Research Brief: Managed Services Provider (MSP) Market Growth Forecast

The global managed services provider (MSP) market will generate a 9.45 percent compound annual growth rate (CAGR) from 2020 to 2025, according to Technavio’s forecast.

The report summary did not mention the annual dollars spent on managed services. However, worldwide spending with MSPs is expected to be $126.47 billion larger in 2025 than it was in 2020, Technavio forecast.

MSP Market Growth Forecast: Four Takeaways

Still, it’s important to note a few items about the report. For instance, the report:

  1. Focuses heavily on enterprise-class MSPs and large-scale IT consulting firms rather than the SMB-MSP sector. Companies such as Accenture, AT&T, Atos, HCL and Tata Consultancy earn mentions in the report.
  2. Suggests that North America will remain the fastest-growing region for managed services — outperforming MSP growth rates in Europe, the Middle East and Africa (MEA), and South America. Cyberattacks against U.S.-based hosted servers will drive managed services market growth in North America, the report suggested.
  3. Increased adoption of IoT solutions, the need to adhere to regulatory guidelines, and ensuring compliance will be crucial in driving the growth of the market.
  4. But data privacy and security risk in cloud-based services will restrict market growth, the report said.

MSP Market Growth Forecast: More Perspectives

ChannelE2E respectfully disagrees with that fourth bullet. Rather than restricting the MSP market, cloud-related data privacy and security risk conversations are driving MSP industry growth, ChannelE2E believes.

Amid that market reality, major security and backup software providers (along with their MSP partners) are pivoting toward integrated, cloud-based cyber resilience platforms.

On the profitability front, the typical MSP now generates about 8 percent EBITDA (earnings before interest, taxes and depreciation) profit margins. The best-performing MSPs typically are closely to 20 percent EBITDA margins, while a quarter of MSPs are either break-even or losing money, according to Service Leadership Inc.

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