MSP Evolution Summit: Acceleration towards services model

The number of partners that derive revenues from managed services has continued to increase over the course of this year as more look for recurring streams of business.

The idea of becoming a managed service provider (MSP) has been gathering momentum for the past decade or more, but this year has seen an increased shift in the breakdown of where a partner’s revenues are coming from.

Outlining the current state of the market for the Informa TechTarget MSP Evolution Summit, Jay McBain, chief analyst at Omdia, said there had been an acceleration towards the managed services model.

“Back in the 80s, 90s – back in the client, server days – around 84% of a partner’s or MSP’s life might be wrapped around hardware and then converting that into break-fix things, where today it’s only 16% of the revenue and only 13% of the profit,” he said.

“You can see managed services becoming a much bigger part of the P&L at 27% of the average partner. This is [the same with] VARs, integrators and solution providers, and managed service providers as well.”

McBain said the other feature had been the geographic expansion of the MSP market, with it becoming increasingly popular outside North America in Europe and Asia Pacific.

He added that the MSP business was outgrowing the global economy by some margin, and there continued to be a sizeable opportunity for partners to go after. “There’s over 335,000 companies around the world now that have at least one managed contract with a customer. So, this industry has matured significantly,” he said.

“When we keep asking on different surveys, what business models [do you have] between hardware and software services, almost half of the respondents come back and say managed services is their number one opportunity to fuel growth in 2025, and we’re starting to see that for 2026 as well.”

He added that the current focus by vendors on taking a platform approach was not simply about technology and bundled pricing, but had to focus on partnering to ensure the MSPs could really benefit from those developments.

“When vendors think about managed services, they have to build out the tech integrations so that MSPs can come in and manage these environments, connect the dots, and integrate and implement. The vendor also must build out services partnerships, which MSPs are a key part of,” he said.

“Alliances are key. In this world where there are seven partners and seven layers of the deal and 13 members of the buying committee, there’s a lot of things going on, and that all comes back to go-to-market. There are 28 moments before the sale, along with understanding who’s in those moments, what the customer is doing, what they’re reading, where they go, especially who they’re consulting with, and designing, architecting. MSPs are in the room. They’re trusted. They’ve been there.”

McBain concluded his session touching on AI and underlined how agentic AI played into the hands of partners and strengthened their position as customer advisers.

“MSPs are the ones that are trusted to look at a business and think about all the departments, how they could work together better, and how some of these generative and agentic technologies should be introduced.

“Again, they’re the perfect company to trust because they’re there for the long term. They’re not going to build something that’s expensive and unprofitable to manage. They’re going to be aligned perfectly with the customer in terms of building an outcome that is cost-effective and keeps the customer 10% better and faster than their competitors, and so that’s why there’s such alignment with managed services.”

To see the recording of the full session click here or to enjoy some of the other sessions in the MSP Summit event.