Service Leadership Inc., a ConnectWise company, has released its 2025 Annual IT Solution Provider Compensation Report. This report offers insights into compensation data and best practices. Key findings indicate that wage inflation peaked in 2022 but has improved since, with only a quarter of employees expected to receive top-level increases in 2025 compared to 2022. The report reveals that top-performing managed service providers provided lower compensation increases than their lower-performing counterparts in 2024. Additionally, remote work remains limited in the industry, with just under ten percent of employees working fully remotely. Employees with 1-3 years of experience have a 3x higher FTE churn rate compared to employees with 8 or more years of experience.
N-able has released its second annual MSP Horizons Report in collaboration with Canalys, revealing a positive growth outlook for managed service providers. The report indicates that fifty-nine percent of respondents expect to increase their overall revenue by twenty percent or more in 2025, while nearly forty percent anticipate over twenty percent profit growth. Cybersecurity remains a critical focus, with ninety percent of respondents predicting sales growth in that area.
AI adoption is maturing with more attention to governance and risk management. Only 6% of respondents are not using any generative AI. 40% have generated data governance rules and designed guidelines for human oversight. The biggest AI use cases are for building workflow automations and automating the sales and ticketing process.
90% of those surveyed are interested in M&A, with specific growth tactics (acquiring new skills and/or regions) the main motivator—up from 44% last year. M&A drivers include the determination to improve competitiveness via expansion into new regions, verticals, or other niches.
Why do we care?
The high churn rate for employees with 1-3 years of experience is a flashing red light. This suggests that MSPs struggle to retain early-career talent, reinforcing the need for better onboarding, career progression paths, and cultural investments. Given the limited role of remote work in IT services, this also underscores that MSPs must compete on workplace environment and benefits—not just salaries. Retention, compensation, and training strategies should be a top focus, especially for early-career hires.
Growth won’t come from just adding services—it will require differentiation, particularly in cybersecurity and AI governance.
A ninety percent considering acquisitions is staggering. This signals that providers who aren’t growing organically may look for partners or acquisition targets. If you’re not thinking about how M&A affects your positioning, you should be, even if you aren’t a buyer or seller. Even mid-sized and smaller MSPs need an M&A strategy, whether it’s being acquired, merging, or defending market position.