Singapore MSPs moving towards AI but face knowledge gaps

A recent report from Barracuda Networks reveals that managed service providers (MSPs) in Singapore are increasingly shifting towards marketplaces and artificial intelligence (AI) to better serve their customers. However, there are significant concerns about their current knowledge and competence in AI applications.

The seventh annual MSP report from Barracuda, titled "The Evolving Landscape of the MSP Business 2024," gathered data from 700 MSP organisations across North America, Europe, and Asia-Pacific, highlighting several key trends specific to Singapore. According to the report, Singapore MSPs expect recurring managed services to account for 37% of their revenue in 2024, up from 29% in 2023. This shift indicates a move away from project-based support to more sustained, ongoing services.

The report underscores a growing dependence on MSPs as businesses scale back their in-house IT operations. This trend is becoming a critical driver for the rise in recurring services. Security products and services remain the most in-demand, with security awareness training (40%), security operations centres (38%), and network security (32%) being the top sellers for Singapore MSPs.

Additionally, Singapore providers plan to expand their offerings by introducing an average of three new services in 2024. Significantly, 98% of Singapore MSPs agree that cloud marketplaces will be essential for their operations. Of these, 52% are already utilising cloud marketplaces, while the remainder are exploring this option.

AI knowledge is a significant area of concern for Singapore MSPs. Nearly all respondents (98%) expressed a need for improvements in their understanding and application of AI products and services. Furthermore, 82% feel an urgent need to offer AI tools and insights to their customers.

Security remains a priority for MSPs, with 94% acknowledging a need to improve their internal security practices and 98% indicating a necessity to stay up-to-date with the latest security trends and capabilities. Despite the projected growth, MSPs face challenges such as increased competition (58%) and the ability to help customers comply with government regulations (86%).

The Southeast Asian MSP landscape is highly fragmented, with both local and global firms competing for market share amid evolving cyber threats and the rising adoption of AI and automation. Philippe Cazaubon, Director at Barracuda for Southeast Asia & Korea, emphasised the importance of building strong vendor relationships to help MSPs navigate this dynamic marketplace. Engaging with partners who offer expertise in security and AI integration can enable MSPs to stay competitive.

This report highlights a significant shift in the Singapore IT services landscape, driven by rising demand for recurring managed services. As MSPs in Singapore and the wider region adapt to these demands, maintaining robust vendor partnerships and continually enhancing their AI and security capabilities will be crucial to their success.

The Barracuda MSP report, conducted in partnership with Vanson Bourne, aims to provide comprehensive insights into the evolving MSP business model. It was released in conjunction with Barracuda's Global MSP Day, which includes virtual and live events for MSP partners worldwide. The event facilitates collaboration, interaction, and the sharing of best practices among managed service providers.

As MSPs navigate these changes and challenges, their ability to adapt and innovate will be key to meeting customer needs and achieving long-term growth.