A recent Insight Research study says that managed services spending should continue to increase at a rate of 8% for the next five years. No surprises here, the study indicates that the current economy may actually have a positive impact on the managed services industry because companies tend to view “outsourcing” as a good choice for reducing operational expenses. For anyone who doubts whether the managed services market is really as healthy as it is, I would hope that this data would convince you. I’ve been posting at least a half dozen of similar reports for the last few months all indicating roughly the same thing: managed services is doing quite well.
While this is great news and everyone in this industry should be thankful for it, I would caution against being too comfortable as there is still a lot of work to be done, especially with all the new companies entering the MSP profession. The economy, while being very good for MSP’s, is having the opposite affect on break/fix VARs. By the thousands companies who have made their living on reselling and reactive IT services are making the transition into managed services. Even those companies who had started the transition a while ago are feeling incredible pressure to offset reseller revenue losses with recurring revenue streams. Now, this is where it gets tricky.
I’ve long believed that the demand for managed services is still greater than the number of qualified MSP’s available to do the work. Assuming that this is true, the number of new “MSP’s” is likely to have a diluting effect on the quality of services in the next year. Two potential problems will need to be monitored very closely. One, end-user expectations and education will be critical. A loss of confidence in the managed service provider profession at this stage is to be avoided at all costs! Two, education and proper training/certification of MSP’s will help moderate their expectations about the profession and help keep them on the generally accepted path towards managed services excellence.
We are already seeing evidence of end-users identifying fake MSP’s and wanting a change. Let’s not disappoint them!