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Canalys reveals major MSP predictions for 2024

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MSP predictions 2024

From the integration of cutting-edge technologies to addressing evolving cybersecurity threats, the role of Managed Service Providers (MSPs) in shaping the digital future is more crucial than ever. The year 2024 is set to be a pivotal chapter for MSPs, marked by robust growth, technological leaps, and strategic recalibrations. Canalys identifies and presents key trends that will define the trajectory of service providers in this year.

Here are the key insights.

2024 MSP predictions

1. MSP revenue growth – The revenue in the managed services channel is projected to surge by a minimum of 12% throughout the year, propelled by heightened customer demands in crucial areas such as cybersecurity management, cloud infrastructure, application development, AI solution consulting, and compliance adherence.

2. Evolving business model – A large number of partners are now engaging in managed services, enabling even smaller players to offer comprehensive solutions to large customers across different regions. By 2024, approximately 50% of MSPs foresee adopting a managed services hybrid delivery model, working collaboratively within an ecosystem of partners, vendors, and customers’ IT teams to deliver tailored solutions.

3. Rising Significance of CybersecurityCybersecurity continues to reshape the MSP landscape, with 34% of partners anticipating over 20% year-on-year growth in their cybersecurity revenue, and nearly two-thirds foreseeing growth exceeding 10% in 2024. The proliferation of co-managed and co-partnering models will amplify the value of Managed Detection and Response (MDR) and Extended Detection and Response (XDR) solutions, as industry stakeholders collaborate to deliver comprehensive cybersecurity services.

4. AI for Customer Management – In 2024, MSPs are leveraging Artificial Intelligence (AI) for enhanced customer management, particularly with the emergence of technologies like Microsoft Copilot. While AI is currently employed for various tasks such as scripting in Remote Monitoring and Management (RMM) and automation in Professional Services Automation (PSA), its integration into existing and future tools is anticipated to be a transformative force in data centers, Infrastructure as a Service (IaaS), and cybersecurity.

5. Resurgence in M&A Activity – After a significant dip in 2023, Merger and Acquisition (M&A) activity within the MSP space is expected to make a comeback in 2024. Economic factors, including interest rate adjustments and increased valuation, are predicted to reignite the interest of buyers, leading to a resurgence of M&A endeavors as MSPs strategically merge to capitalize on specializations and cater to enterprise managed services.

6. Inevitable Vendor Consolidation in RMM – In the RMM and PSA sectors, companies like Addigy, Atera, HaloPSA, NinjaOne, and Syncro are expected to experience high demand in 2024 from both other vendors and private equity firms. ConnectWise, despite being on the market for sale, has faced challenges in finding a buyer at its current price. Speculation surrounds Kaseya, with CEO Fred Voccola’s recent announcement hinting at significant developments for the company in 2024, potentially involving a public offering or acquisition following its acquisition of Datto in 2022.

7. Widespread Adoption of MSP Partner Programs – While a recent Canalys poll revealed that 69% of channel partners believe a dedicated MSP program would enhance their relationship with vendors, the actual delivery of such programs remains limited. In 2024, the proliferation of MSP-focused engagements is expected, provided vendors offer the right incentives and support investments, making them indispensable partners for MSPs transitioning into a managed services-focused motion.

8. Consulting Opportunities Driven by Compliance and Regulation – With the cyber-insurance industry estimated at $17 billion in 2023 and projected to grow significantly, compliance consulting revenue for channel partners is expected to witness a 60% surge in 2024. The role of partners in guiding customers through cyber-insurance selection and compliance is becoming increasingly vital, leveraging the channel’s wealth of knowledge and experience.

9. Challenges for MSPs – Despite the optimistic outlook, MSPs are not without challenges in 2024. New customer acquisition, upskilling existing staff, and managing customer budgets are significant hurdles they will face. Strategies around expanding existing client relationships, recruiting marketing talent, and training existing staff in marketing are expected to be pivotal for MSPs navigating these challenges successfully.

These trends reveal that in 2024, MSPs are leading the way in tech and cybersecurity, going beyond their usual roles to shape a digital future and playing a crucial part in creating a smoothly connected digital world.

Source: Canalys

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