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A major downturn in the global economic outlook is causing business and IT executives to reevaluate their IT spending priorities. In the wake of spiraling inflation driven by the ongoing conflict in Ukraine and rising oil prices, many of the IT decisions made going into 2022 are now being revisited.

MSPs are well-positioned to weather the storm

A survey of 330 senior executives conducted by Gartner finds a macroeconomic downturn has moved into the top five risks alongside new ransomware models, post-pandemic talent, supply chain disruptions and inflationary pressures. By no surprise, the valuations of IT companies are also tumbling on Wall Street.

Uncertainty is, of course, never good for business. However, managed service providers (MSPs) have historically tended to weather downturns better than most companies. Whenever organizations are worried about the economy, they tend to reduce the number of full-time employees they are willing to hire. That generally creates increased demand for external IT services providers to fill any short-term project gaps.

There usually is a lot more reliance on open-source software as well. Rather than reduce the size of their IT staffs, many organizations look to curb IT spending by relying more on free software. Inevitably, that free software needs to be supported before organizations find themselves looking for external expertise that is familiar with a specific type of open-source software.

The struggle to find IT talent may ease up

The issue that many MSPs are struggling with is the number of open positions they are trying to fill. There are more than a few MSPs still struggling to find IT professionals that have the expertise needed to support new customers. Those positions may be easier to fill in a downturn as the number of layoffs steadily increase and many IT professionals that might have retired as part of the Great Resignation decide they may need a full-time job after all.

Unfortunately, though, it could take months before the IT talent pool expands enough to make a material difference. Savvy MSPs may want to put the word out that they have positions to fill at a time when the level of available talent may be about to increase. At the very least, it should become easier to find subcontractors willing to take on specific assignments. Most MSPs are going to be just as concerned about hiring full-time employees as their customers.

Regardless of how expertise is acquired, there is no business model that enables an organization to cut their way to growth. The question then becomes where to make the right investments to weather the storm.

It’s not clear to what degree a prolonged economic downturn may be in the offing, but MSPs should reach out to their customers. Shared empathy during difficult times goes a long way toward creating new business opportunities and tends to dissuade business and IT executives from doing anything rash at a time when they are becoming increasingly nervous about events that are beyond their control.

Photo: wrangler / Shutterstock


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Posted by Mike Vizard

Mike Vizard has covered IT for more than 25 years, and has edited or contributed to a number of tech publications including InfoWorld, eWeek, CRN, Baseline, ComputerWorld, TMCNet, and Digital Review. He currently blogs for IT Business Edge and contributes to CIOinsight, The Channel Insider, Programmableweb and Slashdot. Mike blogs about emerging cloud technology for Smarter MSP.

6 Comments

  1. Moss Jacobson May 18, 2022 at 4:22 pm

    While I agree that the business world is in for a bumpy ride, I am of the opinion that the support MSPs provide must be regarded as an asset and competitive advantage. The need for expert IT and cybersecurity services is only going to continue to rise. In addition, MSPs can often provide an exceptional amount of value and higher level of support for generally less of an investment than a full compliment of in-house IT.

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  2. Very timely and relevant article. Thank you for sharing current trends.

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  3. Very good advice

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  4. The squeeze is real, everyone is feeling the effect of the talent pool draining. I hope people are sharpening their pencils and being creative to retain the current staff with things like flowers or a bottle of wine for the spouse on special occasions of the out of the blue gift for those that brings the work woes home.

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  5. Very informational article.

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  6. Gareth Coleman May 31, 2022 at 6:56 am

    Times are hard all round and I agree with many of the points mentioned. As an MSP we have been trying to hire IT Professionals to expand our team as we grow. The key here I believe, as other have mentioned, is honest, open dialogue with clients identifying their concerns and how the MSP world can help alleviate those concern.

    We are all in for a bumpy ride over the next year or two, with the true cost of the pandemic still emerging and now the war in Ukraine, things are certainly going to get harder before they get easier.

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