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IT Glue survey reveals COVID-19 impact on MSPs

Interest in M&As has fallen 15% since the start of the year

Market downturn due to the Coronavirus

IT Glue has released its third annual Global MSP Benchmark Report which delivers several insights into the effects of the coronavirus pandemic on global managed service providers.

The IT documentation provider’s report consists of two parts: a pre-pandemic survey of more than 1,500 MSP professionals from February 2020, and a follow-up survey of 500 professionals back in May after the situation had escalated.

The latter report revealed that 74% of MSPs are now concerned about a second quarantine period occurring later in the year, after a significant number reported a decline in revenue.

"The pandemic has created an unprecedented landscape for all businesses,” commented Nadir Merchant, general manager of IT Glue.

Specifically, the report revealed that 51% of MSPs experienced monthly revenue decreases due to the lockdown, while 29% saw their accounts receivable increase – suggesting that clients struggled to meet contractual deadlines to pay MSPs for their services.

These unprecedented measures also brought about a shift in MSP priorities and concerns. Before the pandemic, these consisted of a lack of adequate time to complete work (54%), an inability to find good technical employees, followed by changing technologies (32%) and a lack of information sharing (27%).

By contrast, the May survey found that just 20% of respondents stated these as top concerns, IT Glue said. Instead, MSPs turned their focus to cyber security threats, customer churn, price pressure and a second lockdown.

Companies interested in acquiring or merging with other MSPs also dropped to just 37% of respondents, compared to 52% back in the pre-pandemic part of the survey, marking the “most profound shift in M&A sentiment in recent years”, IT Glue said.

“While no business is fully recession-proof, MSPs are uniquely positioned to drive value to customers and thrive during economic downturns,” Merchant explained. “This year’s survey shows that the shift in priorities to a now greater concern for cybersecurity, compliance and customer retention means MSPs have an opportunity to serve as a guide to their small business customers. 

“They are the epicenter for delivering critical IT services that not only help to maintain the viability of many companies during times of uncertainty and volatility, but will enable businesses to emerge stronger from these trying times.”

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