North Carolina has long provided a sense of intrigue to the outsider. Sitting centrally on the country's East Coast means it offers a blend of north and south that's difficult to understand without speaking to a local.
However, since the Great Recession, and in particular the evolution of Charlotte into a banking epicenter, the culture in North Carolina has evolved as transplants from the North East continue to head to the Tar Heel State to take advantage of its prosperous growth and steady hand.
The state also plays host to myriad tech firms, including Lenovo, IBM, Red Hat and Oracle, as well as being home to the largest tech research area in North America - Research Triangle Park in Durham.
As a result of all of this, there is no shortage of MSPs in North Carolina. But are they reaping the benefits of the state's explosive growth over the last decade?
We speak to local players to find out.
Like many other parts of the country, staffing is an issue for MSPs in North Carolina. The Tar Heel State has a number of growing markets, in particular in Charlotte and the capital Raleigh, which means finding competent staff who want to work for an MSP is proving tricky, according to Cameron Welles, CEO of Charlotte-based Premier Technology Solutions and member of MSP peer group The 20.
"It's such a competitive, fast-growing market, which means finding competent, skilled staff can be difficult because there's a lot of competition for that staff - not only among other MSPs, but also among companies that are trying to staff their own IT departments," Welles told CPI in an interview.
One of the reasons for the tough competition is the other industries that have developed a presence in the state. These include Amazon in Charlotte, Lowes in Mooresville and banking institutions such as Bank of America in Charlotte and RBC in Raleigh.
Firms like these tend to have "flashy objects" that attract the best talent, meaning MSPs can miss out on getting the best people, John Campbell, CTO at Charlotte-based MSP Neteffect Technologies told CPI in an interview.
This is compounded by the fact that, while turnover of tech staff at the bigger players can be high, stepping into an MSP organization after a stint at Amazon or Bank of America, for example, can prove difficult.
"They are typically pigeonholed or work in silos in those organizations, which means when they try to transition into the MSP space, it can be very difficult because we require them to handle such a breadth of services.
"It means that you can get those people in, but there is typically a good amount of turnover when they are unable to keep up with the task," Campbell said.
This lack of tech talent can, however, work in the MSP's favor. Nolan Smith, partner at Tego Data Systems, points out that North Carolina "has one of the largest disparities [in the U.S] in terms of supply of tech talent versus demand". What this means is that MSPs can find opportunity in partnering with firms who need technical expertise but can't find the staff to meet their requirements.
"This is great for us because there is a lot of demand from a lot of companies that are trying to push the envelope and are innovative. It's hard for them to necessarily scale as rapidly as they would want to with just traditional hiring, so it's good for MSPs and technology strategy partners like us to advise them, guide them and help them expand their pipeline of available engineers."
Influx of new business
As well as the opportunity to be found in the tech talent disparity, North Carolina has seen a significant influx in business over the last decade. The financial sector in particular has grown significantly since the Great Recession, with the number of jobs in this sector rising by 47.4 per cent since the year 2000 to around 82,000 people - faster than the US' national average in finance of 11.7 per cent.
This means a "huge opportunity" for security-based services that are proactive in nature, Campbell said.
Jeremy Wanamaker, CEO of Complete Network agrees, pointing out that, despite his firm not serving the large financial institutions, Complete Network is reaping the benefits of the growing financial sector in North Carolina.
"We service financial services firms that are small and mid-sized. There are many of them, and some of them support the banks and some of them are ex bankers who went into a different line of financial services work. And they have a high need for IT security, compliance, high-end consulting and so on, so there's a really good opportunity there for MSPs to stand out."
Alongside this growth in the financial sector is an influx of business across the board that MSP can take advantage of. Wanamaker notes that MSPs can find business off the back of this growth, even if they don't serve the enterprises that are moving to the state.
"There are so many businesses moving here, and although we support small-to-midsize businesses, our clients support the big businesses, so as we get large organizations moving into the area, creating lots of jobs and bringing people to the area, the economy grows and it helps the industry, and being in a growing market is a tremendous opportunity."
Market saturation and competition
The downside of an influx of business into North Carolina is market saturation. Campbell notes that even the MSP nomenclature has become watered down as more and more players enter the market positioning themselves as managed services providers.
"There are far too many people that claim to be an MSP that really aren't. A one-to-two person shop that is claiming to be something that they're not, claiming to be larger than they are. And we see the challenge because we do a lot of cleanup after the fact from MSPs that were too small to handle their customers' needs."
Of note, Campbell told CPI that one of the reasons for there being so many smaller players entering the market is because the large businesses coming into the state hire an influx of people in contractor roles and move them to North Carolina, only to let them go after a year or two.
"They get laid off by the banks and then they think: ‘well, I'll just start my own business and be an MSP because that's the hot term right now'. So that presents a huge challenge for pricing and market competitiveness."
Wanamaker agrees that these smaller entrants to the market have an impact on pricing. He describes it as a "downward pressure" on prices because the smaller players don't have the overheads that established, larger MSPs have. Further, they may outsource a number of the services they offer, meaning they can offer them at a cheaper rate than an established MSPs with in-house expertise.
"They're able to offer their services at cheaper prices and some customers may not be sophisticated enough to tell the difference between what we have to offer as a sizable MSP versus what somebody working out of their house may be offering," he said.
Though North Carolina plays host to Charlotte - the country's second largest banking sector - most of the MSPs we spoke with don't necessarily work with clients in the financial industry. Complete Network was the exception, with CEO Wanamaker telling CPI that the firm's financial clients are different to a lot of the other industries in North Carolina by virtue of being more demanding, but also more willing to spend on IT.
"They have bigger budgets, so in that sense it's easier to get them to spend money on what they need to do. But they're certainly more demanding about what they need and what they require in terms of compliance, security and so on."
Elsewhere in North Carolina there are very different types of customers. Smith notes that while Raleigh hosts leading-edge firms like Red Hat, IBM and Lenovo, you can travel 90 minutes east and find a very different type of company, whose whole business is "grinding up corn to feed hogs", Nolan said.
He notes that it's a reflection of the diverse business landscape in the Tar Heel State. And it's relevant for MSPs because despite a business like the one described having been around for over 100 years, claims Nolan, today they can't function without technology.
"It's an interesting dichotomy of customers," he added. "There's actually a lot of opportunity with a shop like that because someone who grinds up corn is going to have a hard time hiring an AWS architect, yet their operation might be perfect in the cloud. Because right now they're running on-prem infrastructure and they don't necessarily have the skills to do that, so there's opportunity for an MSP to come in and do it."
Another industry that is heavily present in North Carolina is manufacturing. Campbell told CPI that along with distribution, manufacturing makes up 40 to 45 percent of Neteffect Technologies' business.
This presents a variety of challenges - one being scale and its impact on security. Campbell explains that while manufacturing firms need to scale up, they also need to shrink back down quickly at different times of the year, only to scale back up again, all of which presents "an interesting challenge" in security.
"What we see is a huge expansion in the IoT space where these organizations are adopting IoT without even knowing it's in their footprint, and they have all these connections without calling it IoT.
"But it is, and it presents the potential for an enormous impact on their infrastructure, as well as how we focus on things."
And with manufacturing "growing so fast" in North Carolina, firms are expanding into diverse plants across the state that were once individual companies and that have since been purchased or absorbed into larger organizations. But this can lead to a disjointed approach to technology, Campbell warned.
"They have an inclination to go and purchase a solution to do X, Y or Z without really communicating at the time, so you do have to go back and reverse engineer a lot of that."
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