Managed Services Provider (MSP) Market Forecast 2020: Coronavirus Impact

The SMB managed services market faces question marks. Roughly one-third of channel partners have two months or less in cash reserves, but 57 percent of partners believe they will meet or beat their original 2020 revenue plan, recent research from The 2112 Group reveals.

The additional anecdotes ChannelE2E has heard include:

  • Pay Cuts: Multiple technology vendors are quietly asking their executive teams to take temporary pay cuts.
  • Flexible Payments, Discounts: Some MSPs are checking in with vendors to pursue discounts or some payment flexibility on subscription services.
  • M&A Delayed or Abandoned: At least two M&A deals involving IT management software have been called off at the 11th hour, ChannelE2E has heard, leading to job cuts at the two would-be sellers.
  • Revenue Variables: To ensure business continuity, BlackBerry CEO John Chen said the company has modeled scenarios where revenue drops 20 percent, 30 percent and even 50 percent. The exercise was designed to ensure the business can survive extreme turbulence, though Chen doesn’t expect to see such extreme drops. “You would expect anybody to do in modeling, and we believe we are quite comfortable,” with the company’s financial condition in those various scenarios, Chen said during a call with financial analysts last week. BlackBerry owns Cylance, an endpoint protection and cybersecurity platform that’s catching on with MSPs and MSSPs.
  • Cybersecurity Layoffs: Even MSSPs (managed security services providers) and MDR (managed detection and response), and SOC as a Service cybersecurity companies will experience some layoffs. The evidence: Herjavec Group, a Top 200 MSSP, cut 8 percent of its 350-person workforce.
  • Lending Challenges & Solutions: The U.S. Small Business Administration Paycheck Protection Program — designed to offer $350 billion in low-interest loans — is off to a bumpy start. Still, that money is expected flow more readily in the days and weeks ahead. And alternative SMB lending and financing programs for channel partners are popping up.

by Joe Panettieri

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