It is time to review the first 6 months of 2020 and evaluate precisely how the global managed services community has been doing. While we have a lot of useful data, we also have a lot of excellent anecdotal information from the MSPs themselves. From these sources, we now have a reasonably good picture of how the first half of this year has been for MSPs (and their clients), and it puts us in an excellent position to begin looking forward to the second half of the year and into 2021.

Your Mileage May Vary

First, it is important to understand that with thousands of members worldwide, we interact with MSPs of all types from many different locations. As much as geographic location may directly impact you, the types of managed services clients you have, and the types of services you provide also contribute significantly to how your MSP practice has been doing in 2020. 

Cybercrime Still a Factor; Continues to Increase

While it is not good news, the increase in cybercrime activity has increased during the pandemic resulting in many MSPs seeing increased demand from customers to fight off these attacks. The same cybersecurity market drivers contributing to the robust 1st quarter activity have helped many MSPs remain relevant (if not vital) to their clients’ ongoing operational efforts. 

Work from Home is New Normal

As the pandemic response from state and local politicians was evolving, MSPs saw an almost immediate surge in activity as they responded to customers needing to develop practical work from home strategies. While the short-term scramble to create work from home capabilities may be over, there is now a long-term campaign that must be waged to protect and defend the remote workers from the increases in targeted cyber attacks. The cyberattacks resulting from new WFH opportunities have initiated a broader corporate security discussion about how to protect such environments from outside the corporate security perimeter. 

Pandemic Impact Varies Depending on Your Managed Service Maturity

It should be no surprise that many MSPs went into the pandemic with relatively healthy financial positions. Bolstered by monthly cash flow and recurring revenue relationships, those MSPs had far less severe responses to the pandemic compared to many other IT providers not significantly invested in managed services.

Comparatively speaking, reactive IT providers saw almost immediate cancellation of discretionary IT project work and struggled to keep up with the process-driven work of supporting large and diverse customers during a difficult period. These same IT providers are likely experiencing difficulty throughout the first half of 2020 as most managed services customers report similar behavior patterns of maintaining existing IT infrastructure, supporting existing users, and cautiously looking beyond the 2nd quarter.

IT Spending Took a Hit

According to Gartner’s Global IT Spending research, IT spending for 2020 is projected to be 7.3% lower than it was in 2019. IT services spending (where managed services would mostly be involved) is expected to be around $969B, a decline of 6.8% from 2019 levels. 

“Overall IT spending is still expected to sharply decline in 2020 but will recover in a faster and smoother manner than the economy,” said John-David Lovelock, distinguished research vice president at Gartner. “Still, enterprises cannot return to previous processes that are now rendered outdated due to the disruption of their primary revenue stream during the pandemic.”

While global IT spending may be off this year, the future is presenting a different story. 

Future Managed Services Growth in Second Half of 2020

The US GDP shrank by 9.5% in Q2 2020 (annualized at 32%); this is not an insignificant number. Some theorize that this number was entirely self-inflicted, but it is now a reality. What is clear is that the economic slowdown was not a demand problem. All the demand-side factors driving managed services growth are still present. We now have a unique additional demand driver caused by the pandemic response as thousands of companies and millions of individuals attempt to figure out how to thrive economically amidst a global pandemic: this is a managed services opportunity. 

US GDP projections for Q3 are estimated to be around 20%, which would be a significant surge in economic activity, much of it focused around IT. As further uncertainty about the pandemic continues, economic reopening and recovery will rely heavily on IT to facilitate this reality. 

MSPs who survived the 2nd quarter will be in a solid position in Q3 and Q4 to stabilize their businesses and continue to support their customers across many geographic and vertical markets. 

Tags : 2020 review,managed services,managed services growth,pandemic

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