Fueling MSP Growth: The Power of Distributor Collaboration

Call it a cutting-edge paradox: As the demand across industries for MSPs continues to rise, it is becoming more challenging for MSPs to manage such demand while also hitting growth goals and meeting customer expectations.

To capitalize on benefits like better market visibility, increased technical support and financial flexibility, solution providers are turning to outside distributors to help position themselves for success.

The demand for IT solution providers and MSPs rocketed with the advent of cloud computing, and it’s only continuing to grow in the age of AI and cybersecurity. In fact, more than half of MSPs expect to see a significant revenue increase in 2024. One in four forecasts that revenue increase to be greater than 20%.

Such growth is being driven by an increasing demand for cloud infrastructure, artificial intelligence (AI) tools and consulting, and cybersecurity management. Amid this boom—the MSP economy is projected to surpass $500 billion by 2028—providers are being asked to help clients address and manage increasingly complex security concerns and IT systems.

To manage such complexity, MSPs should consider tapping distributors. Outside sourcing from distributors helps MSPs expand their offerings, increase efficiency and focus on the core of their business—delivering top-tier IT services to clients.

2024 Trends for MSPs

In business, change is constant. But the pace of change MSPs face has ramped up in the past years and will only continue to increase. That’s why adaptation is key to success in a digital landscape ever in flux.

As client needs change, so must the services that MSPs offer them. We’ve seen a growing curiosity about and demand for AI tools, such as Microsoft’s Copilot.

“In 2023, automation stands out as a pivotal trend reshaping the MSP landscape,” Hanh Tran told CRN. “Both MSPs and their clients are increasingly recognising the value of automating routine tasks and processes. In an era where time is of the essence, automation emerges as a game-changer.”

This is where a wide range of customer options can help providers win market share. MSPs are evolving into something closer to strategic partners with clients, not just service providers. Whether clients want the newest AI tool or to invest more heavily in cybersecurity, MSPs must adapt to fill those needs.

However, service providers must do this while also riding the wave of market expansion and consolidation. Last year saw an uptick in consolidations driven in large part by two factors: a skill shortage in the industry and MSPs increasingly moving toward specialization, streamlining their services to specific areas.

At the same time, the average private equity investment doubled between 2020 and 2023. While the market grows, there are fewer and more powerful players in it.

All of this adds up to a bright-if-uncertain future. Challenges loom: ever-changing client needs, market consolidation, evolving cybersecurity concerns. However, strong businesses will remain on the cutting edge of innovative solutions. As remote work increases the importance of MSPs and economic challenges push SMBs to optimize their IT budgets, agile service providers can deliver exactly what the market needs: cost-effective solutions for a wide range of changing needs.

How distributors can help

In a market governed by rapid and radical change, MSPs would be wise to rely on distributors to help service their clients and meet the demands of their industry. Distributors offer a wealth of benefits—here are just a few.

  • Distributors provide MSPs access to diverse products. Sourcing solutions from various manufacturers allows providers to be a single point of contact for clients, expanding the range of options MSPs offer.
  • MSPs can also cut costs by buying in bulk from distributors. Many vendors offer discounts for high-volume purchasing, which can increase margins.
  • Distributors help simplify supply chain management. They take on the logistics of warehousing and inventory management, saving MSPs time and labor.
  • Distributors can provide technical support to MSPs, which can make tackling new or highly complex problems less risky. This is beneficial, especially to smaller MSPs, who are also fighting the forces of consolidation and specialization.
  • Distributors have industry relationships that can offer MSPs visibility into market dynamics. Often, distributors have better information about market trends, new projects and coming developments in the industry. This market visibility is valuable for MSPs deciding how and where to invest.
  • Finally, many distributors can extend credit facilities to MSPs, offering them more flexibility with finances, a huge help in better managing cash flow.

Distributors can be invaluable resources in shifting markets. They offer MSPs different ways to improve operations, expand offerings to clients eager to adapt to changing landscapes and boost their overall business.

As the demand for MSPs continues to grow and the market experiences consolidation, MSPs have a choice to make. Embrace the flexibility and dynamic capabilities distributors offer, or watch the market pass them by.

By Lon Clark, Director of Global Channel Sales at BitTitan