A survey of 153 decision-makers at managed service providers (MSPs) that manage Microsoft 365 and Azure cloud services found that 32 percent use AI internally. However, only 12 percent reported measurable productivity gains.
The survey, conducted by market research firm Thirdside on behalf of Nerdio, also found that only 14 percent currently manage an AI service that generates revenue. Just 17 percent said customers are asking about Microsoft Copilot or other AI tools.
On the positive side, 46 percent of respondents said they are piloting AI or planning to adopt it within the next 12 months.
AI adoption outpaces measurable results
The results suggest MSPs, much like internal IT teams, are not yet ready to fully operationalize AI. While investments continue, many MSPs still lack key capabilities. These include governance frameworks needed to manage and audit AI agents, along with the knowledge graphs and databases required to provide AI systems with business context. In fact, only 20 percent consistently enforce a documented security and configuration standard across every customer tenant.
Growing complexity challenges MSP teams
At the same time, IT management continues to grow more complex. A total of 60 percent of respondents said management complexity is increasing faster than their ability to scale. Additionally, 29 percent lost technicians to burnout-related attrition during the past year.
Despite AI’s potential, generative AI tools produce probabilistic outputs that can be difficult to replicate. An AI model rarely delivers the same result twice. IT operations, by contrast, rely on deterministic processes that require tasks to be completed consistently every time.
MSPs can use AI to summarize customer service requests and support other routine tasks. However, fully automating workflows to deliver services at greater scale with fewer technicians remains challenging. Only 29 percent of respondents said their MSP grew its customer base over the past 12 months without adding proportional engineering headcount.
Supply chain constraints limit AI expansion
Another challenge is the AI supply chain itself. Key resources remain constrained, from IT infrastructure to skilled professionals with AI expertise. Those shortages show little sign of easing in the next 12 months.
At the same time, the cost of using AI models continues to rise. As a result, most MSPs will likely depend on the AI features and capabilities their technology vendors provide.
AI remains a long-term journey
Eventually, AI will become a standard part of IT service delivery. In the near term, however, MSPs need to recognize that AI adoption is a journey, not a one-time initiative that transforms a business overnight.
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