MSPs enjoy green shoots despite coronavirus, Datto claims

five stacks of coins standing on soil with progressively more mature seedlings on top of them, symbolising investment and growth
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Many managed service providers are still finding growth opportunities during the COVID-19 pandemic, according to cloud provider Datto’s annual Global State of the MSP Report, which found that almost 40% of MSPs reported annual revenue of $2.5m.

According to the report, which surveyed over 1,800 MSPs around the world, MSPs were expected to grow by 17% before the COVID-19 pandemic. After the start of the outbreak, 40% of these businesses expect to reduce their projection by at least 10%.

While this highlights that many businesses will be flat this year, Datto says that MSPs are still growing and there are still opportunities to be found in the market. In fact, 11% stated that they are even revising their growth projection upwards.

“While economic uncertainty is troubling for MSPs, it’s still a good time to be in the industry,” commented Rob Rae, senior vice president of business development at Datto. “Nearly 40% of MSPs reported annual revenue of $2.5M, demonstrating health and opportunity in the market. MSPs remain the cornerstone of our economy as they serve small businesses through the pandemic and beyond.”

With IT becoming a bigger focus for SMBs, MSPs have become “essential service providers” as they are increasingly entrusted with the running of business’ IT, Datto says. Over the past three years, 22% of MSPs reported that their total yearly revenue increased by up to 5%, with 24% reporting growth of up to 10%.

Recurring services continue to prove a strong growth driver, generating more than 50% of revenue for more than half of the surveyed MSPs.

“Supporting MSPs in this economy and market, the two most consistent drivers of MSP growth include generating a higher portion of total revenue from managed services, and setting specific revenue and growth goals,” Datto explained. “Combined, these two activities enable MSPs to roughly double their rate of growth.”

In terms of pain points, many surveyed businesses cited economic uncertainty as the main cause for financial challenges – but an increase in cloud migrations may offset losses, as MSPs play a key role in catering to the accelerated demand for cloud and IT services.

In addition to economic uncertainty, 34% cited cybersecurity as a top concern (an increase of 4% over last year’s survey). However, Datto says rising concerns around cybersecurity ay indicate a higher demand for security services from clients as SMBs increase their IT security awareness.

In the face of the changing digital economy, many MSPs are looking to emerging technologies to help adapt and grow in the post COVID-19 world.

“Given the reliance on remote management technology, MSPs are most excited about the promise of 5G technology as it will enable new opportunities for their clients through the use of faster wireless networks,” Datto explained. “MSPs will have huge opportunities to assist companies with the developing, testing and deploying of this technology, which will significantly fuel innovation.”

Daniel Todd

Dan is a freelance writer and regular contributor to ChannelPro, covering the latest news stories across the IT, technology, and channel landscapes. Topics regularly cover cloud technologies, cyber security, software and operating system guides, and the latest mergers and acquisitions.

A journalism graduate from Leeds Beckett University, he combines a passion for the written word with a keen interest in the latest technology and its influence in an increasingly connected world.

He started writing for ChannelPro back in 2016, focusing on a mixture of news and technology guides, before becoming a regular contributor to ITPro. Elsewhere, he has previously written news and features across a range of other topics, including sport, music, and general news.