What Is An MSP (Managed Service Provider)? A Vendor and Buyer Guide

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It’s a good time to be a Managed Service Provider. According to analysis by Mordor Intelligence, the global MSP market is set to rise from $281bn in 2024 to $411bn in 2028.

The need for skilled IT support is continually growing, and MSPs are perfectly placed to meet this demand.

Understanding what MSPs can offer is extremely important – whether you’re a business looking for IT support, or are considering launching your own MSP. In this guide, you’ll learn everything you need to know about this kind of IT business model.

What Is An MSP?

An MSP is any company that provides outsourced technology services and IT management to its customers.

There are many ‘flavors’ of MSP, but what sets them apart from other kinds of IT suppliers is that they typically take a proactive approach to managing customers’ IT systems – usually offering their services through a long-term partnership.

The MSPAlliance, a membership association, defines ‘managed services’ as:

The proactive management of an IT (Information Technology) asset or object, by a third party typically known as a MSP, on behalf of a customer. The operative distinction that sets apart a MSP is the proactive delivery of their service, as compared to reactive IT services, which have been around for decades.

MSPAlliance

What Kinds of Services Do MSPs Provide?

Managed Service Providers offer their customers a wide range of IT support and services. These may include:

Outsourced helpdesk: Solving support tickets and fixing technology issues. Support is normally provided remotely, but can also be provided by an employee working directly in the customer’s office.
Monitoring: MSPs will actively monitor their clients’ IT environments, applying security patches, updating systems and keeping them in good working order.
Proactive support: The MSP will offer proactive support, including things like preventative maintenance, and giving advice on upgrades.
Technology guidance: An MSP works closely with clients to advise them on the best technology, and how to integrate new systems.
Managing IT subscriptions: Particularly in the cloud era, MSPs play an important role in managing their customers’ SaaS software licenses.
Negotiating IT contracts: Some MSPs help clients navigate software and hardware purchasing.
Cybersecurity: Most MSPs offer a range of cybersecurity services.
Training: Some MSPs offer clients IT training.

There are, of course, many other services that specialized MSPs offer too. An experienced MSP will take care to set the right expectations regarding their services during the MSP onboarding process.

What Is The MSP Business Model?

While all MSPs have slightly different approaches, the MSP business model essentially revolves around a fixed, monthly or yearly fee for an agreed service level. Customers pay the MSP to provide a certain amount of predefined support. This support level can be defined in different ways:

Support for a set number of hours per month
Support for a set number of users or devices
A guaranteed level of uptime
Etc.

Customers will negotiate a Service Level Agreement (SLA) with the MSP, and the MSP will need to show that they have delivered this level of support.

MSP Marketing: What Sorts of MSPs Are There?

There are hundreds of thousands of MSPs around the world, serving different niches, industries and kinds of customers. MSPs can range from one-person businesses, through to major international corporations with thousands of employees.

That being said, there are a handful of common MSP business models:

Pure play: This kind of MSP focuses exclusively on managing IT services for their customers.
Outsourced: In addition to core MSP support, this kind of business provides a wider range of general IT services – including things like procurement support or custom software development.
Vendor neutral or vendor-specialized: Some MSPs are vendor neutral, and are able to provide support for a wide range of business technologies. Others work exclusively in one vendor ‘universe’, be that Microsoft, AWS, Oracle or IBM etc.
Specialist vs generalist: Some MSPs specialize in supporting certain verticals (finance, engineering, retail, etc.) or customer types (SMEs, public sector, education etc.), whereas others are generalists.

MSP Pricing Models

Depending on the kinds of services they offer and the clients they support, MSPs may use different pricing models:

User pricing: A fee per user
Device pricing: A fee per all individual devices managed
All-inclusive pricing: A single fee for all services the customer requests.
Tiered pricing: Specific bundles of services are offered – from basic ‘monitoring-only’ support, through to comprehensive IT management.

How Are MSPs Different From Other Outsourced IT?

Managed Service Providers are not the only kind of outsourced IT support company. Alternatives to MSPs include:

IT consultancies, which tend to focus on project-based work (building a new app or migrating to a new network), whereas MSPs provide long-term support.
IT vendors, who tend to install one specific type of software, for which they may also offer support. However, they do not provide support for any other vendors’ technology.
Helpdesk companies, which are often outsourced internationally and who offer a reactive service. Customers contact them when something has gone wrong – whereas MSPs are continually monitoring their customers’ IT environments and may reach out first.

Why Is Demand for MSPs So High?

According to Statista, revenue in the global MSP market is expected to more than double within the coming decade. What’s driving this enormous demand for MSP services?

Cybersecurity threats: The size and scale of cybersecurity threats is continually growing. Few companies have adequate in-house resources to address these threats. So, outsourcing their security to an MSP can be an attractive option.
IT skills shortages: Demand for skilled IT professionals is higher than ever, yet there is a global IT skills shortage. MSPs can help fill in the gaps.
The cloud and SaaS: Companies are now using cloud-based technology more than ever before. Managing multiple apps and subscriptions can be challenging. MSPs can help.
Complex work and IT: Not so long ago, most organizations’ IT setup was fairly straightforward – and easy enough to manage in-house (with local servers and desktop computers). But today, employees use multiple devices, work remotely and can access data anywhere. Most companies therefore need greater support managing this complexity.

Who Are the Biggest MSPs?

According to Mordor Intelligence, the biggest global MSPs are, in no particular order:

Fujitsu
Cisco Systems
IBM
AT&T
HP

What Are The Benefits of Working With an MSP?

From the customer’s perspective, working with an MSP provides multiple benefits:

Expertise: They can be confident they are getting good support and advice from experts who really know business technology.
Flexibility: An MSP can provide them more support as they grow, add or remove services in line with budgets, and generally flex to meet changing needs.
24/7 support: Most MSPs offer reliable, around-the-clock support.
Peace of mind: Knowing that their systems are being monitored and protected by an MSP means the customer has less to worry about.
Focus on core business: For companies that don’t wish to spend time thinking about their IT, then outsourcing it to an MSP gives them hours back each day.
Cost effective: Generally speaking, using an MSP’s services is less expensive than hiring in-house, dedicated IT staff.

What Are the Drawbacks of Working With an MSP?

For clients, working with an MSP comes with certain limitations, including:

Risks associated with over-reliance: If all of a company’s IT management is outsourced to an MSP, the customer may lose organizational knowledge of how its systems are being managed. Should the MSP increase prices, collapse or be acquired, this reliance can leave the customer in a difficult situation.
Limits of expertise: There will always be limits to an MSP’s expertise. If a customer decides they want to introduce a new software system, technology, or migrate to a new network, the MSP may lack the know-how required.
Disputes over SLAs and responsibilities: If an SLA contract is poorly worded, it is possible that there will be misunderstandings around responsibilities and the level of service the MSP can offer. This can result in disputes.

Insights For Launching or Growing Your Own MSP

For many IT professionals, running their own MSP is an ultimate career dream. Here we’ve drawn insights from interviews with MSP thought leaders about how to start and grow a Managed Service Provider business.

Focus on value

Good MSPs… advise customers on the proper implementation of technology in their business. That core value has not changed

Dave Sobel

Ultimately, running a successful MSP is about helping customers get the most out of technology. By demonstrating to your customers that you can offer long-term value, you can build a solid and successful business.

Don’t forget the business side of things

You have to remember you aren’t just going to be doing IT, you’re running an IT business and have all the tax and reporting obligations that go along with it

anonymous, Reddit

Many MSP business owners end up launching their company because they’re good at IT. But long-term profitability relies on a much wider set of skills – from MSP marketing through to hiring and managing people, business development and more.

Specialize

Find a niche and become really good at it

anonymous, Reddit

Especially in the early days, it’s very important to specialize in a specific industry (finance, healthcare, education etc.) or type of customer (SME, NGOs, local government, etc.). This will allow you to differentiate yourself, and allow you to become more efficient (since you won’t need to keep learning about new markets).

It’s all about people

I work incredibly hard to make my team feel supported…I make sure they’ve got everything they need to be happy and successful in their role and access to help if they need it

Nigel Moore, The Tech Tribe.

Running an MSP will require you to employ IT specialists, often around the world. It’s vital to build strong relationships with employees, develop their skills and give them the support they need.

Be prepared for hard work

Be determined to get up every day and work, no matter how hard it feels

Nigel Moore

No one said running a business was easy. There will be times that it’s tough, when clients are demanding, when people are depending on you. Go into entrepreneurship with your eyes open about the challenges and realities involved.

Keep learning

Go learn, go play, go test, go try, go read, and go listen

Matt Lee

The technology industry is continually changing, and if you’re running an MSP, the onus is on you to stay up to date and aware of new trends.

Don’t forego MSP marketing

Learning lead generation strategies is one of the most important things and that’s where you should invest your money first

Chris Wiser

Your business simply will not grow without a serious MSP marketing strategy. You can be the best IT expert in the world, but without a plan to get your brand out there, it’s almost impossible to grow.

Keep learning: Managed Service Provider (MSP) Best Practices

Heimdal® – Unified Cybersecurity Tools for MSPs

Managed Service Providers around the world rely on Heimdal®’s comprehensive range of cybersecurity tools to manage their customers’ environments.

heimdal platform

Our all-in-one solution means you have a reliable method to easily monitor for threats and resolve issues fast. The platform gives you tools for:

If you’re offering cybersecurity as one of your managed services, Heimdal® provides everything you need to succeed.

Case study: How UK MSP Orbital benefits from Heimdal®’s cybersecurity solutions

Join Our Partner Program: Partner NEXUS

And moreover, Heimdal®’s Partner NEXUS program is now live and you can join in!

NEXUS (Network of Excellence, Unity, and Safeguarding) is a global initiative tailored for MSPs, MSSPs, distributors and resellers that aims at improving customer security and expanding business opportunities.

Why to join in? As an MSP, MSSP, distributor or reseller, you gain access to a comprehensive cybersecurity kit, user-friendly platform that simplifies security management, and extensive training and support for you to focus on growth and turn the tide against cyberattacks. Moreover, you get the best in cybersecurity:

The most extensive XDR suite in the market.
Unified management for simplified control.
Next-level threat intelligence.
Reliable and efficient cloud-native architecture.
Innovative telemetry and responsive capabilities.
Managed SOC services with exceptional support.

Frequently Asked Questions about MSPs

How should I choose a Managed Service Provider?

When selecting an MSP, there are several key factors to consider. First, you need to clearly understand your specific IT needs and business goals, then ensure the MSP has the relevant expertise and knowledge of technology stacks. Next, you need to focus on SLAs – can they offer the support you require at the right price? It’s also important to consider things like online reviews, cultural fit, and their ability to meet your future needs as you grow.

What are some of the most common MSP marketing strategies?

Common MSP marketing strategies include: advertising online and in industry press, content marketing, LinkedIn and social media marketing, thought leadership, webinars, and exhibiting at conferences.

Who can launch an MSP business?

While anyone with a reasonable amount of IT knowledge can start an MSP, the most successful entrepreneurs tend to have several years’ experience working for other MSPs and in-house before launching their own businesses. Besides learning the tech itself, the most successful MSP founders tend to have well-developed professional networks, certificates/qualifications and plenty of real-world experience. This makes the transition to starting a business smoother.

Cristian Neagu

CONTENT EDITOR

Cristian is a Content Editor & Creator at Heimdal®, where he developed a deep understanding of the digital threat landscape. His style resonates with both technical and non-technical readers, proof being in his skill of communicating cybersecurity norms effectively, in an easy-to-understand manner.