MSP report forecasts growth in revenue & cybersecurity

N-able has published its second MSP Horizons Report, highlighting growth opportunities and key trends within the managed services provider (MSP) industry.

The report, developed in partnership with Canalys, showcases an optimistic growth outlook for MSPs, with 59% of respondents forecasting a revenue increase of 20% or more by 2025. A substantial 40% of respondents also expect their profit from managed services to grow by the same percentage. Contributing factors to this growth include increased focus on cybersecurity, endpoint management, compliance, co-managed services, and automation technologies such as artificial intelligence.

Robin Ody, MSP Analysis Practice Lead at Canalys, stated, "The IT managed services market is expected to be worth an estimated US$610 billion by the end of 2025, with channel partners contributing approximately 98% of that revenue. Managed service providers are operating at a time of significant change, both in the demand from customers and the competition from fellow channel partners. This is having a big impact on the managed services business model, affecting the services partners provide and the ways they package these capabilities. The forward-looking partner today is focusing on those specialisations that will provide the most value to the customer and help them remain competitive: cybersecurity, cloud, AI, risk management, compliance monitoring, and vertical capability."

Cybersecurity remains a priority for MSPs, with the report disclosing that 90% of respondents predict an increase in cybersecurity managed services sales in 2025, up from 80% in the previous year. Security-related services are expected to remain the top contributors to managed services revenue, with third-party managed detection and response (MDR) services being the new service many MSPs plan to incorporate. SaaS application backup and AI-powered backup are identified as significantly sought-after services for future backup and disaster recovery offerings.

N-able's President and CEO, John Pagliuca, commented, "A central theme of this year's report is cyber resilience and a constant trend remains: cybersecurity is a key revenue driver. Conversations with MSPs worldwide make it clear that the line between IT operations and security operations has blurred. The leading MSPs differentiate themselves by addressing security across the entire attack lifecycle: from protection and detection to response and recovery. When it comes to cybersecurity, 'good enough' is no longer good enough."

The adoption of AI technologies among MSPs is advancing, with only 6% of respondents not using any form of generative AI. Forty percent have established data governance rules and designed guidelines for human oversight. AI applications are predominantly utilised in building workflow automations and streamlining sales and ticketing processes.

Another significant trend observed is the increased interest in mergers and acquisitions (M&A), with 90% of those surveyed expressing interest compared to 44% in the previous year. The primary motivations for M&A involve acquiring new skills and expanding into different regions.

Cloud modernisation remains an essential focus, with modern MSPs adopting a cloud-first approach for software and infrastructure. Despite this, MSPs still express concerns over security and compliance, and cost control, cited by 40% and 38% of respondents respectively.

John Joyce, Owner of CRS Technology Consultants, expressed his views on the report stating, "There is all sorts of value in the MSP Horizons Report. I feel that we have a pretty good sense of what's going on in the industry. But to see things distilled down to numbers and to see the feedback from the sample group reflecting what we're seeing is a powerful validation. The cybersecurity piece is only going to continue to grow because we don't have a choice. The report clearly highlights that many of us have been able to go on and build a piece of our business out of it, and I don't see that changing. I see it only increasing."

The survey, conducted from October to November 2024, gathered data from 451 business-to-business channel partners across multiple regions including EMEA, North America, APAC, and Latin America.