What is the impact of the pandemic on managed services providers?

A new SolarWinds study revealed the operational impact of the current pandemic on managed services providers (MSPs) and future growth opportunities in the market.

The study surveyed 500 MSPs across Europe, North America, Australia, and New Zealand, to gain insight into how MSPs are successfully navigating the impact of COVID-19 and their views on the next 12 months in the market.

“To see the overwhelming majority of MSPs retain their staff during a time period characterized by uncertainty is truly heartening, especially given the important role MSPs have played in helping businesses digitally transform,” said Colin Knox, vice president of community, SolarWinds MSP.

“The technology industry, and the channel, is resilient but also resourceful, and this crisis has re-enforced the value MSPs bring to businesses. Without MSPs as an extension of the team — focused on risk mitigation and business continuity — many businesses would have been lost, and wouldn’t have been able to support remote working on such a vast, immediate scale. The knowledge, expertise, and skillset of MSPs has been crucial in this changing climate. They have truly become essential.”

Operational impact of the pandemic on managed services providers

• 59% of surveyed MSPs have applied for government financial relief programs, with 74% receiving the help they needed
• Over 80% of respondents have continued operating at their pre-pandemic staffing levels
• The majority of MSPs declared they have adapted their security services for work-from-home clients, with 59% of managed-services-centric businesses offering more security bundles than any other business model

66% of MSPs have reported going the extra mile to support their customers during this time. Along with adapting their security services for work-from-home clients, MSPs have been continuing to accommodate customer needs in the following ways during the pandemic:

• 65% of MSPs do not anticipate making any pricing changes to their managed services package in the long-term
• 24% have offered delayed payments
• 23% have offered temporary discounts
• 19% have reduced their services to fit shrinking customer budgets
• 13% intend to increase their prices following the pandemic

In terms of challenges, MSPs believe the biggest barriers they will face over the next year are:

• Securing new customers
• Social distancing requirements in the office and at customer sites
• Lower IT budgets and spending due to recession
• Adapting to having staff and clients work-from-home

The next 12 months

• MSPs continue to see security services as a crucial growth factor for advancement along with cloud services — 51% are set to increase their security services and 47% plan to increase cloud services sales
• 42% of respondents predicted growth will come from additional project work, and 39% expect an increase in managed services contracts
• For other potential growth opportunities, 40% of large MSPs also anticipate they will engage in a merger or acquisition to support expansion
• Nearly half of respondents estimate more than 20% of their clients will implement work-from-home policies post-pandemic
• Companies operating in a managed services business model show more confidence and expect stronger revenue growth than companies operating primarily in the break/fix business model

The report showed that although MSPs are comfortable with the security basics such as antivirus, backup, and firewalls, there was room for growth in some of the more advanced security solutions and offerings including penetration testing, auditing and compliance management, and risk assessments.

Dealing with the sheer variety and growth of security threats such as ransomware, malicious insider attacks, and advanced persistent threats, requires MSPs to take a broad, layered approach to security including robust solutions to defend against today’s sophisticated threats.