IT and Business Insights for SMB Solution Providers

MSPs Face Challenges Amid Growth Opportunities

Recent research from Kaseya unit Datto on the state of the MSP finds channel pros worried about the competition, an evolved break-fix making somewhat of a comeback, and more. By Colleen Frye

NOW IS A GOOD TIME to be a channel pro, according to a whopping 95% of the 1,800 MSPs surveyed in Kaseya unit Datto’s latest Global State of the MSP Report, and 82% expect revenue will increase over the next three years. That doesn’t mean they don’t face challenges, however, and the topmost for a second year in a row is competition from other MSPs, with 29% of respondents rating it as No. 1.

Other challenges going into 2023 include revenue growth and profitability (both at 28%), followed by acquiring new customers and hiring (both at 24%).

One way MSPs may be acquiring new customers is through break-fix services, which the report says has evolved to more of a co-managed offering to help IT departments in larger companies and can serve as a gateway to new business. Indeed, this year’s survey saw an 11% increase in break-fix revenue.

Datto's Global State of the MSP Report: Looking Ahead to 2023

Still, 56% of respondents’ total revenue comes from recurring services, with the top five managed service offerings being cloud-based infrastructure design and management (83%), office productivity software services (83%), business continuity/disaster recovery and networking (both at 79%), and technical support/help desk (77%).

Anticipated growth areas for managed services offerings include collaboration software, storage design and implementation, and incident response and forensics.

No surprise then that cybersecurity remains a strong growth area, with 97% of respondents offering managed security services such as email security (76%), password policy management (71%), and security framework and compliance auditing (69%).

Respondents expect to add the following managed security services over the next 12 months: managed detection and response and dark web monitoring (both at 30%), privileged access management, web content filtering, and compliance monitoring (all at 29%).

Meanwhile, about 95% of MSPs surveyed point to cloud solutions as a new market opportunity, and half say they expect 75% of workloads to be in the public cloud in three years. For their SMB clients that have migrated workloads to the cloud, the majority are in AWS (54%) and Microsoft Azure (47%).

Finally, the industry is still attracting newbies, with nearly a quarter of respondents reporting that they have been in business for fewer than five years. For veterans and newcomers alike, the State of the MSP report offers some mostly upbeat signposts for 2023.

Image: iStock

About the Author

Colleen Frye's picture

Colleen Frye is ChannelPro's managing editor.

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