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CompTIA: MSPs vexed by cloud challenges and retention struggles

What keeps MSPs awake at night? Cloud, employee retention and margin erosion, according to CompTIA

Managed service providers are growing increasingly concerned about their role in a market dominated by cloud computing solutions

According to CompTIA’s Fifth Annual Trends in Managed Services report, 62% of the 400 MSPs surveyed said that cloud computing was their number one concern.

“They still haven’t figured out whether the cloud is a good thing or a bad thing,” said Kris Nagamootoo, senior manager at CompTIA. They fear that customers will simply bypass them and look to cloud providers for their basic needs.”

The report found that just 54% of MSPs offer cloud-based solutions and services as part of their portfolio. Another 44% said that support cloud services when specifically requested by a customer.

Nagamootoo believes that MSPs are missing out on opportunities to become ‘cloud orchestrators’.

“Just as they remotely managed on premise devices and applications, they can manage what a customer has in the cloud,” he explained. “It’s a natural spot for an MSP.”

Another anxiety for those in the managed space was that of margin erosion. Just over half of the firms cited margin erosions as a factor that keeps them awake at night.

CompTIA said that while naturally occurring market commoditisation accounted for a portion of the pressure, price wars amongst MSPs was also a contributing factor.

Employee churn also ranked highly as concern. The majority of respondents said that they’d lost at least one staff technician to an end-user organisation.

“Employees who leave are usually seeking more stable hours, better pay or a job that’s more challenging than simply monitoring and waiting for an alarm bell to go off” said Carolyn April, senior director, industry analysis, CompTIA. “It’s a problem that MSPs will have to address.”

Despite these concerns, most managed service providers felt bullish about their top line growth over the next two years. Half of all MSPs surveyed expected high revenue growth over the next two years, with services accounting for 75% or more of total revenue.

CompTIA said this was largely down to market maturity. Nearly 90% of respondents had been offering technology services for two years or more.

“The level of confidence among MSPs in how they are running their businesses is quite high” commented April. “Two-thirds of the companies we surveyed consider themselves to be skilled experts at managed services.”

 

 

 

 

 

 

 

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