Managed service provider defined\n\nA managed service provider (MSP) is an outsourcer contracted to remotely manage or deliver IT services such as network, application, infrastructure, or security management to a client company by assuming full responsibility for those services, determining proactively what technologies and services are needed to fulfill the client\u2019s needs.\n\nServices delivered by an MSP are delivered by employees located at the client\u2019s locations, or elsewhere. MSPs can also bundle in hardware, software, or cloud technology as part of their offerings.\n\nManaged service provider business model\n\nManaged service providers structure their business to offer technology services cheaper than what it would cost an enterprise to do itself, at a higher level of quality, and with more flexibility and scalability. This is achieved through efficiencies of scale, as an MSP is able to hire specialists that smaller enterprises in particular may not be able to justify, and through automation, artificial intelligence, and machine learning \u2014 technologies that client companies may not have the expertise to implement themselves.\n\nWhat differentiates managed service providers from traditional outsourcing companies is that when an enterprise outsources an IT department or function, the outsourcing company either picks up those employees or replaces them with a roughly equivalent number of employees elsewhere. An MSP, however, focuses not on the jobs themselves, but the end results the customer seeks. For example, an enterprise might contract an MSP to handle support calls to a certain level of satisfaction and response time. As long as the managed service provider meets those metrics, it doesn\u2019t matter whether it uses dedicated staff, automation, or some other system to handle calls for that customer; the MSP decides.\n\nThere is a great deal of overlap between these definitions, however, and many companies traditionally thought of as offering business process outsourcing are now operating more as managed service providers.\n\nManaged services also differs from traditional IT consulting arrangements in that consulting is typically project-based, while managed services are ongoing subscriptions.\n\n[ Related: 8 ways to get the most from your managed service provider ]\n\nManaged service providers examples\n\nKey players in the managed services market include Accenture, Fujitsu, IBM, Cisco Systems, Ericsson, Lenovo, DXC, and Hewlett Packard Enterprise Development, according to Grand View Research.\n\nKey services offered by MSPs include data center management, network management, mobility management, infrastructure management, backup and recovery management, communication management, and security management.\n\nManaged service providers, however, come in all sizes, with the MSPAlliance, an international association of cloud and managed service providers, estimating around 150,000 MSPs across the globe.\n\nSome MSPs specialize in particular areas, such as network management or cloud management, while others offer one-stop-shopping. According to the MSPAlliance, MSPs typically offer network operation center services, remote monitoring and management tools, and service desk capabilities.\n\n[ Related: 6 top managed cloud services providers\u2014and how to choose ]\n\nStrategic managed service providers\n\nManaged service providers have evolved of late to offer services that support strategic and longer-term business planning, including digital transformation consulting, compliance audits, technology roadmaps, and needs assessments.\n\nAnother area of growth for MSPs has been in providing internet of things (IoT) services, with 50% of MSPs seeing IoT as a significant revenue opportunity, according to CompTIA.\n\nBenefits of managed service providers\n\nTop benefits of using a managed services provider include improved security, more flexibility and scalability, access to top technical and industry expertise, and reduced costs, according to NTT\u2019s 2021 global managed services survey.\n\nAn MSP can also offer variable billing models based on a variety of measures. Variable billing can provide additional revenue opportunities for the MSP, while offering a great deal of flexibility and scalability to a customer. For example, an enterprise that has large investments in hardware and software can\u2019t just reverse that investment during downturns. Similarly, layoffs can be very costly and cause long-term damage once the business turns around if those employees have since found other jobs. Similarly, adding capacity during temporary business surges can be difficult.\n\nMSPs can also invest in technologies and expertise in ways that individual companies, especially smaller ones, cannot, resulting in greater efficiency and performance.\n\nMSPs can also help bridge talent gaps. Take, for example, legacy systems. As older employees retire, young people are increasingly reluctant to learn obsolete languages and technologies. An MSP can not only staff legacy skills but train for them, given their large client bases.\n\nEnterprises can also turn to managed services providers for cutting-edge applications to accelerate adoption, even when they don\u2019t have the staff to use or implement those technologies.\n\n[ Related: Building elasticity in outsourced managed services ]\n\nCurrent state of the MSP market\n\nAccording to Mordor Research, the managed services market will grow to $274 billion by 2026, up from $152 billion in 2020, buoyed by increased adoption of the model, with many companies turning to MSPs to mitigate the impact of the pandemic in the past year. To wit, the percentage of companies using MSPs to manage more than half of their IT needs increased from 25% last year to 38% in 2021, according to NTT\u2019s 2021 global managed services survey.\n\nThe past year\u2019s pandemic also saw a surge in demand for cloud-based solutions and an increased drive to accelerate digital transformations, with customer demand moving away from \u201cbread and butter\u201d services system integration and help desk services to remote work support and cybersecurity as well, according to a recent Acronis survey of managed service providers.\n\nFifty-four percent of managed service providers reported an increase in cloud management revenue last year, and 65% increased their revenue from cybersecurity services, even during the global economic depression, according to a survey by Kaseva.\n\nAs companies sent employees to work from home and revamped their business models, managed service providers were in a unique position to help, with infrastructure already in place and remote work the norm rather than the exception.\n\nManaged service provider jobs\n\nAt an MSP, IT professionals can work with a wide variety of companies in different industries and gain more experience than they can with a single company. Working for an MSP also offers more geographic options, as many MSPs have long relied on remote staff.\n\nManaged service providers find talent the same way other companies do, through networking and job postings. Salaries are roughly comparable to other IT jobs, according to MSP executives, who add that slight premiums can be found in the MSP job market due to competition for skills and business models that can accommodate them.\n\nManaged services providers hire IT professionals with a wide variety of experience levels and skill sets, though individual companies may focus on particular industries or technologies. For example, an MSP specializing in managed network services will skew toward professionals with traditional computer engineering, software engineering, and systems engineering backgrounds, in addition to software developers, and networking and security experts.\n\nMSPs are also investing heavily in artificial intelligence and machine learning given the growth potential for their client bases.