Competition the main concern for MSPs

Annual Datto survey indicates fears expressed in 2022 have continued to rise this year, along with a desire for vendor consolidation

Competition is a rising concern among the managed service provider (MSP) community as they look over their shoulder at rivals keen to take advantage of a growing market.

According to the latest Datto global state of the MSP report, there are indications that channel players are also looking to consolidate vendor relationships to improve simplicity and reduce costs.

Despite 2023 being a tough year for many, the majority of MSPs continued to grow across Europe, with nearly two-thirds (64%) of MSPs experienced year-over-year (YoY) revenue growth. Those able to sell security and support customers looking for protection were able to tap into a rich vein of business.

The downside of continuing to enjoy a growth market is the increased competition as others pile in to take advantage. The Datto survey found that more than a third (35%) of MSPs globally viewed competition as the biggest challenge, which was up from 29% last year.

If there is a plus from facing more rivalry over deals, it is the increased innovation being shown across the MSP community and a bigger focus on generating high levels of customer experience.

Another key takeaway from the Datto survey was the ambition by most MSPs to expand their service options to cover more in-demand technologies.

There has already been a lot of talk about generative AI (GenAI), with MSPs looking to add more services around business intelligence and analytics in 2024. Top areas for growth are expected to include collaboration software and storage design and implementation services.

“While MSPs have long been the unsung heroes of tech, this year’s survey results clearly speak to a growing understanding of the critical role technology plays in a sustainable business,” said Holly Pateman, Kaseya’s senior vice-president of product marketing.

“With revenues and competition on the rise, and a focus on the need for a superior customer experience, MSPs have a front row seat to what makes their customers successful. As a result, these MSPs have a clear view into what keeps a major cornerstone of our economy – small and midsize businesses – running,” she added.

There is also a message in the findings for vendors that relationships with MSPs cannot be taken for granted as more look to consolidate the number of firms they work with. The headline number of 74% of respondents indicated they wanted to use fewer vendors, which was up on the percentage last year (64%). A desire to have a streamlined supply chain as well as improving procurement and asset management factored into those views.

“As we head into the end of the year and the start of 2024, we can all learn from the stories, challenges and successes of the MSPs shaping the future of IT services. We hope that this report will shed light on this thriving industry that is currently experiencing more growth potential than ever before,” added Pateman.  

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