What's Your General Outlook for the MSP Industry in 2021?

All of us, MSPs and channel vendors alike, want to get a feel for what's coming up next. After all, the better handle you have on the business environment, the better decisions you can make. It would be tempting to think, after the year we've just had, that such prognostications are a mug's game. But that's not entirely true. Think about where good data comes from. 2020 was clearly an outlier, so it's not necessarily indicative of the long-range trends that drive our industry.

To understand those trends, however, you still want to get a large enough sample size of experts, diversify the opinions a bit, and that's precisely what we did. We asked ten different industry influencers what they think about four critical issues in the MSP space. This week, we're talking about the general industry outlook.

The Good News

Here's the good news - everybody is positive. As Kaseya CEO Fred Voccola points out "The COVID-19 pandemic showed small and medium sized businesses just how indispensable technology is to operate their businesses safely and effectively. It became clear that technology not only helps SMBs fight the economic challenges they face today, but that it is also their best weapon against a recession.

Gary Pica, President of TruMethods, points out that even though the overall economy is likely to continue to struggle, "SMB technology spending will continue to increase. This means that MSPs will have a growing addressable market."

So that's the good news - even with so much unsettled regarding next year, you're in the right business. And here's why that matters.

A lot of businesses are growing

First, several industries are poised to do very well coming out of the recession. Nigel Moore of Tech Tribe calls out "pharma, education, health and e-commerce in particular. Paul Dippell, CEO of Service Leadership, notes that managed services can thrive in recessions because "smart businesses realize they should focus on their core expertise and not try to run their own IT in a challenging economy." And MSP marketing expert Erick Simpson also points out that "once vaccines have been deployed and businesses return to a sense of normalcy; possibly by Q3, we should see projects that had been placed on hold begin to gain approval to commence or continue."

Which MSPs will gain the most?

Our panel was universally bullish on the MSP space, and each member of the panel provided a strong case as to why.  In addition to the reasons above, a couple of our panel pointed out that less mature MSPs probably dropped the ball in 2020 and are going to shed customers as a result, with more mature MSPs set to pick up those gains. Those less mature MSPs could struggle, Todd Kane of Evolved Management argues, and M&A activity will accelerate as "less stable MSPs look to be acquired by stronger operators in the market."

What this says is that while the outlook is positive for the industry as a whole, the gains are probably going to be concentrated among the MSPs that are the most mature, and the most competitive in their markets.

Next week, we'll take a look at what our influencers think about how the pandemic has altered the MSP marketplace, a rather salient question since it looks like a lot of those changes are going to be baked into the way things are done going forward.