The team at TechPartner dropped a big juicy report called the 2025 State of the MSP Report, making my headline story obvious today.
The report highlights a significant transformation in Managed Service Providers (MSPs), evolving from small teams focused on troubleshooting to key players in cybersecurity, cloud strategy, and AI adoption. According to the report, nearly half of surveyed MSPs reported revenues of less than $5 million, indicating a market ripe for consolidation by larger firms and private equity.
Recent data indicates that 68 percent of MSPs now position themselves as one-stop ICT partners, while 44 percent identify as security partners, reflecting a shift towards enhanced service offerings in response to client demands. The report notes that as IT costs escalate, clients increasingly seek value, with 44 percent of MSPs considering themselves strategic partners in planning IT roadmaps.
Nearly two-thirds of managed service providers (MSPs) plan to increase their investments in artificial intelligence over the next year. This shift aims to not only reduce service costs but also to innovate new offerings essential for survival in an evolving market. 46 percent of MSPs are focusing on client-facing automation to alleviate support burdens. Furthermore, while 46 percent believe that internal process documentation enhances operational efficiency, only 16 percent have audited their processes for compliance, indicating significant room for improvement in foundational business practices.
The survey indicated that 60 percent of respondents were looking to acquire other firms, while 28 percent were open to being acquired. Recurring revenue has become a primary focus, with many companies aiming to increase it from around 65 percent to 80 percent.
Why do we care?
TechPartner dropped their 2025 State of the MSP Report — and it’s basically a snapshot of an industry growing up fast but still messy.
Most MSPs? Still small — under five million in revenue. But everyone’s trying to be a cybersecurity expert, cloud strategist, and now an AI shop. Two-thirds plan to spend more on AI next year, mostly on automation to make tickets go away.
Here’s the kicker — only 16 percent have actually audited their internal processes. So, yeah, we’re investing in AI on top of shaky foundations. Meanwhile, the consolidation train keeps rolling: 60 percent want to buy, 28 percent are ready to sell.
This is the shakeout. The MSPs who standardize, document, and measure real outcomes will become the buyers — or the targets with leverage. Everyone else? They’ll just get rolled up. Governance, not gadgets, will define who survives the next wave.