It’s no secret that the fortunes of managed service providers (MSPs) are closely tied to the overall state of the economy, but with an uneven economic outlook for 2024, forecasting the year is more challenging than usual. While uncertainty remains, a survey of 665 IT professionals conducted by DigitalOcean, a provider of cloud services, offers insights that can be helpful for MSPs as we head into 2024.
Hiring trends may bode well for MSPs
19 percent of respondents said they expect the organizations they work for to either significantly (5 percent) or moderately (14 percent) increase hiring only. Whenever organizations are disinclined to hire full-time employees, it generally bodes well for MSPs. Rather than increase the headcount by hiring more IT personnel, organizations naturally become more amenable to the notion of consuming IT as a service.
Strong demand for AI, cybersecurity, and multi-cloud
The demand for innovative IT solutions remains healthy, with 78 percent of respondents reporting, for example, they expect usage of artificial intelligence (AI and machine learning technologies) to increase in the coming year. 43 percent said they are already using these technologies for both personal and business use.
At the same time, 37 percent said they would increase spending on cybersecurity in 2024, with 47 percent currently supporting hybrid remote IT environments. Another 40 percent are fully remote compared to 13 percent that said they were full time in the office.
Lastly, the survey also finds more than a third of respondents (35 percent) are employing multiple cloud computing environments.
Uncertain economic outlook means more planning for MSPs
The 2024 economic outlook is uncertain; some surveys suggest that IT spending in 2024 looks fairly robust, while others offer more caution.
Heading into 2024 MSPs would once again be well advised to hope for the best while planning for the worst. The challenge is making sure they have the skills and resources needed to take advantage of new opportunities as they emerge. The only thing worse than investing too early in a technology is not having invested enough to meet demand once interest starts to surge. By the time an MSP adjusts, they are likely to find that more adroit rivals have already seized the opportunity often at their expense.
Each MSP will need to closely monitor how customers are responding to market conditions. Not every industry segment faces the same pressures, so while IT spending may be down in one sector, it might be soaring in another. It’s just as probable that IT spending trends will differ sharply from one geographic region to another. Investing too heavily on one sector or region can have devastating consequences for MSPs that forgot to hedge their bets when times were good.
Regardless of how the coming year shapes up, MSPs have a lot more to gain than lose. More organizations are open to the notion of consuming IT as a service. The challenge, as always, is establishing the level of trust required to gain that opportunity in an era where IT organizations will continue to have more choices than ever.
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