7 Things to Know About the State of the MSP (PART 1)

Managed Services Providers (MSPs) are key players in the information technology and cybersecurity arena. But the MSP business isn’t easy. MSPs face many challenges that are unique to them because they’re running both a business and an IT department. Plus, it’s an always-on business where problems can crop up for an MSP or their clients at any time. Add the extra stress of today’s volatile security climate, and you’re looking at a taxing business. These seven insights into the state of the MSP rolling into 2023 can help shine a light on the challenges and opportunities that are ahead for MSPs.

Excerpted in part from Datto’s Global State of the MSP Report: Looking Ahead to 2023

1. Is this a good time to be an MSP?

Nearly all respondents still believe it is a great time to be an MSP. An overwhelming majority of respondents (95%) said that they believe that now is a good time to be in the industry and that it will continue to grow – 82% expect revenue will increase over the next three years. Market sentiment is highly positive. There are also plenty of new MSPs entering the market. While more than half of respondents said they have been in business between six and 11 years, about a quarter reported that they’re relative newcomers and have been in business for less than five years That’s a good indicator that the business is healthy and attracting new entrepreneurs.

3 essential facts about today’s MSP

Source: Datto

2. What’s the revenue outlook for MSPs?

The revenue picture is rosy. Revenue is climbing steadily for MSPs, even in today’s turbulent economy, with three out of five MSPs indicating they’d experienced an increase in revenue in the past 12 months. Security is a strong growth driver, especially as cyberattack risk continues to rise. Diving deeper, just over one-third (36%) of respondents reported annual revenues between $1 million and $5 million, and another third (32%) said they had average annual revenue of less than $1M. Some MSPs are seeing very high revenue, with 8% of respondents saying that their annual revenue topped $10 million and 5% reporting annual revenue of over $20 million.

The revenue outlook for MSPs is rosy

Source: Datto

3. What services are MSPs offering now?

MSPs offer their clients a wide variety of services, but there are a few services that are especially common. The shift to the cloud for SMBs is steady and ongoing. Most MSPs (83%) are helping their clients move into the cloud by offering cloud-based infrastructure design and management. Traditional MSP offerings of networking, Business Continuity and Disaster Recovery (BCDR) and technical support rounded out the top five services offered. The prominence of BCDR speaks to the volatile security climate and the need for businesses to ensure that they’re prepared to recover from a cyberattack quickly.

The top 5 services MSPs offer

Source: Datto

4. What managed security solutions have had the biggest positive business impact?

Ransomware and email security have dominated the security conversation for the last few years and that’s reflected in the top security offerings for many MSPs. The top managed security service currently offered is email security. Many MSPs have added tools that not only address issues after an attack but, more importantly, help monitor networks to mitigate their risk. A third of respondents in all markets believe that security solutions present new business opportunities and MSPs are taking advantage of that.

The top 8 security solutions MSPs offer