Rich Freeman in Channelholic asked – is the Managed Services market getting bigger or smaller? How about both: revenue is increasing while the number of providers is decreasing. According to Canalys data, global managed services revenue topped half a trillion dollars in 2024 with 9.7% year-over-year growth, while the number of channel partners shrank by 0.6%. There are still 335,385 MSPs in the market despite the slight reduction. Large MSPs are rapidly acquiring smaller ones – 92 acquisitions occurred in Q2 2025 alone according to Drake Star.
The consolidation trend has led to “what was 17 MSPs a year ago is now one MSP,” as noted by John Pagliuca, CEO of N-able. Smaller MSPs face challenges competing with larger firms that have superior pricing power, 24/7 help desks, and resources like in-house AI labs.
For smaller MSPs to survive independently, they need to focus on specific customer segments and industries – focused MSPs can achieve 15-30% EBITDA percentages versus 7% for unfocused ones. Most large buyers typically only consider MSPs doing over $5 million in annual revenue for acquisition.
One exception is The 20, which can acquire MSPs in the $500,000-$600,000 range because “80% of all the integration is done before we buy them”. The article concludes that smaller MSPs have options: sell to larger firms, acquire smaller peers themselves, focus on niche markets, or leverage partnerships to remain competitive in a consolidating landscape.
Why do we care?
So—are MSPs growing or shrinking? The answer’s “yes.” Revenue? Way up—over half a trillion dollars globally, growing nearly 10 percent year over year. Number of providers? Down a tick, thanks to nearly a hundred acquisitions in just one quarter.
Here’s the kicker: the big guys keep getting bigger. They’ve got pricing leverage, 24/7 help desks, even AI labs. That’s tough to compete with if you’re a three-person shop. But look at the numbers—specialized MSPs can hit 15 to 30 percent profit margins. The unfocused ones? Just 7 percent. That’s a death sentence in this market.
So here’s the hard truth: if you’re small and trying to be everything to everyone, you’re toast. You either carve out a niche, buy up your neighbors, or get bought. Otherwise, you’ll be one of those statistics in the “slight decline in provider counts.” The middle is disappearing fast.