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Greg Jones, Vice President of Business Development for EMEA at Kaseya, is particularly optimistic about the future of the UK Managed Service Provider(MSP) sector. He notes that the industry is experiencing rapid expansion, supported by strong data from leading sources.
"We're seeing phenomenal growth across the MSP sector, and the data supports this," Jones asserts, highlighting that all major data providers are reporting an upward trend.
Jones' enthusiasm is backed by data from research firm Canalys, which reveals that mergers and acquisitions (M&A) in the MSP channel have surged by a staggering 50% in 2024 compared to 2023, marking a return to pre-pandemic activity levels seen in 2021. This increase is a significant indicator of market confidence and the expanding role of MSPs in the broader economy.
"If we look at technology spend globally, it's up by 7.5% this year, reaching $5.2 trillion," Jones notes. "The momentum isn't slowing down."
One of the most striking trends Jones observes is the shift in budget allocations by small and medium-sized businesses (SMBs). "Ninety percent of SMBs are increasing their technology budgets year on year," he explains. "That's positive. In the past, during tough economic times, technology budgets were often the first to be cut. However, that's not the case now. When challenges arise, we see technology spending either increase or remain steady, which is a win for us and MSPs."
Growth Areas in the UK MSP Market: ‘We're Only at the Beginning of the Wave’
The expansion of the MSP market isn't uniform across all services; some areas are growing more rapidly than others. According to Jones, services related to security and compliance are seeing tremendous growth.
“Both of these areas present huge opportunities for MSPs,” he notes, citing Canalys' projection of a 12% growth in managed services revenue in 2024.This growth is driven by increased demand for cybersecurity, cloud infrastructure, AI consulting, application development, and compliance." We're only at the beginning of the wave," he adds, emphasising that these services allow MSPs to expand their offerings and tap into new revenue streams.
Jones also sees significant growth potential in digital transformation services. He argues that true digital transformation goes beyond mere buzzwords and involves meaningful improvements to business processes through technology.
"The next wave of growth for MSPs is in taking a consultative approach to true digital transformation," he emphasises. "I'm not talking about a 'buzzword' digital transformation. To me, it means making real progress by leveraging technology. Whether it's improving a business process or streamlining operations, that's digital transformation. For MSPs, focusing on this area is critical."
Opportunities and Challenges: ‘MSPs Need Help and Support’
While the growth prospects for UK MSPs are strong, the market is not without its challenges. The rapid pace of technological change presents a constant challenge, especially for smaller MSPs.
"MSPs need help and support to become more business and operationally mature," Jones acknowledges. "The market is evolving quickly, and it's hard for medium to small MSPs to keep up. It's like trying to run a hospital without enough specialised subject areas—whether it's compliance, security, or digital transformation, the landscape is changing, and MSPs need to invest in new skills and capabilities to stay competitive."
Cybersecurity remains a top concern, with the threat landscape evolving rapidly. "Cybersecurity and cyber resiliency continue to be top priorities," says Jones, highlighting the need for ongoing investment. This sentiment is echoed by Kaseya's annual MSP survey, which found that 45% of IT service providers consider cybersecurity the top area to enhance in the next budget cycle.
Another challenge is integrating artificial intelligence (AI) into MSP operations. While AI has the potential to greatly enhance efficiency and profitability, it also introduces new complexities, particularly around compliance with emerging regulations.
"Legislation is coming into force on how businesses use AI and machine learning—what are the ramifications? What's the impact? That's challenging," Jones admits.
Navigating Sales and Marketing Hurdles: ‘Winning New Business is Hard for MSPs’
Sales and marketing continue to be significant hurdles for many MSPs, especially when it comes to acquiring new customers.
"Winning new business is hard for MSPs," Jones notes, pointing out that many MSPs are founded by technical experts who may lack the necessary sales and marketing expertise. "It's a very different skill set to lead a sales and marketing strategy or to set up a sales organisation. So that is a challenge."
To help MSPs overcome these challenges, Kaseya has launched several initiatives aimed at improving their sales and marketing capabilities. These include peer groups, such as the TruPeer programme, which offers quarterly peer meetings, bi-weekly calls, webinars, and targeted training. This enables MSPs to share best practices and learn from one another to drive growth.
"We're focusing heavily on MSP enablement, particularly around sales, marketing support, and growth," Jones explains. "There's a direct correlation between an MSP's success and our own. If we help them succeed in winning new business, we'll see growth as well. It goes back to that old saying about teaching someone to fish rather than just giving them the fish. We're committed to supporting them on this journey, and our programmes reflect that."
