, organizations are looking to cut their costs wherever they can just so they can remain financially competitive.

Regardless of these problems, the managed service industry continues growing with every passing year.