The paradigm has shifted for global Managed Service Providers, or MSPs. MSPs are staying focused more than ever. Today, Cloud and security services form the backbone of MSPs. Even during the pandemic, Managed Service Providers are witnessing remarkable shift to Cloud platforms.
Let’s find out more about the state of MSPs in 2021.
According to the recent report titled “2021 State of MSP”, Datto found out nearly all MSPs now offer some flavor of managed security services.Additionally, the MSPs expect that at least half of client workloads will be in the cloud by 2023.
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What is an MSP?
A Managed Service Provider is a third party IT firm, often contracted by an enterprise to deliver a set of services related to adoption, migration, maintenance, support or storage. The commonly offered services include Networking, Application management, Infrastructure and Cloud migration. In the recent times, we are seeing the emergence of Managed Security Service Providers (MSSPs) and Co-managed IT services. Many MSPs either partner with MSSPs or provide these as part of their integrated offering.
Gartner states that an MSP could deliver its own native services in sync with other providers’ services.
According to Datto, SMP customers spend anywhere between $5000 and $15000 per year on their managed services.
What State of MSP Report Revealed?
Here’s a quick overview of top 5 things that the latest Datto’s MSP report found out:
Competition is a key differentiator
MSPs are facing stiff competition in the industry, and the COVID-19 pandemic has left mixed impact on the revenue streams. 93 Percent of the respondents acknowledged that 2021 is the best time to be a Managed Service Provider, especially if you also provide ‘security’ as part of your MSP offering.
Top adoption centers
Telecom is the top MSP adoption center. It is followed by High tech and healthcare industry. Clients in the North American region are fairly large-sized compared to MSP customers in other parts of the world.
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Data Compliance and Regulations
MSP based in the UK and Ireland are more optimistic compared to players in the APAC region. 21% of the respondents in the APAC region are concerned about the influence of data compliance on their MSP. This is much higher than what is seen in Europe (14%) and North America (15%).
Recurring revenue: a key indicator of MSP maturity curveÂ
67% of the respondents agreed that MSP industry is maturing, as their total revenue comes from recurring services. 40 percent of the total respondents have annual revenues above $1 million, but less than $5 million.
The Pandemic Influence
MSP technology is one of the key players in the pandemic era, enabling IT companies and their customers to beat the pandemic blues with timely services. Remote working with real-time services put additional pressure on existing IT infrastructure. MSPs played a key role in alleviating the pressure. This influenced their revenue generation.
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47% of the MSPs earned slightly higher revenue due to the COVID-19; 18% faced a cut in their revenue streams in the same period.
Nearly every MSP displayed a positive outlook toward the industry. 96% of the MSPs are optimistic about increase in revenue over the next three years; nearly half of them expecting growth of more than 5% by 2025. APAC and Europe would see slightly higher growth compared to North America, the current leader in the MSP adoption.
Security: The Biggest Technology Growth Center for IT Industry
A majority of the MSPs are offering Cloud-based IaaS and DaaS, with additional layer of managed security services. The security layer has allowed MSPs to accelerate digital transformation journeys through modernized Cloud migration. The cloud migration is effective in enhancing the rate of adoption of Office Productivity software services / collaboration services (Microsoft 365, Google Workspace), Storage solutions, video surveillance, API and middleware integration, email security, and so on.
Clearly, building high-end security expertise within MSP portfolio would serve the providers, customers and partners. All these come together to deliver an agile, cost-efficient and flexible infrastructure to manage the volatile scenario in IT operations, recruitment tech, and remote workforce management.
Datto’s 2021 State of the MSP Report is based on statistics pulled from a survey of roughly 1,800 managed service providers worldwide. The survey was conducted by Strategy Analytics on behalf of Datto.
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