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MSPs Losing Staff to Corporate IT Departments?

After working tirelessly to build successful MSPs, some senior level managers and executives are leaving the IT channel to join slower moving corporate IT departments. Concerns about the trend surfaced during private ChannelE2E conversations at Cisco Partner Summit 2016 this week in San Diego.

In one case, the CEO of an MSP said he has lost two of his top lieutenants to corporate IT departments in recent months. The CEO expected those employees to be “lifers” at the MSP because they were well compensated and working on the leading edge of IT. The departures, he said, involved life-work balance and the perceived slower pace in the corporate IT world.

“When you’re here [at an MSP], you’re working with so many different platforms and balancing so many different challenges at a really high pace,” the CEO said. In stark contrast, corporate IT departments tend to have more standardized platforms and a slower pace of life, the CEO surmised.

I digested the sounds bites for a few hours then poked around elsewhere at Cisco Partner Summit. During two impromptu conversations, I raised the talent issue with other IT service providers at the conference. Sure enough, CEOs from the two companies mentioned recent talent loss to corporate IT departments. One involved a 50-person MSP in Northern California. Another involved a 120-person VAR with a managed services practice in Ohio.

In all three cases, the CEOs said they are now brainstorming ways to address the talent challenge. All three MSPs already offer strong benefits (healthcare, retirement plans, etc.) and more. All three also said it’s reality-check time: Can long-term MSP employees really maintain their current pace, workloads, etc.?

Scaling back workloads often isn’t an option, the executives said, because so much of a typical MSP already has automated processes in place. The other key strategy, two executives said, involves building a farm team of talent — and making sure there are succession plans in place for each key employee.

As of September 2015, the U.S. unemployment rate was about 5.1 percent, but the IT unemployment rate was 2.9 percent, according to Upp. The result: Executive recruiters, HR departments and talent management experts are scouring the market to find IT talent for vacant positions. And in some cases, it sounds like corporate IT departments are tapping into the MSP labor pool.

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    Jeff Weinman:

    I would argue this the norm for any business. The strategies of building a farm team and having succession plans in place are critical to your survival. This also points out that it is not just millenials that jump from ship to ship. It’s human nature. Who are the lifers? The business owners (until they sell out, merge or are acquired).

    Time to go work on improving our business valuation (and farming for the next team players, ‘err family as I like to call them).

    Thanks for the great content Joe!

    Amy Katz:

    I think the industry is seeing this in multiple job roles as well – I have talked with many sales managers who are looking to move ‘back’ into an individual contributor role so they can control their whole destiny and their workload. It’s a tough situation; but I agree with Jeff – this is precisely why having an ever evolving succession plan in crucial.

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