Already home to mega channel players, such as Ingram Micro, which houses its East Coast corporate headquarters in Williamsville; and Datto, which opened a 12,000-square-foot facility in Rochester in 2014, New York State can confidently nail its channel colors to the mast, as can the MSPs doing business in the Empire State.
But there are, of course, considerations for MSPs operating in New York. Like every part of the country, the state has its unique challenges. Colors to the mast or not, it's not all plain sailing amid what one partner described as a "sea change" for small business owners (and MSPs by extension) in New York right now.
From regulation to cloud questions, we talk to various New York players to single out four pain points for channel partners in the region in 2019.
1) Growing regulation
New York State regulation was the point mentioned again and again in our conversations with New York MSPs. Partners operating in the Empire State have found themselves managing a growing number of regulatory obligations. As the state embarks on its "new social contract", as one NY MSP put it, small businesses are feeling the pinch in new ways. This has a direct impact for MSPs, but also carries a knock-on effect as certain regulations impact their clients.
"Increasing regulation is very difficult and it really changes the social contract between the state and any business entity," Larry Zimbler, president at Albany, NY-based MSP Liberteks told CPI in an interview. "I'll give you two simple examples of that: New York's new regulation on paid family leave, which offers a meaningful change; and a second, that I'm not saying is bad, but is completely transformative: the state's mandatory training on sexual harassment."
The regulations Zimbler refers to were enacted in 2018. The first - New York's Paid Family Leave (PFL) - came into force on 1 January 2018. It offers all full-time employees of 26 weeks or more paid time off to care for a newly born, adopted or fostered child, or a family member with a serious health condition.
The law mandates that in 2018, such employees were given eight weeks of PFL and paid up to 50 per cent of their weekly income, up to a maximum of 50 percent of New York's average weekly wage. In 2019 the length of time went up to 10 weeks and the income to 55 per cent. In 2020 it will go up to 10 weeks and 60 percent, and in 2021, 12 weeks and 67 percent.
The sexual harassment training came into force on 9 October 2018. It requires all New York state employers to have written sexual harassment prevention policies, as well as annual anti-harassment training for all employees.
Zimbler isn't the only MSP to mention the sexual harassment regulation, which players say although a change for good, has an impact on the day-to-day running of a New York MSP's business.
"Regulations like this just slow down the business," Richard Trivedi, owner and IT director at Staten Island, NY-based MSP Cadrenet, said. "Small businesses have so many things on their plate, this is not something that should be mandated. It also should have been communicated much better to small business owners to provide some sort of a training for their employees, something from the state directly."
But it's not only regulation that has a direct impact felt by New York State MSPs. Trickle-down effect regulations are also touching the business of regional players. For example, MSPs that have New York City-based construction clients may find themselves on the receiving end of delayed payments, diminishing business and reduced uptake of services because of regulatory impact.
Of particular note are New York City's 2018 Safety Training Requirements, which from 1 March last year mandated that construction site workers must have received a minimum of 10 hours of safety training within the last five years before commencing work on a building site. This training must be increased to 40 hours within six months of the start of the work in order for the employee to continue working.
Employers found to have any site workers in breach of these requirements will be fined up to $5,000 per untrained worker. Further, if the training is not logged correctly, a penalty of $2,500 will be levied.
As a result of these new requirements, MSPs' construction clients in the New York City municipality are now operating under such strict compliance obligations that their service providers are feeling the pinch, according to New York City, NY-based MSP Brainlink.
"There is definitely a trickle-down effect of local regulations for our construction clients. While they may have had some of their best years in terms of revenue ever, they're all managing their cash flow more tightly than I've seen them in the last couple of years," Brainlink CTO Raj Goel told CPI. "Three years ago nobody was buying and that was partly due to the election and partly due to Brexit, but now it's due to supply chain cash-flow issues because of new labor regulations in the NYC construction industry."
2) Workforce exodus from upstate New York
While New York MSPs are busy grappling with the impact of various regulations, they are also having to deal with the fact that the workforce (and, indeed, potential workforce) is not staying put in the Empire State. Whether it's the high cost of living in New York City or, ironically, the pull of the city enticing people away from upstate New York, MSPs are feeling the impact in two ways: workforce and clientele.
"Competition is high and client sizes vary in Manhattan, because a lot of big companies have moved out and maintained satellite offices here. So you'll have one or two users working out of Manhattan just for presence, and the rest of them are moving to places like New Jersey," Trivedi explained.
"It makes it tough to find business in Manhattan that you want to support because the majority of the workforce is not there."
The main cause, Trivedi said, is real estate pricing. "It makes going after new clients a little more challenging," he added.
When it comes to upstate New York, the problem lies with a steady outflow of people who initially come to the area for colleges, such as Bard College in Dutchess County or Skidmore College in Saratoga Springs, or who are locals who have graduated college and want to move away from their home towns and cities, according to Zimbler. These graduates used to provide "a good labor supply", the MSP said, but once college is finished, graduates are no longer hanging around and are either heading to the Big Apple or other cities amid a general trend to migrate to bigger markets.
"We have a lot of people who come into this market for education because it's a strong college area, and that used to be a good labor supply. But the problem is, for the most part, they don't want to stay here because they see greener pastures and bigger markets elsewhere."
Indeed, in a 2017 article, local newspaper Democrat & Chronicle, based in Rochester, NY noted that "students flee" the area after graduating the local colleges. According to the piece, only one in 10 graduates remains in upstate New York after graduation.
And as far back as 2006, The New York Times wrote that from 1990 to 2004, 25 to 34-year-old residents in the 52 counties north of Rockland and Putnam dropped by 25 percent, while the population of "young adults" fell by 30 percent in 13 counties, including those that are home to Buffalo, Syracuse and Binghamton.
This will come as no great surprise to Zimbler, who told CPI that there has been a steady outflow of people from upstate New York as far back as 1955, which, he said, coincides with the decline period in GE's maximum employment in the region. The once-iconic conglomerate has lost almost 80 percent of its staff in Schenectady, NY according to North Public Country Radio in Canton, NY, which notes that employment at GE in Schenectady went from 25,000 people in the 1980s to just 5,000 by 2017.
The labor outflow resulting from these various factors is "in our state, something we have to deal with", Zimbler notes simply.
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