Regardless of your political beliefs, you probably have noticed the sense of uncertainty that has permeated much of the world. In countries like the United States and France, there are major changes being contemplated which could dramatically impact how businesses act in the next few years. The discussion of whether or not to raise taxes has reached a global level. My question for today is whether higher taxes will have an impact on managed services, and if so, what will that impact be? Let's discuss.
There are inherently two issues at stake that may impact managed services in the near future. The first are corporate tax rates; the second are regulatory pressures related to employment and hiring.
Taxes. If taxes on corporations increase, regardless of the impact they will have on government revenues, such a move will have a direct influence on whether companies expand and/or reinvest. Such expansion almost always includes some form of hiring, and may likely also include IT investments. When these activities are put on hold, companies necessarily must rely on existing IT assets and resources to maintain their status quo. In fact, when organizations (this is especially true with public sector entities like educational institutions) restrict growth and spending and even contract their budgets for IT, the demand for making do with what they already have becomes critical.
MSPs in these situations often can cap, or even reduce, the IT spending of the customer while simultaneously increasing performance and availability of IT assets. More sophisticated MSPs who offer leasing options or Hardware as a Service plans can accomplish both IT stabilization along with the guarantee of new hardware on a regular cycle.
Employment/Hiring. The other major component at issue lately is regulatory pressure from governments related to how employees are treated. Again, skipping the public policy and political debates, when more regulatory pressure is placed on employers (both public sector and private) you have a tendency to be very cautious about adding head count. In places like France, where employers are very constrained in terms of their ability to get rid of employees, the addition of new employees comes only after great deliberation and certainty of the decision.
Here again, MSPs can and have been playing an important role when it comes to providing employers with more flexibility regarding their employment options. For example, if a company finds it difficult to adjust (up or down) their number of employees, having a MSP relationship can greatly ease that pressure. If a company needs to rapidly expand, for instance, having a MSP can achieve that goal far more effectively compared to the risk of doing it in house, especially if reducing those same employees will be difficult or impossible.
For the record, I am not advocating higher taxes. I am, however, advocating a position that relies on the benefits of managed service providers as necessary components in a global economy where virtually any country and region can take advantage of a MSP to provide greater assurance, predictability, and quality of service. I'll leave the rest of the debate to the politicians.
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