How has the coronavirus economy impacted MSPs (managed IT service providers) worldwide? More clues emerged today, based on a SolarWinds MSP survey of 500 companies across Europe, North America, Australia, and New Zealand.
Among the key takeaways:
- Government Relief: The majority (59%) of surveyed MSPs have applied for government financial relief programs, with 74% receiving the help they needed.
- Staffing: Over 80% of respondents have continued operating at their pre-pandemic staffing levels.
- Work From Home & Security: 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.
- Pricing: 65% of MSPs do not anticipate making any pricing changes to their managed services package in the long-term.
- Payment Plans: 24% have offered delayed payments
- Customer Discounts: 23% have offered temporary discounts
- Fine-Tuning: 19% have reduced their services to fit shrinking customer budgets
- Longer-Term Pricing: 13% intend to increase their prices following the pandemic.
- Security and Cloud Commitments: 51% are set to increase their security services and 47% plan to increase cloud services sales
- Growth Areas: 42% of respondents predicted growth will come from additional project work, and 39% expect an increase in managed services contracts.
- Bonus - M&A Opportunities: For other potential growth opportunities, 40% of large MSPs also anticipate they will engage in a merger or acquisition to support expansion.
In a prepared statement about the report, Colin Knox, vice president of community, SolarWinds MSP, said:
“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. 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.”
More MSP Reality Checks
MSPs show more confidence and expect stronger revenue growth than companies operating primarily in the break/fix business model, the survey shows. Still, MSPs aren't immune to economic turbulence. The biggest challenges facing MSPs over the next year, according to the survey, include:
- 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
SolarWinds MSP's findings reinforce similar anecdotal data points from technology vendors across the MSP market. No doubt, many MSPs saw revenue dips when economic shutdowns took hold, IT Glue research found in June 2020. But more recently, MSP businesses -- particularly those in the security market -- saw sales activities accelerate in the July 2020 timeframe, Zix CEO David Wagner and CFO David Rockvam told Wall Street analysts during an earnings call last week.
Bottom Line: MSP businesses have held up well during the coronavirus economy, but MSPs should continue to plan for best-, mid- and worst-case financial scenarios for at least the next year, ChannelE2E believes.
