The latest report from the Information Services Group indicates a slowdown in global demand for managed services, marking the second consecutive quarter of decline in the value of large contracts. In the fourth quarter of 2025, the value of managed services agreements exceeding five million dollars increased by only 1.2 percent, totaling approximately 10.9 billion dollars, down from 11 billion dollars in the previous quarter. For the full year, managed services grew just 1.3 percent to $43.4 billion, with U.S. growth masking sharp contractions in EMEA and Asia Pacific. The report forecasts a modest growth of 2.1 percent for managed services contracts in 2026, amid economic uncertainties and shifting priorities toward artificial intelligence, which is expected to impact how IT services are consumed.
According to a new report from Omdia, tech services distributor billings in North America saw nearly 15% year-over-year growth in 2024, reaching $16.6 billion. The report highlights that 72.3% of these billings came from the top six technology services distributors, with Telarus leading at $2.9 billion, followed by Intelisys at $2.7 billion and Avant at $2.1 billion. Notably, Bridgepointe experienced the fastest growth at 32%, aided by acquisitions, while Sandler Partners grew by 23.4%. Omdia’s Principal Analyst Devan Adams stated that this report is the first to fully break down the TSD market, shedding light on the complex relationships between distributors and their vendor agreements. The research also indicated that technology advisors accounted for 76% of TSDs’ gross billings in 2024, with value-added resellers and managed service providers contributing 12% and 7%, respectively. As the TSD market is projected to grow at a rate of 10-13% in 2025, its future will depend on how well distributors attract new partners and diversify their supplier base.
Why do we care?
What we’re seeing here is a divergence between how IT services are being bought and how they’re being delivered. Large managed services contracts are stalling globally, not because demand for IT is disappearing, but because buyers are reluctant to lock in long-term operating models while AI is reshaping internal capabilities. This hesitation is being driven less by CIOs and more by finance leaders and business units, who are delaying multi-year commitments while reallocating budget toward internal AI experimentation and shorter-term operating flexibility.
At the same time, technology services distributors are growing rapidly, especially in North America. That growth reflects fragmentation—shorter deals, more vendors, more intermediaries, and more flexibility for buyers.
This shifts where risk and authority sit. Distributors optimize access and choice, not outcomes. When MSPs operate primarily through those channels, they gain reach but lose control.
That creates a strategic fork. MSPs can use distributors tactically to fill gaps while retaining outcome ownership—or they can drift into a fulfillment role where price is set upstream and risk flows downstream. Many will do the latter by accident.
In practical terms, this is how a 50–60% gross-margin service becomes a 20–30% blended margin offering unless governance and decision authority are explicitly priced.
This isn’t about adopting new tools. It’s about deciding whether you own the outcome—or merely supply the inputs.