Barracuda Networks, Inc., a leading provider of cloud-first security solutions, today released its 2024 report, The Evolving Landscape of the MSP Business, detailing how MSPs are turning to marketplaces and Artificial Intelligence to better serve customers. According to the report, the MSP community expresses great concern over the limited knowledge on AI and its applications.

This is the seventh annual MSP report, carried out in conjunction with Vanson Bourne, based on an international cross-section of 700 MSP organizations. The report will be released in conjunction with Barracuda’s Global MSP Day, which includes a variety of virtual and live events for MSP partners around North America, Europe, and Asia Pacific.

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According to the report, key findings underscore MSPs’ continued shifting from project-based support to a recurring services model. Forty-four percent of MSP revenues in 2024 were reportedly sourced from recurring services, up from 34% in 2023. Furthermore, over nine in ten responders believe that businesses are reducing in-house IT operations and increasing the outsourcing of the same services to MSPs, further fanning the growth of recurring services.

Security remains an MSP priority, and customer interest in security-related products and services is perceived as the most desired. Among the respondents, 42% operate security operations centers, while 38% provide security awareness training and 36% provide network security. In 2024, the average number of new services MSPs intends to add to their portfolio is six.

Other key findings:

Cloud marketplaces making life easier: 92% of MSPs responded that cloud marketplaces were core to their business, while 47% of those were already using them and another 50% were looking into the matter.

Need for AI expertise on the rise: 87% of MSPs stated that they had large knowledge gaps in regards to AI and how it should be applied. Meanwhile, 77% felt pressure to deliver AI insights and tools to customers.

Woes related to internal security: 98% said MSPs need to enhance their internal security.

This includes a realistic yet optimistic outlook. Although an increase in growth is likely to happen in 2024, MSPs indicated that two of the top concerns were heightened market competition—48 percent, up from 44 percent in 2023—and helping customers keep pace with government regulations at 82 percent.

“MSPs are operating in a very dynamic marketplace,” said Patrick O’Donnell, Senior Vice President, Worldwide Sales, Barracuda. “With increasing competition and changing routes to market, MSPs need to keep pace with the growing attack surface created by digital transformation. More than half are looking for added support, and a strong partnership with vendors who specialize in security and how it relates to AI can help the MSP industry overcome its challenges and be successful in 2024 and beyond.”Richard Tubb, MSP growth consultant and MSP Day speaker, said, “MSPs, in 2024, are key strategic partners to their clients while they navigate the complexities of technology and security challenges. The research shows that many MSPs are embracing new opportunities to benefit their clients and drive business growth.”

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