Trends and External Factors driving the MSP market 2020-2021
Offering an MSP (Managed Service Provider) service used to be pretty straightforward. Manage suppliers, have a good Vendor Management System (VMS) in place, and run the program efficiently. This is changing rapidly. The possibilities data and tooling offer, the talent shortage, the ever increasing complexity in regulation, it all leads MSP clients to expect more from their providers. For providers themselves it means they have to expand their services. All these changes in the MSP market are explored in the whitepaper ‘Trends and External Factors driving the MSP market 2020-2021’ published by Intelligence Group.
Intelligence Group decided to take stock of where this rapidly shifting market stands early in a new decade. What are the main trends, what external factors are driving these trends, in short, where is the MSP market heading? To do this we asked a group of nine experts from the field to share their insights on seven topics: general market developments, services, customers, competition, regulatory developments, data and tooling. We set out to paint as complete a picture as possible of MSP.
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Developments in the MSP market 2020-2021
The MSP market globally experienced rapid growth last year and does not seem to be slowing down in 2020. New industries are adopting MSP while a growing contingent of midsized organizations is starting to see MSP as a service that could be of value. Large organizations at the same time look to shift to the total talent approach. We expect the MSP market to grow across Europe and industries, with a big part of the market growth being driven by midlevel sized companies. At the same time large companies that have already been using MSP-services, are looking to broaden their services.
Moreover, as the distinction between flexible and fixed labor contracts is blurring, so is the line between services like RPO and MSP. It leads to the emergence of the total talent model and MSP providers looking to offer more services with even greater value. Moving to services with more value, does mean recruiters’ skills will be increasingly critical for the success providers have. At the same time, clients come to expect more from their MSP. They want advice to navigate the talent shortage and the rapid technological developments. One area where customers want MSPs to offer support is dealing with the talent shortage.
As the market for MSP-services is growing, new players enter the market. Locally brokers are trying to transform their services into MSP. In some cases technology allows clients to do MSP themselves. On top of that there are new challengers appearing on the horizon. Online platforms where freelancers working from anywhere offer their services.
In many markets governments are trying to regulate temporary and freelance labor. For MSPs’ clients compliance with rapid changes in regulation remains at the top of their minds reinforcing an important sales argument for MSP-providers. We expect governments to legislation around freelancers or independent contractors, while simultaneously the market itself only keeps getting bigger.
Within an MSP-program large amounts of data are being generated. These types of more traditional datasets are being enhanced by adding external data. Increasingly MSP-providers’ customers will use this to do forecasting and take operational and strategic decisions. Furthermore, MSP has always been a very technology driven service. Automation can make processes much more efficient and can help cut costs. Investments in technology in HR are still very large. It leads to continuous new tooling that MSP providers and their clients can apply.
In this whitepaper we merged the beforementioned expert views into a bird’s eye view of where the market is and where we think it is going. From this an image emerges of an MSP market that is very much in flux.
Do you want to know more about developments in the MSP market? Download the full whitepaper ‘Trends and External Factors driving the MSP market 2020-2021’ below. The white paper is free to download for everyone.