Growth of Managed Service Provider Industry (Image by Freepik @billionphotos)

The managed service provider industry has demonstrated remarkable growth over recent years. 

Research and Markets said the global managed services market was valued at USD 161.37 billion in 2021. The number is expected to reach USD 311.32 billion by 2027, registering a CAGR of 12.44% from 2022 to 2027.

The numbers show how good MSPs are providing a lifeline to organizations in various industries. MSPs enable businesses to stay agile, secure, and technologically adept in a rapidly evolving digital landscape.

As we delve deeper into the nuances of this industry, it becomes clear that MSPs are not just service providers; they are strategic partners in driving business innovation and resilience.

How Big is the MSP Industry in 2023-2024?

The MSP industry is not just growing; it’s thriving. Mordor Intelligence reveals the Managed Services Market size is estimated at USD 280.96 billion in 2024.

Moreover, that number is expected to reach USD 410.92 billion by 2029, growing at a CAGR of 7.90% during the forecast period (2024-2029).

So yes, this growth is a testament to the ever-increasing dependency of businesses on outsourced IT services for stability and growth.

Whether supporting legacy systems, ushering in new technology, or fortifying cybersecurity measures, MSPs are at the forefront for many companies.

Datto’s 2023 survey of over 1,800 MSPs worldwide sheds light on the industry’s dynamics, highlighting the shift towards hybrid workforces, the importance of cloud services, and the critical need for enhanced security measures.

This evolving landscape presents MSPs with challenges and opportunities as they navigate competition and the demands of modern businesses​​.

In 2023-2024, MSPs will continue to serve as the backbone for small to medium-sized enterprises (SMEs) and large corporations, bridging the IT skills and resources gap.

Several key factors drive this growth:

  • Increased demand for cybersecurity services: As cyber threats evolve in complexity and frequency, businesses increasingly turn to MSPs for sophisticated cybersecurity solutions. This demand propels growth within the MSP sector, especially among Managed Security Service Providers (MSSPs).
  • Cloud adoption: The shift towards cloud computing has accelerated, with MSPs playing a pivotal role in facilitating this transition for businesses lacking in-house expertise.
  • Regulatory compliance: With stringent data protection and privacy regulations, companies rely on MSPs to navigate these complexities, ensuring compliance without diverting focus from their core operations.
  • Cost efficiency: MSPs offer a cost-effective alternative to maintaining a full-time, in-house IT department. This economic advantage continues to attract businesses seeking to optimize their expenditures.
  • Hybrid work models: The rise of remote and hybrid work environments has expanded the need for remote IT support, a niche that MSPs are uniquely positioned to fill.

Types of Managed Services Offered

Diving into the managed service provider (MSP) industry can feel like navigating a labyrinth, especially when you’re trying to decipher the various services offered. 

But fear not; let’s embark on a journey to understand the different types of managed services and how they could be the backbone of your business’s IT infrastructure.

The Spectrum of MSP Services

  • IT consulting: A crucial element in the strategic planning and execution of IT initiatives, ensuring that technology investments align with business goals and drive growth.
  • Help desk support: Acts as an operational safety net, offering swift solutions to IT issues and minimizing downtime to maintain business continuity.
  • Cyber security services: Provides a proactive shield against evolving cyber threats, safeguarding critical data and IT infrastructures with advanced security measures.

Diversifying the Type of MSPs

TechTarget categorizes MSPs into three sections based on the size of the client organization, service scope, and specialization:

  • Pure-play MSPs: Smaller providers focusing on specific monitoring and alert services, acting as the early warning system for IT infrastructures.
  • Staffing legacy MSPs: Cater to a broad audience from mid-level businesses to large corporations, offering extensive monitoring and software management services.
  • High-level MSPs: Versatile providers allowing comprehensive outsourcing of IT processes, catering to diverse business needs.
Managed Services Providers Industry (Image by Freepik @thicha2707)

MSPs Categorized by Operational Model and Specialization

  • Break/fix MSPs: The traditional model focused on reactive measures, addressing issues as they arise, akin to IT mechanics.
  • Managed IT services MSPs: Offer proactive, ongoing support and maintenance, ensuring IT systems are always optimal and secure.
  • Managed Security Service Providers (MSSPs): Specialize in cybersecurity, offering tailored services to protect businesses from digital threats.
  • Cloud MSPs: Experts in cloud technology, assisting businesses in migrating to and managing cloud-based solutions efficiently.
  • Specialized MSPs: Focus on particular industries or technologies, offering bespoke services for sectors like healthcare, finance, or specific software ecosystems. For example, we can see Office 365 MSPs, or SAP managed service providers as specialized MSPs.

MSPs Categorized by Service Type

  • Monitoring: Focus on real-time monitoring of applications, network devices, servers, or websites.
  • Remote support: Specialize in cloud-based software, supporting remote devices, and troubleshooting technical issues remotely.
  • Proactive support: Aim to perform preventative maintenance to preempt device or network issues.
  • Centralized management: Offer management consoles for complex networks, including remote monitoring, patch management, and security solutions. For example, we can see MSPs with Octobits as centralized management MSPs. This is because Octobits is a unified dashboard that simplifies the workflow of IT management, including services, billing, and reporting. This tool is helpful for MSPs dealing with complex cloud environments.
  • Scheduled maintenance: Provide regularly scheduled network maintenance to ensure optimal performance.
  • Simplified billing: Handle all invoicing, payments, and budgeting through a billing management system.

MSPs Categorized by Region

  • Local MSPs: Local MSPs serve businesses within a specific geographical area or region. This particular region could be a city, nation, or a few countries. Local MSPs are particularly valued for their ability to understand the unique needs and challenges of businesses operating in their area, such as local regulatory requirements, business practices, and cultural nuances.
  • Global MSPs: Global MSPs offer IT services across multiple countries or even worldwide. They support multinational corporations with complex IT requirements, ensuring consistent service delivery across regions and compliance with international standards and regulations.
  • Specialized regional MSPs: These MSPs focus on specific industries or technologies within a particular region. These MSPs offer healthcare, finance, education, and legal services expertise. Their regional focus allows them to provide highly specialized services that meet their clients’ unique regulatory and compliance needs in those sectors.

Trends and Innovations in the MSP Industry

As mentioned earlier, the Managed Service Provider (MSP) industry constantly evolves.

This means that new trends and innovations are continually emerging to address the changing needs of businesses and technology landscapes.

Here, we delve into some key trends and innovations shaping the MSP industry in current years.

Managed Detection and Response (MDR)

MDR represents a significant shift towards more proactive and advanced cybersecurity measures.

According to a 2023 Markets and Markets report, the MDR market is valued at $3.3 billion in 2023. It is projected to reach $9.5 billion by 2028, growing at a compound annual growth rate (CAGR) of 23.3%. 

By leveraging sophisticated monitoring and incident response capabilities, MSPs are better equipped to detect and respond to threats, minimizing potential damage quickly.

This trend underscores the increasing importance of cybersecurity within the MSP offering, reflecting a growing market demand for more comprehensive security solutions​​​​.

Edge Computing and IoT Management

The rise of IoT devices and the need for faster processing have propelled edge computing to the forefront.

MSPs are now focusing on managing the vast amount of data generated by IoT devices, ensuring it is processed closer to its source for quicker insights and actions.

This trend enhances operational efficiency and opens new avenues for MSPs to offer specialized services in IoT management and edge computing solutions​​​​.

Automation and AI-Driven Operations

Automation and AI are revolutionizing the MSP industry by streamlining operations and enhancing service delivery.

MSPs can offer more efficient and predictive services through AI-driven analytics and automation tools, reducing downtime and improving customer satisfaction.

This innovation allows MSPs to handle complex tasks with greater accuracy and less manual intervention. It showcases a significant leap towards more intelligent IT service management​​​​.

Vertical Specialization

MSPs are increasingly focusing on vertical specialization, tailoring their services to meet the specific needs of different industries.

This trend allows MSPs to differentiate themselves in a crowded market by offering customized solutions that address the unique challenges of the healthcare, finance, and manufacturing sectors.

Vertical specialization enhances the value proposition of MSPs and enables them to establish themselves as experts in specific fields​​​​.


So, as we glance back, it’s clear that the MSP industry’s growth isn’t just a series of impressive statistics.

It reflects a more profound shift towards more collaborative, strategic, and technology-driven business models.

As you navigate your digital transformation journey, remember that MSPs are more than vendors.

MSPs are partners poised to help you harness the power of technology to achieve your business goals.

Bearing this in mind, let’s capitalize and stay current with the managed service provider industry as a fundamental growth of your business.