Channel Partners Raise the Bar Even Higher on 2024 Forecasts

Each quarter Channel Futures takes the pulse of the channel market via its dynamic Quarterly Market Outlook surveys. Insights from these quarterly surveys are used by IT vendors/suppliers to craft successful partner programs and partners to benchmark against competitors. 

The various types of channel partners we receive feedback from include:

Below are key insights from the 1Q24 Quarterly Market Outlook survey. 

Record Year in the Making?  

2024 is trending toward being a record year for MSPs and TAs. When asked how their current full year 2024 forecasts compare with their original projections, both have increased their expectations. Nearly 60% of MSPs and over 55% of TAs expect higher 2024 full year revenues and profits than they originally forecast. 

Diving deeper into the level of forecast increases, TAs were much more optimistic, with over 30% stating their 2024 forecast updates are more than 10% higher than their original projections, compared to approximately 15% of MSPs. 

Related:Partners Share How They're Using Tech Services Distributors

Combine these results with the fact that over 50% of MSPs and nearly 60% of TAs previously stated they were expecting 2024 vs. 2023 full-year revenue and profit increases above 11% (per Omdia’s
Quarterly Market Outlook Survey Insights – 4Q23 report), one can easily see how 2024 is trending toward becoming a record year for channel partners.

AI and Security Solutions Are Vendor Addition Favorites 

The right vendor and supplier partnerships are critical for MSPs to capitalize on the high 2024 forecasts and numerous channel opportunities. In 1Q24, nearly half of MSPs added vendors, and of those additions, over 70% consisted of artificial intelligence (AI) (43%) and managed security (33%) solutions. 

The main reason for MSP vendor additions was to supplement existing tools/technologies (44%), followed by selling to new sectors/ new offerings (37%) and dissatisfaction with previous vendor (16%). 

Telecom-Based Solutions Remain Key Growth Drivers

TAs offer a wide range of solutions to their customers, which include both IT and telecom-based solutions. The solutions that see the highest revenue increases can change on a regular basis. 

Related:MSP Survey: Channel in Better Shape than U.S. Economy

In 1Q24, WAN/connectivity (48%) contributed to revenue growth for the most TAs, which is consistent with last year (1Q23), where it tied for the top spot. Similarly, cybersecurity (46%) was second, like in 1Q23; yet UCaaS (38%) was third, down from its top ranking (tied) last year. 

Conclusion 

Here are the major takeaways from partners’ 1Q24 channel market sentiments. 

Original 2024 full-year revenue and profit forecasts from MSPs and TAs have been magnified since they made their initial projections, with more than one-half of the partners surveyed expecting higher 2024 full-year revenues and profits than previously forecasted. 

AI and security solutions remain key solution areas for MSP vendor additions as they target these key growth areas and onboard the vendors/suppliers with the right solutions to help them capitalize on current market opportunities. 

TAs are obtaining sustained revenue growth from both IT and telecom-based solutions, even in this age where many consider telecom offerings as commoditized and less profitable.  

The 1Q24 Quarterly Market Outlook survey results should be an encouraging sign for all channel constituents, IT and telecom vendors/suppliers and their partners. There are very high forecast expectations this year, which could amount to historically high revenues and profits created via the channel. Certain solutions like AI, security and WAN/connectivity pose the biggest opportunities for vendor additions and financial growth; therefore, vendors/suppliers need to work with their partners to ensure they’re equipped with the solutions to exploit these key areas.

Omdia Quarterly Market Outlook Report: For full insights and analysis of the Channel Futures Quarterly Market Outlook Survey and to obtain a unique perspective on the key trends impacting the channel from the lens of prominent MSPs and TAs, be sure to check out the Omdia Quarterly Market Outlook Survey Insights – 1Q24 report.