95% of MSPs will embrace AI in the next 12 months, reveals Baraccuda report

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Managed Service Providers (MSPs) continue to play a crucial role as strategic allies for businesses amidst the evolving landscape of digital transformation. In response to economic pressures, organizations are increasingly turning to MSPs to manage technology complexities and bolster cybersecurity efforts. The success of MSPs now hinges on their ability to adapt to evolving customer needs and integrate emerging technologies, such as artificial intelligence (AI).

A recent study by Vanson Bourne, commissioned by Barracuda, sheds light on the pivotal role MSPs are expected to play in 2024. MSPs forecasts a moderate increase in revenues, projecting a rise from an average of $27 million in 2023 to $29 million in 2024. Notably, managed services are set to contribute significantly to this growth, with MSPs expecting 44% of their revenue to stem from such services — up from 34% the previous year.

The report also reveals a proactive stance among MSPs towards expanding their service offerings. Nearly all MSPs surveyed (97%) plan to diversify their portfolios with an average addition of six new services in 2024. Key among these are security-focused services, indicating a strong market demand for cybersecurity solutions. The top three services include a security operations center (42%), security awareness training (38%), and network security services (36%).

Cloud marketplaces are becoming essential tools for MSPs, enabling them to offer a broader range of services more efficiently and leading to business growth. 90% of MSPs find these marketplaces easy to transact through, with 47% actively procuring products and services for their clients via these platforms. Looking forward, cloud marketplaces are expected to remain integral to MSP operations, as 92% of respondents acknowledge their crucial role in 2024.

MSP cloud marketplaces

Artificial Intelligence (AI) emerges as a transformative force within the MSP sector. AI tools, products, and services can transform the MSP landscape by reducing costs and resource needs through automation and scaling tasks. A substantial 95% of MSPs are either already using AI (58%) or plan to integrate it within the next 12 months (37%).

The demand for AI from customers is also high, with 77% of MSPs feeling pressured to offer AI-based guidance and tools. The main motivations for integrating AI include improved cybersecurity, efficiency, and predictive maintenance. Those already using AI report employing it in predictive analytics (57%), intelligent customer support (55%), and enhanced cybersecurity (54%).

MSP AI usecases

Despite these opportunities, MSPs face formidable challenges. These include navigating a competitive market landscape, cited by 48% of respondents as a significant hurdle — up from previous years. Other challenges include adapting to evolving cyberthreats (30%), staying abreast of technological advancements (31%), and addressing talent shortages (32%).

To thrive in this competitive environment, MSPs must innovate continuously, embracing new technologies and service models. This includes leveraging AI, expanding service portfolios, and nurturing strong partner relationships that specialize in security and AI integration. Such strategies not only address current challenges but also position MSPs to meet the dynamic demands of businesses seeking reliable, scalable IT solutions.

While MSPs confront multifaceted challenges in 2024, their strategic evolution and adaptation to technological shifts underscore their pivotal role in supporting organizational growth and resilience amidst a rapidly changing digital landscape.


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