Services Revenue Becomes the Channel’s Growth Engine

Halfway into 2026, managed services continue to emerge as one of the industry’s strongest growth engines.

Gone are the days when infrastructure deals and one-time product sales dominated partner revenue. Increasingly, the real opportunity lies in the services surrounding technology, from AI advisory and deployment to cybersecurity management and implementation.

In this article, we examine why managed services continue to grow, why vendors are doubling down on partner-delivered services, and what this means for MSPs and channel partners.

What’s happening: Services now outpace product sales

Managed services are quickly emerging as stronger revenue drivers than product and technology sales. One area where this shift is already clear is cybersecurity. 

In a recent industry analysis, Canalys chief analyst Jay McBain shared that the $311 billion cybersecurity market is growing at 12.1%, with 91.7% of revenue sold through or alongside partners.

According to McBain, the channel now generates roughly $2 in cybersecurity services revenue ($204.8 billion) for every $1 in product revenue ($106.4 billion). 

Services such as MDR, remediation, deployment, maintenance, and support are now generating more revenue than standalone security offerings like endpoint or network security products.

Vendors prioritizing services-centered revenue strategies

Major vendors are increasingly adapting their partner strategies around this reality as well.

Lenovo expanded its services-focused strategy through Lenovo 360 for Services, a framework designed to help partners attach services to every deal and transition toward higher-margin recurring revenue models. 

The initiative includes ready-to-sell offerings across the digital workplace, hybrid cloud, AI, and as-a-service solutions.

LG Electronics USA’s commercial display division recently launched LG PRO Services, a manufacturer-backed installation service for its Direct View LED (DVLED) portfolio designed to help partners plan, deploy, and scale display projects beyond simply providing the hardware.

Taken together, these moves reflect a broader shift across the channel: vendors increasingly want partners to expand their managed services offerings rather than rely solely on product sales. 

As customer environments grow more complex and product margins continue to shrink, services are becoming the channel’s biggest long-term revenue opportunity. 

So what is driving that shift? Several industry trends are accelerating demand for managed services.

Why managed services are growing over product sales

Outcome-based IT is becoming the priority

Organizations are increasingly prioritizing business outcomes over standalone technology purchases. It’s no longer about offering customers and partners tailored software solutions; it’s about offering services that:

• Manage environments
• Improve efficiency
• Strengthen security postures
• Optimize cloud usage
• Support long-term digital transformation initiatives
• Demonstrate ROI for AI investments

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IT environments have become too complex to handle

In addition, modern enterprise environments have become increasingly complex and difficult to manage. Hybrid infrastructure, multi-cloud deployments, cybersecurity requirements, regulatory compliance, and distributed workforces have significantly increased operational complexity for businesses.

This is not to mention the rise of AI technology, which introduces new challenges around AI integration, deployment, governance, orchestration, and ongoing management. Altogether, these shifts are making enterprise technology stacks far more complicated than they were just a few years ago.

Beyond operational complexity, the financial structure of managed services is another factor to its current success. 

Recurring revenue is bringing more value in the long term

It’s no surprise that managed services’ ability to generate recurring revenue is playing a major role in its growth across the channel. 

Compared to one-time hardware or software margins, managed services provide partners with predictable monthly revenue, longer customer relationships, and greater business stability.

This recurring model is also attractive to vendors, which benefit from stronger customer retention and longer-term engagement. 

“We try to be very clear about not reinventing the wheel. Vendors are already building things that work, so we’ll use those where it makes sense, and then we’ll focus on offering the specialized services we know our customers want,” Netrio CEO Mark Clayman told Channel Insider earlier this year.

Cybersecurity and AI require more expertise than ever

Cybersecurity and AI are also accelerating the need for services-led engagement. As two of the fastest-evolving areas in the channel, both require specialized expertise that many organizations struggle to maintain internally.

Many businesses lack the in-house talent needed to manage modern security environments or deploy AI technologies effectively. 

At the same time, the rapid pace of innovation makes it difficult for internal teams to keep up with evolving threats, compliance requirements, and best practices.

This creates growing opportunities for partners offering services such as: 

• Security operations 
• AI readiness assessments 
• Governance and compliance support
• Implementation and ongoing optimization

AI is creating new cybersecurity challenges and opportunities

Cybersecurity and AI also present a unique double-edged sword. While AI-powered technologies are helping organizations improve operations and automate security processes, they are also fueling a new wave of AI-powered cyberattacks and threats.

Many organizations are finding MSPs and MSSPs better equipped to manage that rapidly evolving landscape than internal teams alone

In April, Omega Systems CEO Mike Fuhrman told Channel Insider that the growing complexity surrounding cybersecurity presents both a challenge and an opportunity for businesses and service providers alike.

“Now, security and even other things are so much more complicated, and there are tons of things you can add on to the core services to give your customers what they need,” Fuhrman said. “It’s certainly a different time.”

Bottomline: Services, outcomes, and customer experience remain paramount

As managed services continue to emerge as a central revenue opportunity across the channel, it’s clear that organizations are prioritizing long-term outcomes and customer experience over one-time sales.

For MSPs and channel partners, that means continuing to invest in services that span the entire customer lifecycle. 

Whether it’s advisory, deployment, cybersecurity management, AI support, optimization, or ongoing maintenance, the biggest opportunities lie in continuous engagement rather than standalone transactions.

As customer environments become more complex and businesses demand more support, managed services are positioned to remain one of the channel’s biggest growth drivers for years to come.