A new report from ConnectWise’s Service Leadership unit shows MSP wage pressures are finally easing after peaking in 2022, but competition for advanced technical talent remains intense.
The 2026 Annual IT Solution Provider Compensation Report finds that hybrid work has become the dominant operating model across the IT services industry, while demand for high-skill engineering and consulting roles continues to rise.
How top-performing IT providers structure compensation
The report correlates compensation data with IT solution provider profitability, providing insight into how compensation strategies differ between top-performing and lower-performing organizations.
Unlike other compensation reports, the report focuses exclusively on roles and structures specific to the IT solution provider business model.
“This report provides IT Solution Providers with a clear view of the real costs associated with recruiting and retaining talent in today’s market,” said Peter Kujawa, executive vice president and general manager of Service Leadership and IT Nation at ConnectWise.
“As labor remains the largest expense for most firms, understanding how top-performing organizations structure compensation and improve operational efficiency is critical to maintaining profitability and long-term growth.”
Why operational efficiency remains critical for MSP profitability
Kujawa also noted the positive shift in wage inflation trends following its peak in 2022. While easing wage pressure is encouraging for solution providers, he emphasized that improving operational efficiency remains critical.
Key findings from the report include:
- Wage inflation peaked in 2022 and has improved significantly since then
- Top-performing IT solution providers awarded fewer large pay increases in 2025
- Hybrid work remains the dominant model in the industry
- Demand for advanced technical roles continues to grow globally
Service Leadership also highlighted new data in the 2026 report, including insights by ownership type (privately owned vs private equity–backed) and analysis of the number of full-time consultant employees and average consultant costs.
These additions aim to provide clearer visibility into workforce composition, cost structures, and organizational performance.
New data reveals workforce trends and AI adoption
In the report’s official press release, Service Leadership also noted that the study provides insight into regional differences in workforce and pay trends, using compensation data from IT solution providers worldwide.
The report also examines variable incentive compensation, average billable rates, and annual compensation growth trends, with data being segmented by region, city tier, and, where available, metropolitan area.
Finally, the study also introduces data on the number of Digital Workers—AI agents and automation bots—currently used by IT solution providers, highlighting the industry’s growing shift toward automation-enabled operations.
Interested readers can access an executive summary or purchase the full Service Leadership Index 2026 Annual IT Solution Provider Compensation Report here.
Earlier this year, we spoke with ConnectWise CEO Manny Rivelo about the zofiQ acquisition and its goal of bringing agentic AI automation to PSA workflows to boost MSP efficiency.