Kaseya CEO Champions Higher Profits for Managed Service Providers

Managed service providers (MSPs) are the backbone of IT support for many businesses, yet their compensation often falls short of their value. This disparity becomes clear when comparing MSPs to other professional services like legal and accounting firms.

Fred Voccola, CEO of Kaseya, is on a mission to change this imbalance. For the past decade, his company has been working to reshape the economics of the MSP industry.

“We’ve been on a 10-year journey with one clear goal: to fix what we see as an injustice in the MSP world,” Voccola explains.

The core issue becomes apparent when comparing MSPs to other outsourced services used by small and medium-sized businesses (SMBs).

“SMBs typically rely on three main outsourced services: legal, financial (or tax), and IT /cybersecurity providers – these are the MSPs. Without a doubt, MSPs are the most crucial and strategic partners for SMBs. They keep business systems running and protect against growing cybersecurity threats like ransomware,” Voccola points out.

He adds, “MSPs face a much tougher job than most lawyers or accountants. IT is complex and constantly evolving. Yet, here’s the unfair part – the average profit margin for MSPs globally is only 10-12%, while law firms enjoy 37% and accounting firms 35%. This doesn’t make sense given how much harder and more valuable an MSP’s work is.”

Kaseya is taking steps to address this imbalance by introducing more profitable products and putting partners first in all its decisions. The company hopes its next moves will help level the playing field for MSP margins.

Recently, Kaseya launched its “Kaseya 365” offering, which it sees as the first of four steps to improve MSPs’ financial position.

Introduced just two and a half months ago, Kaseya 365 has already attracted 4,000 MSPs worldwide, covering five million endpoints. The service offers various subscriptions, including patch management, antivirus, MDR/EDR, anti-ransomware protection, and backup solutions.

“Kaseya 365 is our subscription service, which we believe is the first part of a four-step plan to permanently change the economics of the MSP industry,” Voccola states.

The company aims to gradually increase MSP margins with each new product release, with more planned for later this year.

“Our IT Complete platform can help customers spend half as much on software, adding 5-10 percentage points to their profit margin,” Voccola explains. “Additionally, the AI-based automations in our platform can make engineers 20-30% more efficient, potentially adding another 5-10 points to the margin.”

He notes that other support, such as playbooks, peer groups, and strategic advice on pricing, service delivery, and M&A activity, can further boost partner margins.

“An MSP using Kaseya’s solutions should be able to achieve a 30-37% profit margin. This could be game-changing for MSPs. That’s our mission and what we’re striving for,” Voccola emphasizes.

He points out that MSPs are often small businesses themselves, run by hardworking entrepreneurs who deserve recognition.

“These MSPs are the economic engine of our modern economy. We see how much effort these men and women put in. It’s unfair that they can’t earn profits that truly reflect the value they provide,” Fred Voccola concludes.

Kaseya’s efforts to boost MSP profitability come at a crucial time. As businesses increasingly rely on technology, the role of MSPs in maintaining and securing IT infrastructure becomes even more critical. By working to increase MSP margins, Kaseya aims to ensure that these vital service providers can continue to support and protect businesses effectively.

The company’s four-step plan, starting with Kaseya 365, represents a significant push to address the longstanding issue of MSP undervaluation. If successful, this initiative could not only benefit MSPs but also strengthen the overall IT support ecosystem for SMBs worldwide.

As the digital landscape continues to evolve and cyber threats become more sophisticated, the importance of well-resourced and fairly compensated MSPs cannot be overstated. Kaseya’s mission to improve MSP economics could play a crucial role in ensuring that these essential service providers can meet the growing technological needs of businesses in the years to come.