With a sudden rise in remote work, managed service providers have started gaining more recognition for the work they do.
So, what exactly is an MSP, how does it work, and why is it so beneficial for companies?
What is a managed service provider?
Let’s start by defining what a managed service provider actually is.
MSP, short for a managed service provider, refers to an outsourcer who remotely manages and provides IT services including application, infrastructure, network, and security management.
They provide these services to a client company and fully assume responsibility for those services.
It’s their job to find the most proactive and efficient solution to a client’s issue, and they provide services and technologies that will meet the clients’ needs at the client’s location or elsewhere. They also offer services regarding software, hardware, and cloud technology.
MSP business model
When it comes to their business model, MSPs have a specific structure. They offer more affordable services that come with more scalability and flexibility, and with a higher quality level.
These types of services usually come with a cheaper price than when an enterprise does the same job.
Achieving a higher quality level with cheaper price points is possible with the help of scale efficiency. Essentially, an MSP is in a position to hire specialists that most enterprises are not able to justify.
In addition to that, MSPs utilize artificial intelligence, automation, and machine learning that most client companies can’t implement themselves due to lack of expertise.
So, what is the difference between these new managed service providers and the traditional outsourcing companies?
When an enterprise outsources an IT expert or even a whole department, the company either picks up those workers or they replace them with an equal number of employees somewhere else.
On the other hand, an MSP takes a holistic, results-guided approach instead of focusing on the number of jobs and hours involved.
For instance, an enterprise will also sometimes provide a contract for an MSP so that they can handle the support calls satisfactorily and with a specific response time.
The managed service provider’s job is to prioritize those standards no matter what it takes to get there. They might employ automation, dedicated staff or some other system. The methods are factored in to meet the goal, not the other way around.
There is a lot of overlap between outsourcing and utilizing MSPs.
In fact, a lot of companies that were traditionally viewed as offering business process outsourcing have since pivoted to operating as MSPs. They do differ in their methods as we’ve discussed, but they also differ in their terms.
While MSPs typically provide on-going subscriptions, consulting for outsourcing is more of a project-based service. Depending a company’s anticipated length and breadth of projects, one may be preferable over the other.
Examples of managed service providers
Managed service provider agencies come in all sizes from under 50 members to over 1,000.
According to MSPAlliance, an international association of cloud and managed service providers, there are an estimated 150,000 MSPs worldwide that make up the most popular managed service providers can be found within the estimated number of 150,000 MSPs across the whole world.
Some of the key players include Fujitsu, Accenture, Ericsson, Lenovo, IBM, and DXC among others. Some of the main services MSPs offer are network management, data center management, infrastructure management, mobility management, communication management, backup and recovery management, and security management.
It all depends on what kind of service you’re looking for. Note that some MSPs specialize in specific areas of work. They may be specialized for cloud management for infrastructure management separately. Others, however, may have an expertise for one-stop-shopping only.
According to the MSPAlliance, most managed service providers tend to focus on remote monitoring and management tools, operation center services, and service desk capabilities.
Strategic managed service providers
Managed service providers have also evolved and now offer services that are meant for longer-term and strategic business planning. This includes compliance audits, digital transformation consulting, technology roadmaps, and needs assessments.
MSPs have shown immense improvement in another area of growth which includes providing different internet plans of things (IoT) services. According to CompTIA, most of today’s MSPs, up to 50% of them, view this area as a significant revenue opportunity.
Benefits of managed service providers
Managed services offer a wide range of great benefits for your business. First and foremost, using managed service providers will provide you with improved security, more flexibility and better scalability. It will also grant you access to top industry and technical expertise at a very affordable price. This is one of the most budget-friendly options for the highest-quality outsourcing service, creating a great return on your investment.
MSPs will also likely offer you variable billing models. These models allow MSPs to have additional revenue opportunities which creates a greater deal of scalability and flexibility to you as their customer.
For instance, if an enterprise has large investments in software and hardware, they can’t simply reverse their investment during downturns.
On top of that, layoffs tend to be extremely expensive and they leave long-term damage behind. This can be harmful for the company’s budget, especially if the employees find new jobs in the meantime. It can also be quite difficult to add capacity in the middle of temporary business surges.
Another advantage of investing in managed services is that MSPs can invest in expertise and technologies that individual companies can’t afford, especially if they are smaller businesses. Utilizing these expertise and technologies usually results in higher efficiency and greater performance.
MSPs can also help with talent gaps, as can occur within legacy systems. Older employees have to retire at some point.
As seasoned employees leave the company, incoming candidates are less likely to learn obsolete technologies and languages. However, when you hire MSPs to provide outsourcing services for you, they can not only staff legacy skills but also train for them.
Enterprises also tend to turn to managed service providers when they need help from time to time. They usually provide assistance for cutting-edge applications and accelerating adoption. This demonstrates how widely used and valued MSPs skills and expertise are.
Current state of the MSP market
As predicted by Mordor Research, the managed service market is expected to grow to $274 billion by 2026 — up from $152 billion in 2020.
With an immensely increased adoption of the model and many companies choosing MSPs to reduce the impact the pandemic has caused in the past two years, managed services are on the constant rise.
In part influenced by the pandemic, there has been a sudden surge in demand for cloud-based solutions. More and more customers have started to move away from more traditional options towards managed services.
Additionally, up to 45% of managed service providers have noted claimed a great increase in cloud management revenue. An even higher 65% of MSPs have seen an increase in their revenue by providing cybersecurity services. This sudden jump was even present during the global economic depression.
At a time when numerous companies sent their employees to work from home, their business models were hugely affected by this change.
However, managed services providers found themselves in the perfect position to provide efficient services and help to the customers. The infrastructure was already set in place and remote work was already the norm for them instead of being an exception to work around.
Managed service provider jobs
Lastly, let’s discuss the scope of a managed service provider’s job. What is their experience with this kind of agency, and where can they work?
With an MSP, IT professionals get to work for different companies and even different industries. This allows them to gain a much wider and richer work experience than working in a single company would ever provide them with. As this job is a remote working position, working as an MSP allows for a wider set of geographic locations.
As with many other companies, if you’re looking for a job position at MSP, networking and job postings will be your best friends.
Salaries are comparable to their IT jobs and in addition to that, certain premiums can be achieved in the MSP market. This is mainly due to the fact that specific business models and constant competition for skills can accommodate such premiums.
Managed services providers mostly hire IT professionals who possess a wide range of different work experience levels and a variety of relevant skills. Certain companies choose to focus on specific industries or technologies so if you specialize in any of those, you are more than qualified to apply for the job.
For instance, if an MSP is specializing in managed network services, they will mostly look for professionals who use software engineering, traditional computer engineering, and people who are security and networking experts.
Lastly, note that MSPs are actively investing in artificial intelligence and machine learning. If that’s the area of your expertise as well, you may be able to easily find suitable job positions in this industry.
Overall, with companies stepping into the world of remote work more these days, managed service providers are at a great advantage. They provide high-quality services at affordable prices and are capable of coordinating services for long-term business plans.
This area of IT services is becoming more present in the industry with every day and is expected to grow even more in the following years. Managed service providers are definitely worth looking into, both as a client and as an aspiring IT professional.