What are the top traits high-growth MSPs have in common?

What are the top traits high-growth MSPs have in common?

New research by Kaseya highlights the habits that set some MSPs apart from the pack

Managed service providers (MSPs) are experiencing historic growth, according to a new study, and the companies that are leading the market seem to share some winning habits.

The sixth annual MSP Global Pricing Survey report by IT management solutions provider, Kaseya, is aimed at providing visibility into both pricing and new service offering trends in the MSP market segment.

This year’s survey gathered data from over 900 MSP respondents, double the number from 2016, with insights from more than 50 countries.

The latest study reveals ‘historic’ MSP market growth, with 26 per cent of respondents reporting that their average annual monthly recurring revenue growth over the past three years exceeded 15 per cent. This is up from 23 per cent reporting such rises last year.

The research shows that high-growth MSPs are diverging from their lower growth peers and, while correlation doesn’t necessarily signify causation, Kaseya believes that this is because faster-growing MSPs are consistently offering more services across the entire gamut of offerings than their slower-growth counterparts.

“This market bifurcation can be attributed to the current profound transformation in the MSP market as merger and acquisition activity reshapes the industry while, at the same time, SMB prospects demand complex new services such as layered security, cloud services, and network monitoring,” the report stated.

“Consequently, it’s no longer sufficient for MSPs to offer a minimally viable service for, say, backup and disaster recovery and consider the service ‘done.’ Instead, the MSPs that are successfully surfing these market changes are the ones introducing complete suites of strategic managed services that help their customers meet their business goals.

“Basically, whenever there is a choice, high-growth MSPs choose to offer more options and more complete service suites,” it said.

The report also highlights some of the other behaviors and strategies that seem to set the highest performing MSPs apart from the rest of the market, with the ability for businesses to evaluate the market and clearly identify areas of demand playing a big part in growth among both large and small MSPs.

Further, Kaseya found that high-growth MSPs were generally able to continually find ways to free up resources to deliver more services or dramatically scale their existing services.

One of the top ways for fast-growing MSPs to scale, according to Kaseya, is to acquire larger clients that return higher monthly retainers but, through hardware standardisation, efficient remote monitoring capabilities, and advanced automation, can be managed with a similar level of resources allocated to smaller clients.

“Fifty-five per cent of lower growth MSPs have the largest percentage of their client-base consist of companies with 25 or fewer employees, while only 40 per cent of high-growth MSPs do,” the report said.

“Overall, high-growth MSPs are almost 60 per cent more likely to have the largest percentage of their client base consist of companies with more than 100 employees,” it said.

Pricing also plays a role in growth, according to the report, with high-growth MSPs seemingly able to communicate to their clients the full value of the services they are providing. This trait puts high-growth MSPs in a position where they are more likely to successfully charge higher rates for cloud services than slower-growing companies.

“Furthermore, high-growth MSPs both report more price increases by service offering in the last 12 months and anticipate more price growth by service level in 2017 than their lower growth peers,” the report said.

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