AI is set to deliver enormous changes to the managed services market, forcing MSPs to rethink their established business models and reconsider where they create value for customers.
“The managed services world is going to go through a significant transformation over the next couple of years as MSPs start to embed AI into their delivery models, into their managed services capabilities,” said Alastair Edwards, chief analyst at Channel Dive sister company, Omdia.
“Agents are going to start to replace people,” said Edwards.
AI is specifically putting pressure on business models built around labor-intensive delivery.
“We’re seeing a lot of pressure on some of the core systems integration models, particularly those companies who are heavily oriented around labor arbitrage, as AI and agentic AI starts to replace the need for so many people to deliver services,” said Edwards. “This is a picture in flux.”
Navigating the AI skills shortage
The changes come at a time when the services market is already enormous. Omdia estimates the world's top 1,000 partners now generate $1.07 trillion in annual revenue, about 63% of the global IT services opportunity. The top 30 companies account for more than half of that total, underlining both the scale and concentration of the opportunity among the industry’s largest MSPs.
Rather than relying on headcount to drive growth, partners will need to differentiate themselves through specialist expertise, industry knowledge and their ability to help customers adopt AI effectively.
“There is a real skill shortage in the industry at the moment, particularly around AI, particularly around how to help customers embrace these new technologies effectively,” said Edwards.
The result is that routine operational work will become increasingly automated, with customers opting for partners that can provide strategic guidance, technical expertise and trusted advice throughout AI deployments.
Partners must adapt or die in the AI era
As AI changes service delivery, Edwards argued that technical skills alone will no longer be enough. Partners will need to combine AI expertise with deep customer knowledge and the ability to translate rapidly evolving technologies into practical business outcomes.
That will require continued investment in new skills at a time when demand for AI expertise is already outstripping supply.
“The biggest challenge that customers have today, that vendors have, and actually that partners have, is around trust,” said Edwards. “What partners and the channel ecosystem bring should be that layer of trust. That becomes a critical currency in this AI era.”
He added that partners that fail to adapt their business models risk being left behind as AI reshapes the managed services landscape.
“There are many companies that are not going to be relevant in this new world, in this new future,” he warned.
