MSP profitability: Market splits as some MSPs stagnate — Jessica Davis, Omdia

About this episode

The episode highlights a structural split within the managed services market, defined by how different segments are responding to rising economic uncertainty, AI experimentation, and shifting revenue expectations. Omdia’s recent partner sentiment polls reveal a divergence: approximately 44% of channel partners expect their revenue to fall, while 41% anticipate growth—signaling a bifurcation rather than a broad recession. The episode identifies this as a period of market stress with implications similar to the post-2008 transition from break-fix to recurring revenue, but now driven by new pressures and emerging technologies such as AI. Key evidence centers on AI-related services, where Omdia reported around 60% growth, concentrated among a minority of advanced MSPs, compared to roughly 10% for managed services overall. This growth remains experimental, with most providers currently using AI to drive internal efficiencies rather than as client-facing offerings. The ongoing uncertainty around how AI capabilities will be priced and delivered through the MSP channel mirrors previous transitions—such as the shift to cloud licensing—where price-setting power and business models were cont