N-able, Inc. announced its second annual MSP Horizons Report in partnership with leading channel analyst firm, Canalys. The report-which summarizes the top findings from research with MSPs across the globe-reveals a sharp projected uptick for managed services growth driven by a number of key factors, including the maturity of cybersecurity services. The increasingly successful "MSP 3.0" model underscores the importance of focusing on long-term opportunities vs. short-term wins to drive both scalability and profitability.

Robin Ody, MSP Analysis Practice Lead, Canalys (now part of Omdia) shared, "The IT managed services market is expected to be worth an estimated US$610 billion by the end of 2025, with channel partners contributing approximately 98% of that revenue. Managed service providers are operating at a time of significant change, both in the demand from customers and the competition from fellow channel partners. This is having a big impact on the managed services business model, affecting the services partners provide and the ways they package these capabilities. The forward-looking partner today is focusing on those specializations that will provide the most value to the customer and help them remain competitive: cybersecurity, cloud, AI, risk management, compliance monitoring, and vertical capability."

Key Findings Include:

• Growth outlook overwhelmingly positive for MSPs
  • 59% of MSP respondents expect to grow overall revenue by 20% or more in 2025.
  • Almost 40% of respondents expect more than 20% managed services profit growth in 2025. Key growth factors include a bigger focus on endpoint, powerful cybersecurity and compliance tailwinds, co-managed expansion, and automation levers-including AI.
  • The top challenges to growth include new customer acquisition and upskilling staff.
• Cybersecurity force factor continues to strengthen
  • Cybersecurity managed services sales growth is expected by 90% of respondents in 2025, up from 80% in the previous year's report.
  • Security-related services represent the top four most important contributors to managed services revenue over the next three years, with third-party MDR topping the list of new services MSPs are planning to add.
  • The most in demand future managed backup and disaster recovery services are SaaS application backup (53%) and AI-powered backup and recovery (51%).
  • Cyberthreat complexities, compliance requirements, and data breach liability concerns by partners and customers top the list for fueling cybersecurity growth.

"A central theme of this year's report is cyber resilience and a constant trend remains: cybersecurity is a key revenue driver," said John Pagliuca, N-able President and CEO. "Conversations with MSPs worldwide make it clear that the line between IT operations and security operations has blurred. The leading MSPs differentiate themselves by addressing security across the entire attack lifecycle: from protection and detection to response and recovery. When it comes to cybersecurity, ‘good enough' is no longer good enough."

• AI adoption is maturing with more attention to governance and risk management
  • Only 6% of respondents are not using any generative AI.
  • 40% have generated data governance rules and designed guidelines for human oversight.
  • The biggest AI use cases are for building workflow automations and automating the sales and ticketing process.
• M&A is now back on the agenda
  • 90% of those surveyed are interested in M&A, with specific growth tactics (acquiring new skills and/or regions) the main motivator-up from 44% last year.
  • M&A drivers include the determination to improve competitiveness via expansion into new regions, verticals, or other niches.
• Cloud modernization is in full swing
  • On-premises will always have a place but modern MSPs are cloud-first for software and infrastructure according to the findings.
  • However, concerns remain with security/compliance cited by 40% and cost control by 38%.

"There is all sorts of value in the MSP Horizons Report," said John Joyce, Owner, CRS Technology Consultants. "I feel that we have a pretty good sense of what's going on in the industry. But to see things distilled down to numbers and to see the feedback from the sample group reflecting what we're seeing is a powerful validation. The cybersecurity piece is only going to continue to grow because we don't have a choice. The report clearly highlights that many of us have been able to go on and build a piece of our business out of it, and I don't see that changing. I see it only increasing."