According to a recent Canalys poll, channel partners expect significant growth in their managed services businesses in 2024, driven by customer demand for cybersecurity management, cloud infrastructure, application development, AI solution consulting, and compliance requirements. The MSP model is evolving, with more partners involved and working in an ecosystem of other partners and vendors: cybersecurity-managed services and AI present opportunities for growth and better customer management. M&A activity in the channel is expected to return, and vendor consolidation in RMM is inevitable. MSP partner programs will become more widespread, and compliance and regulation will drive consulting opportunities. Challenges for MSPs include new customer acquisition, upskilling staff, and managing customer budgets. Canalys predicts that managed services revenue in the channel will grow at least 12% in 2024.
According to research by Advania, just 2% of mid-market businesses can retain quality IT talent for more than two years. A shortage of skilled staff is cited as a significant barrier to achieving cyber security objectives. Mid-market businesses often develop lower-quality cyber strategies internally due to difficulties hiring skilled IT staff. The mid-market faces challenges in retaining top IT talent due to rapid technological advancements and limited budgets compared to larger enterprises. Overall, IT sector retention rates are notoriously poor.
Why do we care?
The prediction of a 12% growth in managed services revenue shows robust demand in this sector. Canalys is big on ecosystems. Practically, it’s about recognizing that influence and connection may play more of a role than direct sales.
I’m going to call out RMM consolidation. What does that mean? While vendors have already rolled up, they’re all dragging every product ever created along for the ride. Several of the large players sell two or three different solutions in the same space. While I do believe that process of consolidation is inevitable, I think the timeline is ridiculously long, and it’s not on my 2024 or 2025 risk analysis. Fun to talk about, not a practical concern.
Instead, talent retention is both a challenge and an opportunity. Providers should focus on creating a conducive work environment, offering competitive benefits, and providing opportunities for career growth and skill development, because by being great at retention and having great people, they can deliver that solution to customers. We keep our people around… so you don’t have to.