MSPs Continue To Thrive Amid Job Losses In The IT Sector

Managed service providers (MSPs) have come to the forefront this year. As the COVID-19 pandemic forced companies around the world to transition to remote work, experts agree that one of the key factors in this successful transition has been MSPs. And now they are expected to get an even bigger boost due to a recent loss in jobs in the IT sector.

A new survey by management consultancy Janco Associates shows that after three months of rebound, the U.S. IT job market reversed course in November, cutting 8,300 jobs. That follows a 9,300-job gain in October, a 13,500 rise in September, and a 4,500 increase in August. For the year, the net loss of IT jobs is at 81,100. Three quarters of the lost IT jobs in the U.S. are concentrated in two segments: one is data processing, hosting, and related services, while the other is computer systems design and related services.

Become a Subscriber

Please purchase a subscription to continue reading this article.

Subscribe Now

The report noted that in November, the major loss of jobs for IT professions was in small businesses and consulting firms.

“Hiring of IT professionals has all but stopped due to the uncertainty about the recovery,” said Janco CEO M. Victor Janulaitis. He added that IT jobs will be at risk for the foreseeable future.

Yet the bad news for the IT sector could benefit MSPs. In fact, Datto’s recent annual “Global State of the MSP” report found that SMBs have been increasingly entrusting their IT to an MSP—even before the pandemic. Individual MSPs have seen steady growth over the past three years, with 22% saying that their total revenue per year grew by up to 5%, and 24% reported growth of up to 10%.

And while the pandemic has caused some MSPs to cut their growth projections by as much as 10%, there are still growth opportunities in the market.

“While economic uncertainty is troubling for MSPs, it’s still a good time to be in the industry. Nearly 40 percent of MSPs reported annual revenue of $2.5 million, demonstrating health and opportunity in the market. MSPs remain the cornerstone of our economy as they serve small businesses through the pandemic and beyond,” said Rob Rae, Senior Vice President of Business Development for Datto.

In fact, MSPs offer various benefits to SMBs. For one, outsourcing to an MSP can help companies normalize their IT budgeting, which is especially important during these uncertain times. MSPs can also supply the expertise and staffing needed to assist clients in different service areas, which generally makes more sense when hiring for short term projects.