MSP Market Growth Rate: Worldwide Managed Services CAGR Forecast Reality Check
The global managed services provider (MSP) market remains in growth mode. But MSP market forecasts sometimes raise more questions than they answer.
Consider these two forecasts:
- Overall Managed Services Market Forecast: The worldwide managed services market will reach $557.1 billion by 2028, which represents a 12.6% compound annual growth rate (CAGR) from 2020, according to Fortune Business Insights research.
- Cloud Managed Services Market Forecast: The worldwide cloud managed services market will reach $237 billion by 2032, which represents a 9.6 percent CAGR from 2022, according to market research firm Fact.MR.
Reread those two forecasts, and something doesn’t add up.
Cloud MSPs: Where the Action Is?
Specifically: How can (1) the overall MSP market be growing faster than (2) the cloud managed services market? After all, the cloud managed services market is newer, growing from a smaller base and generally hotter than the overall MSP market.
Other than the two forecasts above, every stat we’ve seen suggests public cloud and multi-cloud MSPs — those focused on AWS, Microsoft Azure and Google Cloud Platform — are growing more rapidly than more traditional MSPs that offer SMB-type IT services.
Still, we confess: We’re not making an exact apples-to-apples comparison, since the two research sources — Fortune Business Insights and Fact.MR — use different timeframes within their CAGR forecasts.
MSP Market Forecasts And Your Business
Nevertheless, we offer up the two example reports above as a timely reminder:
- Research reports are forecasts that may or may not come true.
- The general consensus suggests that the MSP market will continue to grow faster than the traditional IT market for years to come.
- Your MSP’s performance ultimately hinges on one thing: Your leadership, strategy and execution.
Remember, 25 percent of MSPs are roughly break-even or money-losing businesses, according to Service Leadership Inc. benchmark research. In stark contrast, top-quartile MSPs generate EBITDA profit margins of roughly 18% or more, Service Leadership research also finds.
Bottom line? MSP market forecasts may provide a baseline from which to measure your business performance. But ultimately, you control your MSP business’s fate…
A timely reminder for sure. Gartner has the most internally consistent and reliable growth forecasts for IT services in my experience. Other sources, such as the ones listed in the article above, frequently use stats from online aggregators that are little more than fly-by-night operators with a questionable understanding of statistical best practices &/or the subject they are forecasting. Then Forbes writes a nice article around the aggregator’s forecast, giving it credibility, and the slop gets passed on to the unsuspecting reader.