There are roughly 8,000 managed service providers in the United States, and the typical managed service provider generates $3.9 million in annual revenue.
Here are some other fast facts about typical MSPs, according to a presentation delivered today at the Ingram Micro Seismic Partner Conference in Chicago.
There are roughly 40,000 U.S. solutions providers — and roughly 20 percent of them (about 8,000) are MSPs. The typical MSP:
- Generates $3.9 million in annual revenue, 79% of which comes from MSP services.
- Has 25 employees.
- Generates $450,000 in pre-tax net income.
The information comes from Service Leadership Inc.’s 2007 Solution Provider Profitability Study. Michael Minnich, president and CEO of NetGain Information Systems, shared the data points above during a presentation Tuesday morning. (Full disclosure: I missed the presentation because of flight delays but received a copy of Minnich’s presentation.)
Generally speaking, I think the data points above are pretty reliable. Still, I often hear from vendors that there are roughly 80,000 to 120,000 solutions providers in the United States. The 40,000 figure sounds low to me.
Posted In: Finance | HR | Marketing | Sales
Tags: managed service provider annual revenue | managed service provider sales | managed services revenue | managed servics sales | Michael Minnich | MSP revenue | MSP sales | NetGain Information Systems | Service Leadership Inc.
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Those are impressive and interesting numbers. I think the real interesting question is where these numbers will be three years from now. The next few years should theoretically see a lot of providers consolidating/scaling up in some way. I wonder what the averages will look like then.
Mike Cooch
http://www.everonit.com
http://www.smbitpros.com
Josh: Hard to say what the numbers will look like. But the platforms are pretty predictable: A year or 18 months from now, I suspect at some point the number of MSPs will actually drop just a bit, since “pretenders” in the market will exit amid failed SLAs and bad business/revenue models.
Three years from now…
1. MSPs will drive profits even higher using such services as managed telepresence, managed video surveillance and SaaS applications that contain open source at the core.
2. MSPs will also have a single, API-driven dashboard for all of their managed services.
3. MSPs will plug into commodity back end services (such as Amazon S3) if/when needed.
4. The MSP-oriented conversations will continue to be more business-driven, with marketing and branding forever remaining the biggest priorities for MSPs.
5. Hopefully, I won’t be blogging from a hotel room at midnight — unless, of course, the hotel is somewhere in the Caribbean.
Thanks for your efforts Joe. You too Ms. Katz. You both certainly bring value to the MSP market of today. I agreee the best is yet to come!
Everyone tell a friend about MSP Mentor so we can help Joe at least fly on a better airline. If it is to the Caribbean so be it…
Joe: Great predictions! Hope they all come true, particularly #4 in your case…
Jim Van
http://www.logicomm-inc.com
I suspect margins to improve as companies increase productivity and capital investments mature. Leveraging open-source solutions to build integrated management dashboards should increase service delivery efficiency while adding considerable value to the client. I know in our pure-managed services, pre-tax margins are well above the 11.5% margin noted above.
@Jeff: The open source angle is something I believe in strongly. We will see a blending of open source and closed source. But open source will have a growing position in this market, and will greatly influence the decisions of closed-source solutions providers. There is value in both open and closed source. But the days of pure closed-source are over.