MSP growth opportunities in the age of COVID? Do we dare believe? Datto, Inc. just announced the release of its fourth annual Global State of the MSP Report, based on a survey of more than 1,800 MSPs around the globe. The survey aimed to learn if and how MSP priorities have shifted due to the COVID-19 pandemic, underscoring the continued growth and evolution of the MSP industry.

Pre-pandemic, MSPs were expected to grow by 17%, according to the report. After the start of the pandemic, 40% of MSPs expect to reduce their growth projection by at least 10%. In some cases, this means that many MSPs will be flat this year. However, it also speaks to the growth opportunities in the market. 

Datto’s Rob Rae

“Like everyone else, the MSP community took a hit financially as a result of the COVID-19 pandemic,” said Rob Rae, senior vice president of business development, Datto. “The survey found that 40% of MSPs expect to reduce their growth projection between 10% and 20%. However, while COVID-19 has presented many new challenges for MSPs, it has also created many new opportunities, including the rise in cloud mitigation and security. Both cloud and security have always been top of mind, but as we move toward a work-anywhere, work-everywhere model, cloud migrations and security are expected to drive the managed services opportunity through 2020.” 

Takeaways for MSPs

The report’s key findings provide a reflection of the current mindset of MSPs globally. Here are a few of the top takeaways: 

It’s actually a good time to be an MSP … ? According to the report, MSP growth opportunities don’t look too shabby. Nearly 40% of MSPs have been in business for more than 16 years, and there is a solid group of newcomers on the horizon. Eighteen percent of MSPs have been in business less than five years; that indicates that the managed services industry is attracting new blood. This could explain why 84% said now is a good time to be an MSP.

What’s keeping MSPs up at night. Economic uncertainty is troubling for MSPs due to  the COVID-19 pandemic. Nearly 40% expect to reduce their growth projections by between 10% and 20%. Also, cybersecurity for clients remains a top pain point (not surprisingly) for 34% of MSPs, compared to 30% in 2019. More than three in five (61%) say that they consider antivirus the most critical security solution for SMBs, followed by advanced firewall and RMM.

Projects and revenue pick up speed. When asked how they expect the pandemic to impact 2020 revenue, 11% of MSPs said they actually expect their revenue to increase during the crisis. Quite a few MSPs believe the pandemic will accelerate cloud migration and security projects for many clients. Also expect VoIP, business continuity, Azure migrations, hardware sales and business resilience to drive revenue as clients continue to recover.

Recurring services remain solid. More than half of MSPs said over 50% of their revenue came from recurring service. As we’ve come to learn in recent years, this is a key indicator of MSP maturity. One in four (24%) MSPs surveyed reported their businesses make between $1 million and $2.49 million in annual revenue.

So, is it indeed a good time to be an MSP?

While 40% of those surveyed in the report expect to reduce their growth projections as a result of the COVID-19 pandemic, they still expect to bring in more than $2.5 million in revenue. So, while their projections are lower, they are still growing. 

“Additionally, even with the pandemic, MSPs still control 10% of the $1.2 trillion SMB technology spend,” said Rae. “There is an immense amount of opportunity, and based on our report, MSPs are most excited about the impact of cloud, 5G, AI and IoT.”

The Continued Evolution of MSPs

As the world reopens and we adapt to the new normal, it’s critical MSPs continue to evolve to help SMBs. The market and stage are set for MSP growth opportunities, even in this new landscape.

“Businesses that once never allowed employees to work remotely suddenly adapted to a 100% remote workforce. Restaurants that once only offered dine-in services were quickly forced to offer take-out,” said Rae. “The list goes on. But one thing that is certain is that we will never go back the way things were. MSPs are the backbone for how businesses around the world will make it through these tough transitions and come out stronger than ever.”