Steady Growth Recommended for Stretched & Expanding MSPs

Adding more services and expanding cloud-based applications solutions are the best way forward for managing service providers (MSPs) in Australia, according to new data. However, business leaders will need to grow carefully, or else they will face an exodus in staff at a time when skills are incredibly hard to come by.

These insights come from The Evolving Landscape of the MSP Business 2023, published recently by researcher Vanson Bourne and commissioned by Barracuda MSP.

The researchers surveyed 500 MSPs worldwide and found that, overall, companies were “torn between a desire to expand their services portfolio and grow their customer base, but also hampered by the fact that employees are reporting higher levels of stress.”

Given Australia’s extreme skills shortage and the high levels of mobility among employees, a key priority for MSPs must be to retain staff, the report noted.

Australian MSPs Are in a Good Position

According to the report, Australian MSPs share ambitious plans for growth. This is despite data showing that the large global channel enterprises are facing economic headwinds and Australia is likely to fall into a recession this year.

Australian MSPs are nonetheless anticipating revenue increases of 28.43% — up from $19.73 million to $25.34 million.

Growth will come from broadening the MSP’s business to add new services and support new industry sectors. This also underpins the ongoing theme of acquisition and consolidation in the local market, as MSPs look to add new capabilities to complement their existing businesses quickly.

Overall, MSPs expect to introduce an average of seven new services for their customers in 2023, and 42% of them see business growth opportunities in cloud-based applications.

Finding Enough Talent Is the Challenge

As far as challenges to growth are concerned, MSPs are worried about competition as they look to expand. Nearly half (47%) were more concerned about this than in 2022. In order to outgrow their competitors, recruitment and skills development is a key challenge, with 40% of MSP employers concerned that their processes to keep up with the latest technologies and security trends were not up to scratch.

Most significantly, 22% of employers reported that their employees had a high level of stress, making it much more likely for those employees to decide to move on.

Runaway growth may not be possible for MSPs, as there simply aren’t the skills or resources for it. However, the opportunities are there, so those businesses that can take a measured and employee-first approach to the market will likely be able to weather the challenging market ahead.