In recognizing the struggles of managed service providers (MSPs) to achieve the financial success and professional esteem they rightfully deserve, the initiatives spearheaded by Kaseya have been aimed at addressing these challenges and empowering MSPs to thrive.
Fred Voccola, the articulate CEO of Kaseya, has emphasized the stark contrast in profit margins that MSPs face compared to legal and accounting professionals, both of whom also cater to the critical small and medium-sized business (SMB) sector. This disparity highlights an unsettling reality within the service industry.
The persistent feeling that data protectors, innovators, and the professionals responsible for managing complex security, software, and infrastructure needs are not receiving adequate recognition drives Voccola’s commitment to rectifying these inequities in the field.
“The small to mid-sized businesses are really the engine [of the global economy] … what’s allowing small businesses to save the global economy? Think about it,” he said passionately. “It’s technology that only the enterprise could leverage three decades ago; now it can be accessed by smaller enterprises.”
“What that represents, which is great for MSPs, is that because technology is the catalyst for SMBs’ tremendous success,” Voccola elaborated. “They’ve come to rely on technology, demanding that it remain consistently available and secure, which is exactly where the role of the MSP becomes invaluable.”
Voccola pointed out that the increasing reliance on IT and the critical role of MSPs in delivering and supporting these services has not translated into considerable economic advantages for the channel. “The average profit margin of an MSP in the United Kingdom is about 9.5%, while in the US it hovers around 10%, and in Western Europe, it stands at about 9.4%,” said Voccola. “Many of these same clients also employ two or three other service providers, including legal and accounting firms, which boast substantial profit margins: around 40% for law firms and approximately 35% for accounting firms.”
“We have a situation where the MSP, which is a hundred times more essential than the law firm or solicitor to their client and to society at large, faces a significantly tougher challenge … yet they earn only a fraction of the financial rewards. That’s a significant concern.”
Enhancements
The vendor’s recent DattoCon event showcased several enhancements to its 365 platform, driven by a commitment to ensure more profitability for MSPs by improving their operational landscape.
“If you’re operating a business with a meager 10% margin, making the necessary investments becomes a daunting task, especially considering the demands placed on MSPs,” Voccola pointed out. “The sizeable investments required mean that higher margins are essential.”
“We are fundamentally transforming the economic model of the MSP landscape so that these problems become a thing of the past,” he declared. “With Kaseya 365, we are delivering an integrated platform that equips the MSP with everything they require for a fraction of the typical costs. Importantly, our ownership of all software means we can integrate systems deeply, resulting in enhanced automations for the MSPs.”
Time and money
Voccola elaborated that Kaseya aims to enhance MSP profitability from two dimensions: reducing costs associated with technology and liberating valuable time via automation and service consolidation.
“The MSP has two core issues,” he said. “Firstly, the average MSP allocates approximately 25% of their revenue towards software and hardware necessary for service delivery, primarily due to reliance on 15 to 20 fragmented solutions.”
“The second hurdle involves MSP engineers,” noted Voccola. “They are consistently overworked. This creates an ongoing struggle for the MSP to scale their revenue efforts. About 70% of their tasks currently could be automated, enabling them to focus on more strategic efforts. By offering a unified platform instead of 19 different systems that don’t interact, Kaseya allows for seamless automation.”
He indicated that the company can keep its service costs lower than competitors due to this automation, freeing up significant portions of the day for MSP engineers—between 30% and 50% of their time now returned to more critical tasks.
“What we are doing is addressing the fundamental issues plaguing the industry to allow MSPs to function as profitable enterprises with margins approaching the 40% they deserving of the immense value they deliver,” said Voccola.
User 365
Kaseya continues to enhance its 365 platform alongside user-centric security and data protection tools, following the launch of the Edge offering, with additional developments on the horizon.
“Kaseya 365 User serves as a comprehensive solution to prevent, respond to, and recover from threats to user security, user identity management, and data preservation—essential facets of effective user management,” he explained.
The firm also expanded the scope of its Partner-first Pledge, introducing a backup concierge service designed to assist partners in maximizing their revenues through essential user support services.
“We’re offering this to all our MSP partners at no cost,” said Voccola. “This initiative will be fully operational across Europe by the end of February.”
“Backup represents a pivotal revenue stream, often one of the largest for MSPs, while also being a significant cost center,” he clarified. “Approximately a third of the MSPs we collaborate with have indicated that they struggle to effectively market and position the right types of backup and disaster recovery solutions to their clients.”
“Moreover, about two-thirds of MSPs express genuine concern regarding their pricing strategies, configuration, and the perceived profitability of their backup offerings,” Voccola added. “In response, we’re establishing a backup concierge service, ensuring that every Kaseya MSP will have access to a dedicated backup and disaster recovery expert who will assist in pricing and packaging their solutions effectively.”
“This initiative will remain free of charge, and we believe it could potentially elevate the profit margins and revenue growth for every MSP by an additional five to 10 percentage points,” he concluded.
**Interview with Fred Voccola, CEO of Kaseya**
**Interviewer:** Fred, thank you for joining us today to discuss the current profitability crisis in the managed services industry. It’s clear that MSPs are facing significant challenges. Can you elaborate on what you believe are the major factors contributing to this crisis?
**Fred Voccola:** Thank you for having me. The primary challenge lies in the extraordinarily low profit margins that MSPs are facing—around 10% in the U.S. and even lower in other regions like the U.K. and Western Europe. This is alarming when you compare it to industries like legal and accounting services where firms see profit margins of around 40% and 35%, respectively. It’s disheartening to see that the professionals responsible for maintaining the technological backbone of small and medium-sized businesses are not receiving commensurate recognition and financial reward.
**Interviewer:** You mentioned that MSPs are critical to the success of SMBs, especially as they increasingly rely on technology. What role do you think Kaseya plays in enhancing the profitability of MSPs?
**Fred Voccola:** Kaseya is fundamentally transforming the economic model for MSPs. With our integrated platform, Kaseya 365, we help these providers reduce their operational costs and streamline their services. By consolidating the numerous software tools they currently rely on—typically 15 to 20 fragmented solutions—we provide a cohesive system that enables automation and enhances efficiency. This transformation allows MSPs to focus on strategic tasks rather than getting bogged down in repetitive, manual work.
**Interviewer:** You mentioned automation as a key component of your strategy. How does that specifically impact MSPs’ profitability?
**Fred Voccola:** Well, an average MSP spends around 25% of their revenue on the software and hardware required for service delivery. By automating around 70% of the tasks that engineers perform, we can significantly reduce operational costs and free up their time—between 30% to 50%—to work on higher-value tasks. This reduction in spend, combined with the time savings, can push profit margins closer to that 40% mark that they truly deserve for the value they provide.
**Interviewer:** That’s a strong vision for the future of the MSP landscape. Could you share more about recent developments with Kaseya’s 365 platform?
**Fred Voccola:** Absolutely! Our recent enhancements to the Kaseya 365 platform focus on expanding user-centric security and data protection capabilities. We understand that as MSPs help SMBs scale and become more dependent on technology, these providers need robust tools to prevent, respond to, and recover from cyber threats efficiently. Our aim is to empower them with cutting-edge solutions that not only secure their clients but also enhance their operational efficiencies.
**Interviewer:** Thank you for sharing these insights, Fred. It sounds like there’s a significant shift underway that could greatly benefit MSPs in the long run.
**Fred Voccola:** Thank you for having me! We’re incredibly committed to addressing the challenges MSPs face, and I truly believe that by working together, we can improve their standing and profitability in the industry.
