Managed service providers are standing at a major crossroads. For years, the MSP model has been built on a foundation of operational support—managing IT infrastructure, handling help desk tickets, and executing projects quietly in the background. But that role is evolving rapidly, according to Prasad Narasimhan Sulur, senior partner at Bain & Company, a global management consulting firm based in Boston.
“We are at this moment of inflection where the traditional view was, we are the silent back-office supporters,” Sulur noted during a Q&A session on MSP trends with Kaseya Community Chief Gary Pica at DattoCon earlier this month. “This is a moment in time where your customers are going to go through a fundamental business transformation themselves.”
That transformation—driven by AI, automation, cloud, and cybersecurity—creates a window for MSPs to reposition themselves at the front of the house: helping customers deliver better services, generate new revenue, and innovate faster. Those who seize the opportunity will thrive. Those who don’t risk being left behind.
Specialization: Vertical, Horizontal, or Ecosystem
MSPs face critical strategic decisions about where to focus as the market bifurcates. Sulur outlined three primary paths to differentiation:
- Vertical specialists, such as MSPs focused on healthcare, legal, financial services, or the public sector.
- Horizontal specialists, concentrating on areas like unified communications, ERP, or cybersecurity.
- Ecosystem specialists, aligning closely with a specific platform like Azure, ServiceNow, SAP, or Dynamics, often co-selling with the OEM to generate leads.
Regional players are also carving out competitive niches. The key, Sulur said, is to identify “how am I able to perform better tomorrow or get a competitive edge tomorrow … because I have this extra thing.”
Growth Is Shifting: Cybersecurity and AI Lead the Way
Not all service categories are created equal. Traditional managed services will continue to grow roughly in line with the market, Sulur noted, but cybersecurity and AI represent outsized growth opportunities.
Pica, a veteran MSP leader, reinforced the point:
“Those people that kind of stay down in those core services we have today, that’s not really a growing TAM. And there could even be price pressure as efficiencies from AI come along. But in these other categories around cloud, security, AI, it’s massively growing.”
Pica emphasized that MSPs must pursue high-value services even as they optimize their existing operations. The race is already underway—and not everyone will keep pace.
Customers Are Now Driving Innovation
One of the most significant shifts underway is who’s driving technology adoption.
“Up until recently as MSPs, we’ve driven the pace of innovation with SMBs,” Pica said. “What’s happening now is our customers are telling us about technology—they’re driving the change.”
That change is happening because customers have invested heavily in technology, and now they need to see ROI. This new dynamic demands that MSPs become strategic partners, not just service providers. Standing still is not an option.
Three Layers of AI Opportunity
AI isn’t some distant future scenario—it’s happening now inside MSP organizations. Pica highlighted three areas where MSPs can leverage AI today:
- Observability Layer:
Move beyond static dashboards. Use AI to detect meaningful signals across cybersecurity, logs, and system performance, enabling faster mean time to resolution (MTTR) and proactive intervention. - Customer Interaction Layer:
AI-powered chat, copilots, and conversational tools are already helping MSPs scale service desks without adding headcount. Some MSPs are using these tools to dramatically improve ticket handling efficiency. - Service Layer:
The foundation of AI success lies in data and integration. Many MSP environments rely on a patchwork of tools, which makes deploying AI complex. Standardizing on a single platform and clean data architecture unlocks real automation potential—whether for patching, diagnostics, or software upgrades.
Pica said this is exactly where platform vendors like Kaseya are focusing—eliminating integration sprawl and enabling AI to operate on unified data sets.
A Three-Part Strategy to Win the Transition
Pica laid out a clear roadmap for MSPs looking to stay ahead in this transformation:
1. Lead on Efficiency
Efficiency must become a core cultural value. Start by measuring support efficiency, such as the number of seats supported per help desk resource, tickets per end user, and tickets closed per technician. From there, expand efficiency metrics across marketing, finance, HR, and other functions. Share these metrics with your team and build accountability around them.
2. Fill the Value Gaps
As core IT and security services become more efficient, pricing pressure will mount. The answer: Develop new, high-value services—especially in AI and automation—that align with your customers’ digital transformation goals.
3. Be More Strategic
Lean into your customers’ business models. Elevate your vCIO function by understanding not just technology, but business strategy:
- Who are the decision-makers?
- What drives their business success—sales, marketing, margins, market share?
- How are cloud applications actually used in their workflows?
Pica recommended showing customers a list of all the cloud apps in use; most CEOs underestimate the number by 50%. Analyzing these application ecosystems across multiple clients helps MSPs spot patterns and craft new service offerings.
Make Automation Part of Your Culture
The journey toward AI and automation leadership mirrors the industry’s earlier shift to security-first thinking, Pica said. The MSPs that embraced security early never relinquished their lead. Pica urged MSPs to take the same approach now:
“We had to have everybody in our business see everything we did through the lens of security. We have to get to the same place with automation, where it is part of our culture. Everybody in the business thinks about it in that way.”
This isn’t about solving everything overnight. It’s about starting today—taking the first steps that will compound over time.
A Gold Rush Moment
Pica concluded with both a warning and an opportunity:
“At each phase there are remnants of MSPs that got left behind and this opportunity—not a hundred percent of MSPs are going to take advantage of it. It’s our job as a community to make sure that we are at the front of the line because we’ve never had [an opportunity] this big.”
The AI era represents a gold rush for MSPs who move quickly, build strategically, and make automation part of their DNA. Just as security transformed the industry, so too will AI and efficiency.
The path forward is clear: Optimize relentlessly, innovate boldly, and step into the strategic front lines of your customers’ businesses.
Related: Survey Says, AI Is the Next Big Shift: Is Your MSP Ready or at Risk?
