For managed service providers (MSPs), like everyone in general, 2020 was an unpredictable year. Since the outbreak of the pandemic, cloud–based solutions, particularly collaboration tools have seen significant growth owing to the adoption of remote work by enterprises. Many offline businesses shifted online, leading to a rise in the demand for managed services. In this very uncertain climate, MSPs have become truly essential for businesses to survive and thrive.
Moreover, the MSP industry is expected to grow dramatically in the coming years. The global managed services market was valued at $152.05 billion in 2020 and is expected to reach $274.20 billion by 2026.
However, the MSP industry faced its share of challenges to survive the impact of the COVID-19 pandemic. In this 2021 MSP Benchmark Survey Report, we take a deeper look at the various factors driving the growth of MSPs, the challenges they face, the services they provide and their pricing structures.
Among the many findings in the 2021 MSP Benchmark Survey, five themes emerged.
Three Main Challenges for MSP Clients in 2021
MSPs expect managing a remote workforce, IT security, and business continuity and disaster recovery (BCDR) to be the biggest problems for their clients in 2021. The security concern is consistent with other reports that have shown a huge uptick in cyberattacks in 2020. IT security has also been the top priority of IT leaders in our annual State of IT Operations Survey for the past several years.
Primary Challenges MSPs Anticipate Facing in 2021
Acquiring more customers is the primary challenge a large portion of the MSP respondents anticipate facing in 2021. In addition, nearly one-fifth of MSPs cited dealing with advanced and sophisticated security threats as a top challenge. Another 15 percent are concerned about shrinking IT budgets as a result of the pandemic.
Post-Pandemic MSP Growth Opportunities
The majority of MSPs believe cybersecurity and remote workforce setups will present the biggest opportunities for growth in 2021. This is consistent with the fact that the majority of MSPs have their clients turning to them for help with IT security.
MSP Services Revenue Growth
Of all service offerings, security services revenue has gone up in the past 12 months for the largest number of MSPs — a whopping 65 percent, even in the face of a global economic recession. This year’s report shows that cybersecurity has become ever more critical to SMBs.
For about 54 percent of MSPs, cloud management revenue has gone up. Both cybersecurity and cloud management services growth can be seen to be a direct result of the pandemic. There was an associated huge increase in cyberattacks as well as demand for cloud services.
Importance of RMM and PSA for MSPs
The remote monitoring and management (RMM) application is undoubtedly the most important application for most of the MSPs (65 percent). The vast majority of MSPs (83 percent) said they believe the integration of core applications, like RMM and professional services automation (PSA) solutions, helps their organizations drive better bottom-line profits.