Growing in the MSP market: why more clients is rarely more growth

Growing in the MSP market still means the same thing to most owners: winning more clients on the same offer. And then it disappoints. The revenue growth is there, the margin is not, and the question of where the next jump sits keeps hanging around the coffee machine. Anyone who has let their business ride the wave of the market these past two years now notices that the wave is slowing and that competitors are positioning more sharply.

The market is still growing fast, but not the way it did in 2018. Every MSP owner who has had a stable revenue line these past years knows this feeling: things went the way they went, AI would come along eventually, and that security talk was kept warm. That time is over. Anyone who did what they did no longer gets what they got.

The awkward part is that the pain is diffuse. Clients no longer know exactly what you do for them. They assume you are handling NIS2 and governance, even when they do not pay for it and you do not have it in place. Meanwhile you do run tenant management on Microsoft 365 and ten other things that simply work, and are therefore invisible. You are indispensable and invisible at the same time. And if a client had fewer tickets this year, they suddenly want to pay less. While fewer tickets is precisely the proof that you are doing your job well. That is a communication problem, not a delivery problem, and it pinches exactly where the margin sits.

What really works when growing in the MSP market

What we see working at MSPs that have taken steps these past two years: not selling harder, but positioning more sharply. Everyone knows the people, process, technology framework, with people first. In practice three quarters of MSP owners are still stuck in technology. Another tool, another vendor, another proposition. But distinctiveness has long stopped sitting in which stack you run.

For small and mid-sized MSPs the jump lies in specialising. Towards security, towards MSSP, towards AI, towards a specific sector. Large MSPs can afford a generalist offer, because they have the manpower to put specialist teams alongside each other. Under a hundred people that is an illusion. Then the choice is: pick a speciality and organise the rest through partnerships in which one and one make three, or stay stuck in the middle segment competing on price with parties who do that better.

The partnership trap: why equality is the only test

Partnerships sound easier than they are. In sale processes we regularly see MSPs stuck in old agreements with a partner who has since grown two sizes too big, or who has stopped investing in the segment. A drag on your negotiating position, a drag on your multiple in any eventual sale, and a drag on your terms. The question is not whether you enter partnerships, but how you can get out of one without injury. So put that exit clause in before you sign, not when you are three years in and the balance has tipped.

The hard test is equality. If one party feels the pain and the other does not, it is not a partnership but a supplier relationship with a ribbon on it. Four MSP owners who met around 2015 at a ticket system implementation in London spent a whole day together every month for two years. Not competitors, everything on the table: rates, propositions, staffing problems. Out of that came a blueprint no consultant could have delivered. That is the kind of partnership that works. Four equal parties with shared pain and shared success.

What those four did was something most MSP owners never do: open their own figures to people who really understand them. Your accountant does not get it, your partner does not want to hear it, your management team is too close. Peers with the same problem in the same market do. That is where the acceleration sits. Not in another webinar about EBITDA multiples, but in someone who had exactly your discussion with a client last month and explains in ten minutes where they took the corner.

The P&L paradox inside your own walls

The same logic applies internally. At one MSP that became part of a larger whole through an acquisition, the organisation was set up in separate business units each with their own P&L. Beautiful on paper: entrepreneurship, responsibility, focus. In practice the units fought each other, because at the end of the month one thing counted: your own number. Helping each other on cross-sell was in the strategy, and never happened. If everyone has their own success and their own P&L, you can write down collaboration, but it will not fly.

The answer does not sit in yet another KPI on top, but in redesigning the incentives. Share a bonus pot at group level. Count cross-sell twice: at the delivering unit and at the introducing one. Or accept that your business units are in fact separate companies and drop the illusion of synergy. Everything in between costs you more in internal friction than it brings in.

Two metrics buyers look at now

Anyone thinking seriously about growing in the MSP market needs two figures on the board table. The first: revenue per employee. How do you turn over more with the same headcount? That will not work by trying to do everything. It will work by specialising, deploying tooling cleverly, and having infrastructure as code in order so that you prevent standard tickets instead of solving them. That knowledge is still relatively rare and therefore valuable. The second metric: net revenue retention. How many euros do you get out of your existing client base next year compared with last? That combination, more out of your workforce and more out of your existing clients, is what buyers and investors now open first in your figures.

Underneath that sits a more fundamental point. Your client base is your largest unused asset. Most MSPs have hundreds of clients of whom they serve only a fraction of the potential. Not because the offer is not there, but because the account manager does not know, the client does not ask, and nobody takes the trouble to inventory structurally what is still on the table. A one-hour client review per quarter, with a real conversation about where the client is heading and not about which tickets are open, raises your NRR more than any sales campaign. And because you already know the client, the acquisition cost is zero.

The MSP owners who have sat still these past years on a comfortably stable revenue now have two choices. Take charge themselves, position, specialise and organise partnerships as equals. Or join a larger group and cover part of the risk. Both are defensible. Carrying on as before is not. In the MSP Late Night performance club, MSP leaders take this further every month, with the figures and the choices on the table the way those four MSPs in London did.