The debate over whether MSPs should be outsourcing to a ‘master MSP' has been rekindled by ConnectWise's takeover, with one commentator predicting that the move could prompt more MSPs to take support back in-house.
Proponents of the master MSP model argue that backing off helpdesk support to a white-label provider with more critical mass can help MSPs boost margins.
This includes Service Leadership, whose research found that the gross margins of MSPs who use master MSP Continuum are eight per cent higher than similar counterparts.
Detractors, however, say MSPs who outsource core functions to a third party are surrendering a key differentiator.
Talking to Channel Partner Insight, Todd McQuilkin, CEO of UK-based MSP Air-IT, said that many small MSPs are tempted to outsource their service desk to a master MSP such as Continuum, Inbay or Benchmark 365 because it is the hardest component to scale, but he argued that the model is not sustainable.
"I'm not a fan of outsourcing core components of an MSP's services, which I would consider as service delivery and NOC - and maybe later down the line SOC," he said. "The MSP market is saturated and we need to differentiate ourselves. If we outsource our core components then we are becoming a reseller of MSP services, and we are not a fully-fledged MSP."
This debate has been stirred up again by Connectwise's takeover by Thoma Bravo, a private equity house that is already the owner of Continuum (as well as Connectwise competitor SolarWinds MSP).
Ray Stasieczko, the CEO and founder of US reseller alliance TEASRA, argued in a Linked In blog post that the acquisition "brings up questions" for MSPs working with Thoma Bravo's portfolio companies.
He estimated that 5,000 MSPs use the platform of Continuum, which he branded the "world's largest master MSP'.
"Thoma Bravo's could put together an un-disputed powerhouse of capabilities," Stasieczko said.
"It must be evident to all logical thinking the return on investment would be a higher return if the same buyer bought both Continuum and ConnectWise. This buyer would then be in the position to deliver managed IT services to the SMB space globally. They would also be a position to filter out or expand the current partners on these platforms.
"So, the thousands of MSPs who outsource to these organizations may indeed find themselves outsourcing service to a competitive threat."
Stasieczko predicted the move could prompt a shake-up of the MSP landscape.
"I expect that many MSPs will seriously consider bringing their helpdesk in-house and look for alternative backend solutions. MSPs joining forces will allow for shared resources. So, over the next couple years we should expect MSP roll ups to gain in momentum," he said.
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