The fourth edition of our annual Global MSP Benchmark Report is here. This year’s report brings you many exciting insights that range from client password management to the impact of COVID-19 on the MSP industry. Although the world is still reeling under the pandemic, the MSP industry fared better than others thanks to the accelerated demand for cutting-edge technologies. However, this doesn’t mean that the MSP industry isn’t facing challenges of its own.
With most MSPs being presented with unique opportunities and challenges over the last year, we set out to determine how they fared in terms of managing their revenues, achieving business growth and adapting to new technology trends. In this short read, we’ll discuss some of the key findings from the IT Glue 2021 Global MSP Benchmark Report. Also, don’t forget to join us on May 19 for a “deep dive” into the report, as an insights panel comprising of industry experts reviews the findings from the survey and shares their thoughts.
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This year’s participants totaled 1,334 from 38 countries, spanning five continents across the globe. Of the participants, 87% identified themselves as MSPs while 10% were internal IT teams. The remaining 2% identified themselves as MSSPs. About 60% of our participants were from the United States while Canada (9%), the United Kingdom (7%) and Australia (7%) took the next three spots. This diverse range of participants represents IT Glue’s global partner network and shows how documentation is a significant aspect of IT no matter where you are.
While the pandemic created challenges as well as opportunities for the MSP industry, we wanted to see how the top-performing MSPs fared amidst all these changes. We have defined a top-performing MSP as one that had revenue growth and margins over 20%. Most of these MSPs managed to sustain their growth by adopting cutting-edge technologies and offering innovative services that leveraged cloud technology, automation and cybersecurity.
About 29% of our respondents belonged to the top-performing category. Also, 57% of our respondents posted revenue growth in our 2021 survey. It is worth noting that over half of our respondents in the 2020 follow-up survey reported a revenue decline due to the pandemic. Considering the work-from-home scramble and economic slowdown we witnessed throughout last year, this recovery is definitely a positive sign for the MSP industry.
We ask our participants about the tech stack they currently use, whether they intend to switch, their reasons for switching, etc., to get a complete picture of their tech tools. Key tools like RMM, ticketing and BDR (backup and disaster recovery) were popular among MSPs for obvious reasons. Nearly 85% of our respondents consider integrations between various solutions a significant factor. Based on this, we believe that cross-platform integration is all set to play a bigger role in the coming years.
When it comes to switching intent, 30% of our respondents wanted to switch their PSA solution due to reasons like lack of functionalities and outdated features. However, the disruption caused by the pandemic combined with the massive effort required in switching prevented many from making the switch.
The MSP industry is witnessing significant growth every year. This trend is likely to continue over the next few years. However, this also attracts new entrants to the industry and the competition is getting intense. Although customer churn is inevitable for any business, keeping it within the acceptable rate requires a lot of effort. This year, 48% of our respondents witnessed less than 5% churn as opposed to 49% in the previous year.
Churn is a huge factor since it could directly impact your revenues and margins. For instance, 73% of the respondents who reported less than 10% churn earned higher revenues compared to last year. As the competition heats up, MSPs need to focus more on retaining their existing customers. Losing valuable customers can impact profitability and overall growth. This finding shows the significance of engaging with your customers more and addressing their evolving needs.
While pre-COVID trends have stabilized for the MSP industry this year, there seems to be no shortage of other challenges within the industry. This year, 46% of our respondents cited hiring good talent as a huge challenge. Other key challenges reported this year were lack of time – 46%, cybersecurity threats – 35% and price pressure – 26%.
Not to blow our own horn, but our survey results also revealed that most of the respondents who fared much better happened to be ITG partners, which signifies the importance of smart documentation in the IT industry.
What we have shared here is just the tip of the iceberg. Our 2021 Global Benchmark Report has many interesting insights on factors such as the economic outlook, mergers and acquisitions, password management, network management and more. You can access all that by simply clicking the link below.