Business model

Has the MSP business model expanded beyond managed services?

COVID-19 may have caused MSPs to hedge their bets with multiple business models rather than just providing managed services, CompTIA noted in its latest report.

According to new research from CompTIA, managed IT service providers (MSPs) are shifting their business model beyond managed services.

The trade association and research firm surveyed 400 MSPs as part of its 2022 Managed Services Trends Study. The results showed that the pandemic has forced many MSPs to transform significantly. Moreover, respondents expressed a mixture of optimism and concern about the future.

On the one hand, 53% of MSPs said they felt optimistic or very optimistic about their business. However, 25% of MSPs said they were pessimistic or very pessimistic about the state of their own business in the coming year. Last year, only 4% of respondents told CompTIA that they felt uneasy about the future.

Their concerns ranged from macroeconomic crises to channeling conflict into their jurisdictions. Macroeconomic crises scored the highest, followed by supply chain and cash flow issues.

Carolyn April from CompTIA_2022

Carolyn April of CompTIA

“Like many businesses, MSPs have been rocked by two years of pandemic-induced economic upheaval,” said carolina april, senior director of industry analysis at CompTIA. “Some MSPs saw this as an opportunity to get creative and find new ways to deliver value to customers, but others struggled to hold on.”

It is impossible to overstate the impact of COVID-19 on IT teams, both internal and outsourced. The pandemic has driven massive cloud adoption and, in most cases, turned outsourced IT into a profitable business model.

And based on CompTIA’s survey results, most MSPs appear to have handled COVID-19 well. The majority (64%) of respondents said they “came out even or ahead” in 2021. However, an alarming 32% said they “came out behind” in 2021.

Source: CompTIA

Some companies, CompTIA found, have expanded their business model beyond managed services. In the 2021 survey, 44% of companies said more than 75% of their revenue came from managed services. This time around, 37% of respondents landed in this category.

Source: CompTIA

MSPs in the “hybrid” model included “traditional, one-time revenue streams,” such as project and product sales. Additionally, 30% of pure-play MSPs have also accepted non-recurring work requests.

“If the pandemic has taught businesses, especially smaller ones, anything, it’s that the need for an off-the-shelf Plan B, C, or sometimes D is not moot,” CompTIA wrote.

MSPs also reported skills-related challenges. Respondents highlighted the need for technical training for their staff (44%) and 37% said they had difficulty hiring qualified people.

“The skills are there, but today it’s a job seeker’s market and MSPs are competing not only with other tech companies for new hires, but with companies in all job categories. industry,” April said. “Smart MSPs invest in their existing staff by providing in-house training and access to certifications and other accreditation pathways for professional development.”