IT Service Providers: Profitability is Key Challenge

A study into the managed IT services provided by UK IT Service ProvidersProfitability is the key challenge facing UK IT service providers in 2010, according to a new research report published today by Kaseya. In the survey of 450 IT service providers, 48% cited being profitable as their number one focus, followed by differentiating their services from the competition (20%) and completing the volume of work with limited staff (16%).

The report into the UK IT service provider market also explores the steps IT service providers have taken in 2009 to maintain profitability. Increasing sales efforts was a key focus for 60%, while 37% turned to automating IT tasks to drive efficiencies into their operation. Other tactics included reducing staff numbers (32%) and reducing billing rates (15%).

The research also uncovers a startling correlation between IT service provider business models and their expectations for growth in 2010. Only 37% of IT service providers offer fully managed IT services, while the majority earn their money by reacting to client issues through approaches such as break-fix. However, while as many as 60% of companies offering fully managed IT services predicted an increase in billings in 2010, a massive 65% using a break-fix approach said they expected no growth at all.

Phil Sansom, Vice President UK Operations, Kaseya comments:

“An ever growing reliance on technology in the workplace and increasingly complex IT requirements suggests a golden opportunity for IT service providers who can support small to medium-sized businesses. However, IT service providers have to work hard to maintain profitability and billing levels in a highly competitive market with challenging economic dynamics. While many have taken steps to address their challenges, the research clearly suggests that moving away from a break-fix model is the vital factor in ensuring success through 2010.”

The Kaseya report presents the findings of the research, within the context of the wider market trends impacting the IT services sector. It also provides analysis into the research results and offers good practice advice and recommendations to help IT service providers adopt a business model that will deliver profitability and growth.

To download the full research report please visit

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