Survey: 77% of MSPs Expect Profit to Increase in 2024

MSPs are projecting a lot of confidence for 2024 profit as AI and security projects tick up.

The prospects for MSP revenue look bullish if you ask the respondents of the Q4 2023 Channel Futures Market Outlook survey. Channel Futures queried 112 MSPs about how they performed in the final quarter of 2023 and how they feel about the year to come.

By and large, partners are feeling great.

The vast majority of partners – 72% – reported year-over-year total revenue growth in the fourth quarter. Similarly, 70% said their recurring revenue increased from Q4 2022.

MSP Revenue, Profit on the Rise

Twenty-five percent of partner respondents said they expect 2024 profit to exceed 2023 profit by more than 20%. A further 52% believe profit will increase from 1%-20%.

In both the category of profit and revenue, only a single-digit percentage of MSPs anticipate any decrease.

Q. How do you expect your full-year 2024 managed services business revenue/ profit forecasts to compare with 2023 actuals?

AI Highlights Next-Gen Tech Opportunities

The bullishness comes as MSPs expand their line cards in the area of AI, security and cloud.

Artificial intelligence, which includes chatbots, cybersecurity with AI features, and automation tools for sales and marketing, was the most common area where MSPs added a vendor (38%). Managed security (28%) and cloud storage (25%) followed.

Related:Q4 Tech Advisor Survey Points to Widening TSD Market

In addition to adding AI vendors, MSPs reported increases in AI solutions they delivered to end users. About one in 10 (9%) respondents said the AI-related solutions they deployed or consulted on with clients increased more than 50%. The majority of partners (63%) reported an increase in these solutions. Only 23% of respondents said they do not deploy or consult on AI-related solutions.

Q. How much did the AI-related solutions you deploy to your customers or consult with them on increase in Q4 2023 compared to Q4 2022?

Internally, MSPs predominantly used AI tools for sales and marketing (38%) and email (35%). Next came education and research (31%).

Fifty-six percent of MSPs said their cloud solutions revenue grew year-over-year in Q4. Fifty-three percent of MSPs said security solutions revenue increased.

Customer Expansion, Sales Trouble MSPs

Finding new clients seems to present the biggest obstacle for managed service provider firms.

When asked to list their top challenges, about half (51%) cited expanding their customer base. Another 37% pointed to sales. Marketing came in third with 23% of MSPs selecting it as a top challenge.

When asked how layoffs in the tech industry were impacting them, 48% said they hadn't felt an impact.

Channel Futures also queried 94 technology advisors (agents) about their Q4.