It’s a new year, and I hope you had a Happy New Year. I’ll be catching up from the holidays and mixing in the latest news, including later this week highlights from the Consumer Electronics Show, which kicks off in Las Vegas today.
The State of the MSP Industry 2025 by Kaseya highlights the optimism among managed service providers, or MSPs, regarding their growth prospects in 2025, with 91 percent prioritizing profitability. Despite concerns about new customer acquisition and revenue growth, sixty-four percent of MSPs reported revenue increases last year, and sixty-seven percent expect further growth over the next three years. The landscape remains competitive, with smaller MSPs leveraging their niche expertise to stand out. Additionally, the report notes a significant rise in AI-driven threats, with over two-thirds of MSPs experiencing increased attacks. The findings suggest that top-earning MSPs proactively adopt new technologies and focus on client-centric services to drive their success.
In 2024, the managed services market experienced varied growth, with Canalys predicting a five percent overall channel growth and a thirteen percent increase for managed services in 2025. The year saw a thirteen percent rise in managed services globally, but growth slowed to just under eleven percent for 2024. The importance of artificial intelligence was a central theme, with significant investments leading to efficiency gains, although customer adoption of new tools remained low. Cybersecurity services grew by fifteen percent, driven by rising ransomware threats and a shortage of skilled personnel. Compliance services surged by sixty-six percent as businesses navigated complex regulations. Mergers and acquisitions in the channel slowed in North America but remained strong in Europe and Asia Pacific, with smaller managed service providers being actively acquired. Overall, the landscape is poised for recovery in 2025, focusing on cybersecurity, cloud computing, and compliance as key growth areas.
Fiverr released a survey of one thousand and one U.S. small business owners, revealing a strong sense of optimism for 2025 despite facing challenges from new economic policies. The survey found that nearly ninety percent of respondents remain hopeful, particularly in sectors like education, finance, and retail. Eighty-five percent believe the new administration will improve conditions for small businesses, with women-led firms showing even greater optimism at ninety-two percent. However, economic concerns are prevalent, with rising costs cited as the primary challenge by fifty-five percent of owners and thirty-eight percent fearing a recession. The impact of proposed policies on tariffs and taxes is significant, with seventy-two percent indicating these will affect daily operations. As small businesses prepare for 2025, key focus areas include hiring talent, marketing investments, and adopting new technologies to enhance efficiency.
In a recent report by Business Insider, the Big Four consulting firms have shown varied revenue growth performance for the year. Deloitte reported a revenue increase of 8 percent, while PricewaterhouseCoopers experienced a more modest growth of 4 percent. Meanwhile, Ernst & Young saw a decline of 2 percent, and KPMG reported stagnant growth. The findings come as firms continue to navigate a challenging economic landscape, with a survey indicating that over 60 percent of firms are adjusting their strategies to adapt to changing client needs.
Why do we care?
We’re starting the year off optimistic. Providers expect growth despite challenges. Focus on differentiation and financial discipline. Providers should also assess regional opportunities and risks, with a special focus on compliance services, which saw significant growth. As regulations increase globally, offering tailored solutions for compliance can open doors to high-margin contracts.
Additionally, align services to meet small businesses’ need for efficiency and cost management. Those are business outcomes, and what customers are asking for.
I included the Big Four data to highlight that there is space that smaller, agile providers could fill, particularly in digital transformation and tailored IT solutions. MSPs should watch for areas where consulting firms retrench or underperform, offering specialized services or cost-effective alternatives. These could include targeted cybersecurity services, compliance assistance, or cloud migration projects.