Greg Jones (pictured), Vice President of Business Development for EMEA at Kaseya, is particularly bullish on the sector's future, noting that the UK MSP sector is experiencing rapid expansion.
"We're seeing phenomenal growth across the MSP sector, and the data supports this," Jones asserts, pointing out that all leading data houses report an upward trend.
Jones enthusiasm is related to data from research firm Canalys, which reveals that that Merger & Acquisitions (M&A) transactions in the MSP channel have surged by a staggering 50% in 2024 compared to 2023, reflecting a return to pre-pandemic levels of activity in 2021.
This is a significant indicator of market confidence and the expanding role of MSPs in the broader economy, Jones highlights. He notes, "If we look at technology spend as a whole across the globe, that is up this year by 7.5% on $5.2 trillion, so it's not slowing down."
One of the most striking trends Jones observes is the shift in how SMBs (small and medium-sized businesses) are allocating their budgets."Ninety percent of SMBs are year on year putting more money into technology spends than other budget lines," he explains.
“That's positive. If we look at the previous pullback in 2008, one of the first budgets to go was technology. However, that's not the case now. When tough times come, we see spend increase or stay the same, which, for us, and MSPs, is a win.”
Growth areas in the UK MSP market: ‘We're only at the beginning of the wave’
The growth of the MSP market is not uniform across all services, with some areas experiencing particularly rapid expansion. According to Jones, services related to security and compliance are experiencing tremendous growth.
“Both of those areas are huge opportunities for MSPs,” he notes, with Canalys projecting a 12% growth in managed services revenue in 2024, driven by demand for cybersecurity, cloud infrastructure, AI consulting, application development, and compliance. We're only at the beginning of the wave,” adding that both security and compliance allow MSPs to expand their service offerings and tap into new revenue streams.
Another area where Jones sees significant growth potential is in digital transformation services. He argues that true digital transformation goes beyond buzzwords and involves making meaningful improvements to business processes through technology.
"The next wave of growth for MSPs is that consultative led approach around true digital transformation," he emphasises. “I'm not talking about a ‘buzzword’ digital transformation, because for me, digital transformation just means we moved the needle on something using technology.
“A business process was a little legit, and now it's a little bit better. Well, that was digital transformation, whether you like it or not. So, I think for MSPs, focusing on that true digital transformation piece is critical and key.”
Opportunities and challenges: ‘MSPs need help and support’
While the growth prospects for UK MSPs are strong, he reiterates, the market is not without its challenges. The rapid pace of technological change presents a constant challenge for MSPs, particularly smaller firms.
"MSPs need help and support, that's the main thing, to become more business and operationally mature. The market is changing and adapting, and it's hard for medium to small MSPs to keep up,” Jones admits, acknowledging the difficulties these businesses face in keeping up with the specialised demands of their clients.
“It's like trying to be a hospital without enough specialised subject areas, like paediatric surgeon, a heart surgeon, and an orthopaedic surgeon. The SMB landscape is changing, which creates more demand for the MSP.
“On top of that, we're seeing enterprises lean on MSPs a lot more now for co-managed services to help them with specialist areas, whether it's compliance, security, or digital transformation,” emphasising that the increasing complexity of the services required by SMBs means that MSPs need to continually invest in new skills and capabilities to remain competitive.
Cybersecurity also remains a top concern, with the threat landscape evolving rapidly. "Cybersecurity and cyber resiliency continue to be top concerns," says Jones, emphasising the need for ongoing investment in this area. This sentiment is supported by recent the annual Kaseya MSP survey that found 45% of IT service providers consider cybersecurity the top area to add or change solutions in the next budget cycle.
Another significant challenge is the integration of artificial intelligence (AI) into MSP operations. While AI offers the potential to greatly enhance efficiency and profitability, it also introduces new complexities, particularly around compliance with emerging regulations.
Jones acknowledges this, stating, "There's legislation coming into force on how businesses use AI and machine learning—what are the ramifications? What’s the impact? That’s challenging."
Navigating sales and marketing hurdles: ‘Winning new business is hard for MSPs’
Sales and marketing continue to be significant hurdles for many MSPs, particularly when it comes to acquiring new customers.
As Jones notes, "Winning new business is hard for them [MSPs]," largely because many MSPs are founded by technical experts who may lack the necessary sales and marketing expertise.
“It's usually a very different skill set in an MSP business to lead a sales and marketing strategy or to set up a sales organisation. So that is a challenge.”
To address this challenge, Kaseya has launched several initiatives designed to help MSPs improve their sales and marketing capabilities.
These initiatives include peer groups, such as its TruPeer programme, which includes quarterly peer meetings, bi-weekly calls, webinars, and targeted training, allowing MSPs to share best practices and learn from each other to drive growth, Jones says.
“We're focusing a lot on MSP enablement, around sales, marketing support, and growth. There's a direct correlation with an MSP's success and our success," he adds, highlighting the importance of supporting partners in their growth journeys.
“If we help them be more successful with new business, we'll see growth as well. It goes back to that old saying about teaching a person to fish rather than buying them the fish, helping them with the journey. And we've done a lot in our programs.”
