New MSP Growth Opportunities During the Pandemic (and Beyond)

Managed services providers serving these vertical markets are seeing significant increases in IT services demand that are projected to last well beyond the pandemic.

Business Sectors

The coronavirus pandemic has had a devastating impact on the economy. The U.S. Bureau of Labor Statistics reports that, even after a 2.5 million gain in jobs in May, the unemployment rate is still at a shocking 13.3 percent. The stock market plummeted, erasing all of the progress over the past three years. Additionally, the Foreign Policy Research Institute points out that consumption is down, investments are down, and arts, entertainment, recreation, and restaurants, which normally account for 4.2 percent of the GDP, accounted for virtually nothing in the early part of 2020.

Pretty bleak.

So why are some managed services providers (MSPs) seeing business growth?

CompTIA surveyed more than 200 channel companies, confirming this phenomenon. The organization found that 75 percent of technology firms are experiencing an increase in business opportunities. Two primary drivers are the shift to remote work and businesses’ decisions to shift from on-premises to cloud infrastructure.

COVID-19 era business growth for MSPs and other IT solutions providers primarily can be attributed to the areas of:

  • General consulting, growth for 53 percent of CompTIA survey respondents
  • Managed services or outsourced IT, 49 percent
  • Communication, collaboration, and A/V technology, 44 percent
  • Cybersecurity, 39 percent

Vertical Market Opportunities

Some MSPs can attribute their growth to their verticals of focus, some which experienced an immediate need during the pandemic:

1Healthcare

During stay-at-home orders and social distancing, health care providers needed to find ways to minimize patient’s exposure to coronavirus when they sought help for other conditions. Patients, too, who may have never considered a remote doctor’s appointment, began to change their views. A Sykes survey found that although only about 19 percent of consumers had tried telehealth prior to the pandemic, 38 percent of people liked the idea of getting a diagnosis without exposure to other people waiting in the doctor’s office.

Frost & Sullivan reports that there has been a sharp growth in that telehealth in the early part of 2020, and projects adoption to increase by 64.3 percent this year.

There’s more good news for MSPs working in the healthcare vertical. Now that more healthcare organizations have invested in telehealth solutions, the trend is expected to continue. Frost & Sullivan predicts a CAGR of 38.2 percent through 2025.

2Education

When government officials ordered people to stay at home, that included school-age children and college students. Schools and educational institutions quickly formulated remote learning plans. They launched live streaming, classroom portals, communication and collaboration solutions, and secure connections. In some cases, schools distributed laptops or tablets so students could participate in remote activities.

3Government

The pandemic created the unique challenge for local governments to continue to provide essential services while protecting first responders, keeping them healthy and able to do their jobs.

Wherever possible, departments had to shift services online and enable employees to communicate remotely. Some municipalities turned to technology to handle some of the responsibilities that are typically handled with feet-on-the-street resources. Instead of patrolmen, they used smart surveillance systems to enforce social distancing or monitor areas where people could congregate.

4Manufacturing and Supply Chain

Although some manufacturing facilities were deemed nonessential and ordered to close, that wasn’t possible for others. Plants that produce personal protective equipment, cleaning products, food and beverages, for example, needed to find ways to keep operating and keeping their employees safe.

In addition to accelerating their cloud roadmaps and ramping up automation and remote capabilities, they also needed to solve new problems, like how to conduct screenings safely and accurately as employees entered their facilities.

Transportation and distribution, in particular, needed help to overcome challenges, including dealing with containers stacked and waiting to move, a high demand for replenishing consumer and healthcare products and tracking drivers and shipments.

How Essential is Your MSP Business?

Before the pandemic, successful MSPs had well-defined value propositions and communicated them to their clients. Now, like our perception of so many other things in the world, has changed. Your role isn’t just to keep your clients operating, although that provides substantial value. You may be integral to essential businesses and organizations’ ability to providing products and services to the community at large.

That’s value that your clients will recognize and appreciate long after the pandemic and that provides you with great potential for growth, even when other businesses are stagnant or slow.

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The former owner of a software development company and having more than a decade of experience writing for B2B IT solution providers, Mike is co-founder of XaaS Journal and DevPro Journal.