By James Bergl - Director, Datto, Asia-Pacific
Managed service providers (MSPs) occupy an important position in today’s business IT environment. Like all providers, their ability to serve client needs is impacted by a multitude of factors. What does the MSP landscape look like in Asia and across the globe; what are their major challenges and how is the industry evolving to meet the new demands of the market?
To find out, we reached out to over 1,600 respondents from Singapore, Asia-Pacific and around the world and here’s what we found:
1. MSPs moving to become ‘Strategic Advisors’
As SMBs everywhere struggle with increasing IT complexities, including greater compliance demands, security threats and intensifying skills shortages, MSPs are seeing the opportunity to position themselves as ‘strategic advisors’ to help their clients navigate this evolving landscape. This is seeing MSPs moving to specialise their services for particular industries. This is a smart move, which could see them not only bolstering bottom-lines, but also elevating the client - vendor relationship into something more akin to true partnerships. At present, 56% of MSPs specialise for targeted sectors, with verticals including healthcare, finance and legal among the most popular.
2. Recurring services driving revenue
As SMB demands for IT services continue to evolve, IT service providers are adjusting their business models to include more managed services. Our survey found that more than 80 percent of MSPs report recurring services driving a portion of their revenue, highlighting an industry shift from IT service providers solely modeled on ad-hoc services to becoming more strategic with more than 44 percent of respondents reporting that over 50 percent of their revenue is the result of recurring services.
3. MSPs plan to hire more, but it’s not easy
According to our study, the vast majority of MSPs (71%) plan to make between 1 to 5 new hires in 2019, indicating healthy growth in the industry driven by client demand. However, 37% of MSPs feel that landing the right candidate will be more difficult, compared to last year.
4. Security still a major pain-point
As cyber-attacks continue to evolve in sophistication and frequency in Asia-Pacific and across the globe, MSPs continue to report security as a major pain-point for their businesses and their client’s businesses. In fact, ransomware and cybersecurity have doubled as a pain-point, from 14 percent in 2017 to 30 percent in 2019.
5. Best time to be an MSP
Despite some headwinds, the survey revealed a very positive outlook for MSPs, who expect to expand their teams and achieve healthy business growth in 2019. While respondents reported grappling with concerns about marketing and sales, the data shows that MSPs are becoming savvier about this aspect of their business. It also found that MSPs are evolving to take on specialist roles, which will help them find and cement customer relationships in today’s increasingly sophisticated marketplace.
Encouragingly, nearly 100% of MSPs, most who have been in the industry for more than 15 years, think that right now is the best time to be in their industry.
To find out more, see Datto’s State of the MSP Report here.