Managed Services Market Growing Slowly for IT Channel Companies

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Concerns about revenue, staffing and the impact of cloud computing are causing IT channel companies to take a "go-slow," yet steady approach to managed services.

CompTIA surveyed 400 IT solution-provider and channel firms for its new "Trends in Managed Services Operations" study, which revealed that half of all channel firms provide managed services either exclusively or as part of a broader business portfolio – up from just 40 percent in 2011. Another 17 percent of companies expect their managed-services business to account for three-quarters or more of their total revenue over the next five years, CompTIA said. Just under two-thirds of firms see managed services as an escalating share of overall revenue during that time.

“The managed services model is becoming more commonly practiced across the channel and generating demand among end-users," said Carolyn April, director, industry analysis, CompTIA. “It’s a steadily growing market that is not going away despite some uncertainty."

That uncertainty has prompted most IT channel companies to dabble in the managed services market, but not make a full-fledged switch. The most viable emerging scenario is a hybrid model, where the company slowly introduces some measure of managed services offering into their portfolio, while continuing to foster their legacy streams of revenue, the nonprofit reports.

“The incidence of pure play MSPs is pretty low," April noted. “It’s still an added practice as part of an overall business. Many, if not most, MSPs continue to sell hardware and other infrastructure to their customers, do the implementation and only then take over management of said devices under a managed services contract."

Financial considerations and staffing issues are two big contributing factors that prompt companies to make a cautious move into managed services.

Among IT channel companies not offering managed services, four in 10 say they are waiting to see the impact that cloud computing has on the managed services market. And despite the cloud-related uncertainty, a slow start to managed services does not the majority of channel companies will never adopt them. Nearly two-thirds of survey respondents said they plan to begin offering some level of managed services within the year.

The complete CompTIA report is available to members for free by going to the CompTIA website.

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