This year has already brought a lot of channel activity; whether through mergers and acquisitions—for both vendors and service providers—the naming of new CEOs and executives, or things to look out for in 2019. But which of the major trends in the market are actually worth watching?
To answer this question and more, I sat down with Continuum CEO Michael George. Recently, Michael shared his predictions for the managed services industry, alluding to three major forces that will disrupt the market. Keep reading for a deeper dive into these three forces, including exclusive insight from Michael on how to align your MSP business for success in 2019.
1. The MSP Market is Going to Be Dominated by the Top 20 Percent
The Pareto Principle suggests that 80 percent of the wealth is dominated by 20 percent of the market, and a combination of market forces has created the perfect storm for this to emerge in the managed services marketplace. By 2020, just 8,000 out of 40,000 MSPs in the United States will dominate most of the available revenue.
The first of these market forces is a reduction in the workforce of up to 40 percent due to retirement, as predicted by CompTIA, which could leave many providers without successors to lead the businesses and hamper growth.
Second is the trend of mass market expansion through merger and acquisition, now that private equity firms and major office equipment dealers have realized the opportunity that awaits them by investing in or acquiring managed services businesses. That is likely to result in increasingly challenging environments for smaller players unable to seek an exit as their competition grows larger and stronger.