Security Staff Acquisition & Development, MSP, Content

Some Staff Cuts In Data Protection Technology Market

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The long-term outlook for the data protection market remains strong, but near-term the industry is not fully immune to the coronavirus pandemic and resulting economic fallout. Indeed, multiple backup and disaster recovery (BDR) technology suppliers have trimmed staff over the past couple of weeks, including vendors across the enterprise, SMB and MSP sectors.

Examples include targeted job cuts at Cohesity and Carbonite in early May 2020, and some job cuts this week at Datto, ChannelE2E has confirmed. Each of those companies offers cloud-based data protection services, though their business models, ownership models, and target markets vary from business to business.

Cohesity has been a fast-growing, venture-backed startup focused on enterprise and midmarket engagements. Carbonite, owned by publicly held OpenText, aligns with sister company Webroot to offer cyber resilience services. And private equity-backed Datto focuses on business management and IT automation solutions delivered entirely via MSPs.

Datto CEO Offers Perspectives

ChannelE2E reached out to Datto for a comment about this week's changes. In response, Datto CEO Tim Weller said:

"As the economic consequences of the global pandemic continue to sink in, Datto made the difficult decision to reduce our number of employees. Our hiring over the past six months anticipated a much higher rate of growth in 2020 than the MSP industry or Datto are now likely to see. Our actions simply mean rolling back our global team size to where it was six months ago.

Throughout the crisis, we have elevated our high-touch account management and direct-to-tech support, even with our employees working from home. Partners’ day-to-day interactions will not change. We continue to support MSPs with our trademark one-to-one approach and champion their efforts to keep SMBs running throughout this crisis and beyond. Our strong culture also allows us to support our former colleagues while continuing to innovate on behalf of MSPs.

On an optimistic note, we expect higher levels of growth for MSPs and Datto to return when meaningful, sustainable re-opening occurs. SMBs will accelerate their digital transformations and MSPs will be their perfect enablement partners. It is simply very difficult for anyone to predict when that will happen."

The MSP Market and Coronavirus Pandemic: More Context

It's difficult to debate Weller's key points about the pandemic, the economic impact, and the resulting SMB market challenges and opportunities. Weller outlined many of the market trends in this ChannelE2E interview from a week ago.

As ChannelE2E has previously pointed out, the overall MSP industry lost momentum in late March 2020 and early April 2020 as some end-customers went dark and many businesses shifted to Work From Home (WFH) models. Anecdotal evidence suggests the MSP market has stabilized in recent days, but that doesn't mean the go-go growth times have returned -- at least not yet.

Many technology companies across the MSP industry have temporarily cut executive pay and staff compensation. Staff cuts have even hit some cybersecurity firms -- which had been Wall Street and Venture Capitalist darlings before the pandemic. The overall MSP market likely faces slower growth while certain vertical segments (retail, hospitality, transportation, etc.) explore ways to jumpstart or pivot their activities.

Still, the long-term market prospects are good for the MSP-driven data protection market. The MSP industry has been growing anywhere from 9 percent to 12 percent annually ahead of the pandemic, according to multiple research reports. The managed security services industry had been growing closer to 15 percent annually. And the cloud-based storage market was forecast to grow at a 21.9 percent compound annual growth rate (CAGR) from 2020 to 2027, according to an Allied Market Research report released ahead of the pandemic.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.