80% of Australian MSPs Face Growing AI Demand; 90% Not Ready for It

Australian MSPs are struggling to meet AI demand from their clients, and security is a big part of the problem, according to research from Barracuda Networks, in collaboration with Vanson Bourne.

According to the research — The Evolving Landscape of the MSP Business Report 2024 — 80% of Australian MSPs feel “under pressure” to deliver AI tools and insights to their customers. However, more than nine in 10 (94%) said that they need to make “significant” or “notable” improvements in their internal knowledge and application of AI first.

Consequently, 66% of MSPs are looking for additional support from their vendors when it comes to AI expertise and guidance.

AI is primed to become an absolute boom sector in Australia. For just one example at the largest end of town, the investment group that owns more than 50% of major government datacentre provider, Canberra Data Centres, announced that it was investing around AUD 646 million from a capital raise over the next two years.

This investment is entirely to support the additional scale that CDC will need to capitalise on AI. This extreme level of investment highlights both the opportunity and impact that AI is going to have on organisations focused on IT services to enterprises.

At all levels of business, Barracuda’s research also shows that 96% of businesses are scaling back their in-house IT and relying more on MSPs, and that MSPs are proving to be popular employers for the best IT professionals. Those MSPs that can get on top of the AI demand have the opportunity to achieve significant growth in the years ahead.

Security is the enduring challenge

However, to fully embrace the AI opportunity, MSPs are also well aware that they need to significantly upskill on security. From the research, 90% of MSPs report that they believe they need to improve their internal security posture.

This would, in part, explain why so many MSPs have been investing in acquiring security specialists. Due to the ongoing skills shortage in cyber security, acquisition is the most efficient way to quickly build those capabilities.

Overall, however, despite the challenges, Barracuda’s research supports other recent analysis that suggests that Australian MSPs are well poised for the future. Growing opportunities and growing capabilities mean that, overall, 97% of MSPs expect to increase their service portfolio with around six new services this year, with diversification becoming a key part of their growing resilience.