BUSINESS
Is The MSP Industry In Serious Decline ?
Here ’ s how the MSP growth pendulum is swinging from “ sugar high ” to talk of a recession .
BY PEDRO PEREIRA
Paul Cissel CEO of Growth Caddie and a TMT Expert in Residence
Greg Crabtree Speaker , Author , Entrepreneur and Financial Expert
Historically , the economy slows in an election year because markets dislike uncertainty . However , this year ’ s election has been more uncertain than most with an assassination attempt against the Republican presidential candidate , Donald Trump , and a late candidate swap on the Democratic side for Kamala Harris .
For MSPs , there were some “ canary in the coal mine ” signs at the end of Q2 indicating you may have to fight harder for new , higher-profitability customers .
Overall , Leads , Opportunities , And Sales Are DOWN
Data from Service Leadership indicates the rate of growth of MSP sales is slowing down worldwide . The latest Service Leadership figures show that non-private equity-backed MSPs are growing at 6.8 % year over year , compared to a 10 % growth average over the past 10 years , says Paul Cissel , CEO of Growth Caddie , M & A Expert in Residence for TMT , and a senior analyst and facilitator for Service Leadership . MSPs backed by private equity are doing better , growing at 32.1 % year-over-year .
Cissel views slower growth as a normal correction , given that during Covid , MSP growth rates reached 25 %, an unstainable pace long term . MSPs are still closing deals on a monthly basis , although some more profitably than others , he says .
“ Deals are closing but we are coming off of a pretty stellar period during Covid when we were making 25 % growth . That post-Covid growth seems to be a confluence of inflation , pricing increases , and the maturing of the MSP outsource message . Now that we ’ ve come off that sugar high , we ’ ve come back down to a saner area where we have to really work hard for your business ,” Cissel says .
Cissel also noted that most MSP sales historically slow down during election years . Growth in 2012 dropped to 9 % from 11 % the previous year ; in 2016 to 3.6 % from 9 %; and in 2020 to 5.4 % from 8.5 %. Then came the pandemic-fueled growth spurt .
But further economic slowdown is possible , and TMT has issued a report with numbers to that effect . The Election Year MSP Market Forecast notes that 63 % of MSPs polled “ have seen the close rate of proposals and new MSP contracts slowing .” The report further shows that “ the average MSP is only closing 23 % of the qualified opportunities they get in front of
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