A survey of 500 IT leaders in the U.S. and United Kingdom (UK) suggests managed service providers (MSPs) might have more to gain than lose during an economic downturn.
Conducted by the market research firm Vanson Bourne on behalf of Tangoe, a provider of software and services for managing IT expenses, the survey finds a full 99 percent of respondents see benefits from outsourcing telecommunications, cloud, and mobility services.
Tough times can increase demand for external resources
In many ways, consumption of managed services has already run countercyclical to the general economy. When times get tough more organizations are less inclined to hire full-time employees. As such, there is a natural tendency to rely more on external service providers to provide a wide range of capabilities.
Of course, the number of organizations that might have the financial wherewithal needed to pay for those services, always contracts during a prolonged economic downturn. However, MSPs generally tend to benefit whenever organizations are less inclined to add headcount to their payrolls.
The survey also suggests there is growing recognition that whatever internal IT resources an organization does have could be better allocated. A total of 94 percent of respondents said a notable amount of time of their average working week is dedicated to activities related to telecommunications, cloud, and mobility assets, including nearly a third (29 percent) of their week on average involving some type of manual process. Not surprisingly, 85 percent said eliminating manual processes would allow IT to focus on more purposeful work.
Some services budgets expected to increase despite recession
More than half of those surveyed report choosing to have at least some aspect of the mobile (56 percent), telecommunications (51 percent) and cloud software services (51 percent) they consume being managed in-house, with budgets allocated to these services expected to increase by an average by 10-12 percent over the next couple of years. Mobile device count (78 percent) and usage of mobile services (83 percent) are especially going to increase, the survey finds.
The challenge all these organizations will face is that IT is only going to become more complex to manage in the years ahead. Cloud services have already extended the number of IT platforms being employed. As edge computing begins to gain traction, the number of IT platform that will need to be managed across a highly distributed computing environment is going to be beyond the ability of most internal IT teams to manage. At the same time, organizations are also likely to discover their ability to offer competitive IT salaries severely constrained during a downturn. As such, MSPs should find it easier to hire and retain the best IT talent.
Savvy and prepared MSPs can emerge stronger from economic downturns
Naturally, most MSPs would prefer to the global economy rebound for the benefit of all. The fact is, however, most economists are forecasting there will be a global recession in 2023. There are a lot of factors that could impact those forecasts, so any such predictions are far from absolute. However, savvy MSPs would be well advised to prepare for the worst with one caveat in mind. As long as clients are not going out of business altogether, history has shown that most MSPs emerge stronger at the end of a recession than they were at the beginning.
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