Executive summary

With inflationary pressures pushing up the costsof labor, fuel, and equipment, data from managed service providers (MSPs) show field service costs are up 8% year-over-year. These rising service delivery costs have hit MSPs’ core business particularly hard — crashing into the multi-year maintenance and break-fix service contracts with locked-in pricing schedules that often feature declining year-overyear per-unit service costs for the customer.

But MSPs also have a tremendous opportunity emerging just outside of this core maintenance business. The pandemic accelerated digital transformation across every sector — and it’s not slowing down. Deloitte predicts “the fusion of digital and physical experiences will only accelerate” in the next five years. To meet shifting expectations around digital-first and tech-enabled experiences, consumer-facing businesses (especially in retail) are driving what’s been termed the Great Technology Reset. They’re making long overdue investments in upgrading and implementing new devices and technologies, along with the infrastructure to connect and support them—and they’re urgently seeking service partners to help them complete this critical digital transformation work.

Traditionally, MSPs have had a conflicted relationship with this type of project-based deployment work. Compared to contract-based maintenance and break/fix work, project-based work can deliver substantially higher gross margins. But the unpredictable, volatile nature of project-based work — from the skillsets required, to the location, to the timing — leads to staffing inefficiencies that eat into those margins. Moreover, the major logistical challenges to staffing projectbased work have traditionally limited MSPs’ appetites for pursuing these potentially lucrative opportunities. But MSPs increasingly cannot afford to turn their back on their customers’ urgent needs (and the massive revenue opportunity) presented by the Great Technology Reset.

Successful MSPs are using on-demand talent strategies to right-size their field service workforce in real time — solving the conventional limitations around variable coverage and field service labor cost efficiency. They’re building an agile, on-demand workforce that enables them to meet the tremendous opportunities within the oncoming wave of project-based deployment work. This on-demand talent strategy enables MSPs to help their customers through this transition period, building loyal advocates in the process. And it empowers MSPs to create efficiencies that transform the formerly challenging project-based work into a powerful growth and profitability engine.

Despite challenging economic climate, the Great Technology Reset is here

Unprecedented uncertainty defines the current macroeconomic environment. Rising inflation and tightening monetary policy brings anxiety of a looming recession. Yet other signals point to brighter forecasts: consumer spending remains strong, and most retailers expect moderate to strong growth for the next year. Growth-minded businesses see opportunity in times of uncertainty and are making investments that will help them surge ahead while their competition slows down. But even conservative businesses recognize the need to make strategic investments in technology
in order to keep pace with the competition.

Deloitte summarized this Great Technology Reset in its 2022 Retail Industry Outlook, noting that the pandemic accelerated the convergence of digital and physical worlds. As Deloitte highlighted, “For years, connectivity, bandwidth, and security have limited retailers in deploying in-store technology,” but today, “legacy technologies that retailers run in-store likely cannot support customer and associate needs in the future.” Businesses need to develop tech-enabled in-store experiences that deliver the same convenience that consumers have come to expect from online channels.

Oncoming wave of tech deployment presents huge opportunity for service providers

Led by the retail sector, businesses are making massive investments in transforming in-store experiences through new digital technologies and updated digital infrastructure: new POS systems, digital signage, voice commerce, and other contactless technologies for delivering digitally enhanced shopping experiences. Research from IHL Group shows a “once in a generation” surge in IT spending: IT spending as a factor of revenue increased by 40-50% from 2019 to 2022. Moreover, the most successful retailers are now spending nearly half their IT budget on deployment of new systems and technologies — a drastic increase from the 20% that has been typical for the last few decades.

This wave of IT spending creates a tremendous opportunity for MSPs to capitalize on more project-based deployment work. Retailers and other businesses will need trusted service partners to help them deploy new technologies and upgrade the infrastructure to support them. The barrier for MSPs, however, is that the unpredictability and volatility of this deployment and project-based work has typically been difficult to plan for and thus difficult to staff.

MSPs are re-thinking their view of project-based work

The steady, predictable revenue from contract-based maintenance and break-fix work makes up the core of the typical MSP business model. That predictability also makes it a lot easier to align labor resources. Most MSPs already have optimized their resourcing plan to drive efficiency and maximize profitability for this maintenance work.

But deployment and project-based work is defined by volatility rather than predictability. MSPs don’t always know when it’s coming (and can’t predict the exact skillsets that will be required), making it extremely difficult to build out a field service workforce to align with demand.

Traditionally, this project-based work makes up a smaller piece of an MSP’s business, but with the oncoming wave of IT spending, MSPs are re-thinking how they view project-based work in two key ways:

THE CUSTOMER-CENTRIC PERSPECTIVE: Smart MSPs are shifting their perspective to the lens of their customers. Retailers and other consumer-facing businesses urgently need to transform their entire in-store environment. They need to drive this transformation despite strong headwinds: inflation, recession worries, continued supply chain disruptions and unprecedented labor pressures. The next 2-5 years present tremendous vulnerability and risk. It’s a make-or-break moment for businesses — and the key decision-makers and leaders in those businesses.

MSPs need to recognize the urgency and weight of their customers’ needs — or someone else will. Disruption is at the doorstep, as myriad small, agile competitors are eager to gain a foothold by stepping in to help retailers solve these problems. Moreover, service partners that can help businesses meet these critical needs will build immediate and lasting loyalty that will translate into revenue in the years to come.

THE PROFIT-CENTRIC PERSPECTIVE: Smart MSPs are shifting their perspective to the lens of their customers. Retailers and other consumer-facing businesses urgently need to transform their entire in-store environment. They need to drive this transformation despite strong headwinds: inflation, recession worries, continued supply chain disruptions and unprecedented labor pressures. The next 2-5 years present tremendous vulnerability and risk. It’s a make-or-break moment for businesses — and the key decision-makers and leaders in those businesses. MSPs need to recognize the urgency and weight of their customers’ needs — or someone else will. Disruption is at the doorstep, as myriad small, agile competitors are eager to gain a foothold by stepping in to help retailers solve these problems. Moreover, service partners that can help businesses meet these critical needs will build immediate and lasting loyalty that will translate into revenue in the years to come. What has traditionally been a smaller piece of the MSP service revenue pie is about to explode. Supporting this transformational wave of tech investment — upgrades, installs, expansions, etc. — presents a tremendous volume of work for MSPs. That work represents a huge growth opportunity precisely because it’s been traditionally
under-resourced by most MSPs.

Whereas routine maintenance work has already been optimized (and is still seeing margins hit by inflation), project-based work still presents a largely untapped market opportunity. If MSPs can find creative ways to solve the challenge of aligning labor resources with volatile demand, this work has the potential to move from the periphery into the center of profitability strategies.

Why deployment work is hard to support: Variability without visibility

The volatility of project-based deployment work can be broken down into two core challenges:

CONSTANT VARIABILITY

Unlike long-term maintenance contracts, device and infrastructure deployment work is bid out on a project-by-project basis. There is no regular cadence or schedule. Moreover, an existing RFP, or even a project that an MSP has already won, can often get delayed — by client bottlenecks like spending freezes, by supply chain disruptions and equipment availability issues, etc. Projects can also get fast-tracked — for example, if a new version of a device becomes available sooner.

MSPs can’t predict exactly when this work is going to hit, and the work usually doesn’t happen in the same place twice.

How do you build a field service workforce? The constant variability — of skillset, location and time — makes it nearly impossible to build out and optimize a field service workforce to support it

LACK OF VISIBILITY

The less-obvious problem is that deployment work is incredibly difficult to price correctly, thanks to a lack of visibility. MSPs typically price based on their own historical service data, but this historical data is less relevant when every deployment project is unique. MSPs have little-to-no visibility to what the market rate is (or should be) for a particular project.

How do your price competitively – and protect margins? The lack of visibility makes it difficult to find that sweet spot where they can be price-competitive to win bids — while also protecting margins.

MSPs require agility and visibility; traditional labor models can’t deliver

Labor is the lynchpin in field service delivery: To gain the workforce agility they need to support volatile deployment work, MSPs need both variability and visibility in their field service workforce strategy and pricing model. A 2022 TSIA report shows that nearly all MSPs have developed a resourcing plan that blends full-time employees with third-party labor. The problem is that these
traditional labor models — even put together — can’t deliver the variability and visibility needed to meet the volatility of deployment work.

The Employee Model

Variability

The biggest downside of the employee model is the lack of flexibility. The employee model can’t scale quickly because it takes too long to attract, hire and onboard new employees. And the full-time employee (FTE) workforce has a relatively static set of skills that are locked to geographic locations where they live.

This rigidity makes it difficult to meet varying, yet very specific skillset needs of projectbased deployment work. It also means MSPs are often sending highly experienced field service techs to do relatively simple work. This inefficient labor utilization can also impact employee retention and experience. And covering a broad geographic footprint with full-time employees typically means that travel costs go through the roof, rapidly eating into margins.

Visibility

The employee model gives the MSP full control and visibility over service quality and outcomes. The MSP controls the hiring of field service techs who bring the right skillset and experience. The MSP ultimately knows exactly who is going on-site to represent the brand and complete the work.

The employee model also delivers full visibility into the cost of service: The MSP can see the exact cost breakdown of what they’re paying for field service delivery, including the huge line item for travel or “windshield time.”

The Third-Party Model

Variability

Third-party labor directly addresses the variability challenge. There are subcontractors all over the country, including specialty subs that provide techs with very focused skillsets. MSPs can quickly
engage one (or typically many) of these third parties to source field service talent to supplement their core FTE workforce.

The rapid scalability and flexibility are wellsuited to volatile project-based work — and it delivers relative cost efficiency over the employee model: MSPs don’t have to worry about travel time, utilization rates or the administrative costs of hiring, training and benefits. As an overarching benefit, MSPs see this as a way to outsource the risk and responsibility for service quality and outcomes to the third party.

Visibility

Unfortunately, signing away responsibility for labor sourcing also means signing away visibility into that labor sourcing. MSPs have little-to-no visibility or control over who is going on-site to represent their brand (and the reality is the responsibility for outcomes always falls back on the MSP in the end-customer’s eyes). There’s no cost transparency — MSPs can’t see exactly how much of the total service cost is going to travel, equipment, labor, etc. — so they can’t optimize service delivery. They also can’t see how much third-party margin stacking is eating into their profitability.

And while the third-party model provides relative cost efficiencies from a labor standpoint, it doesn’t solve the pricing problem. MSPs still cannot see “market rates” for deployment work, making it difficult to price competitively so that they can both win more business and still preserve profitability

On-demand talent emerging as a powerful model

As broader MSP field service strategies encounter the limitations of full-time employees and third-party labor, field service leaders recognize that even the combination of these two options can’t deliver the variability and visibility needed to meet volatile deployment service demands. Fortunately, the pressure cooker of market demands is a powerful source of innovation, and the ongoing demand wave of the Great Technology Reset is driving increasing adoption of alternative staffing models — most notably, tech-enabled on-demand talent.

Forward-thinking MSPs are leveraging on-demand talent through modern tech platforms that make it easier, faster and vastly more practical to engage with an on-demand workforce model. This model directly addresses the key demands of variability and visibility to support volatile service demand.

Just as tech platforms have created marketplaces of on-demand talent for things like transportation, food delivery and retail order fulfillment, on-site talent platforms give MSPs direct access to a large, geographically broad and diversely skilled and experienced pool of field service talent.

The On-Demand Model

Variability

The on-demand model enables an MSP to right-size its field service workforce in real time. Field service leaders can quickly and consistently put the right skills in the right place
at the right time to meet customer needs — ideal for the resourcing the skill sets needed to support one-off deployment projects and other short-term deployment work.

The on-demand model delivers this “realtime right-sizing” without requiring the MSP to take on the costs of a full-time workforce: not worrying about utilization, not taking on the full admin burden of FTEs, and largely eliminating costly “windshield time” by sourcing hyper-local talent.

Visibility

On-site talent platforms give MSPs full visibility and control of who they send on site to represent their brands. Leading platforms simplify quality control with robust quality scoring and rating systems, as well as filtering tools to hone a list of skilled and experienced field service technicians that can deliver high-quality outcomes and experiences for customers.

The on-demand model also provides full cost transparency. The MSP can see exactly what it’s paying for a field service technician to complete a job. No hidden fees, travel costs or margin-stacking.

Transformative value: Market-based pricing insights

In the simplest sense, the on-demand model blends the visibility and control of the employee model with the flexible coverage and cost efficiency of the third-party model. But leading on-site talent platforms provide a transformative value that MSPs have been missing: marketbased pricing insights. MSPs gain invaluable visibility into pricing data that extends well beyond their own four walls. These pricing insights deliver a real-time look at how specific field service work is being priced right now.

This is the key piece of the puzzle: MSPs can use these insights to confidently and competitively price RFPs for deployment work — pricing to win business and ensure profitability.

Simplifying administration and risk management

The on-demand talent model immediately draws critical questions from smart field service leaders: What are my admin responsibilities? And how do I manage the risk of on-demand talent — particularly around quality and misclassification?

Leading on-site talent platforms address these concerns head-on through a combination of technology and value-added service partnerships.

Streamlining sourcing and vetting

On the admin front, leading platforms streamline the process of finding and vetting on-demand talent. Candidates can be filtered by quality score, experience, location, skill set, ratings, certifications, and even recent background checks and drug tests.

Automating compliance

On the risk management front, leading platforms tackle the all-important compliance concerns around employee misclassification by delivering robust compliance reporting that provides service organizations with realtime visibility to worker utilization. Some platforms even offer AI-powered compliance alerting capabilities to help identify potential classification issues before they become an issue.

Admin service partners

For MSPs seeking additional admin help, leading platforms go one step further: connecting them with service partners that can provide project management or dispatch capabilities for additional capacity in these administrative components of service delivery. Bundled insurance and mediation services are also available as part of a service package.

Leveraging a blended workforce model to build recession-proof growth strategies

The ongoing economic volatility and uncertainty that we see at a macro level echoes the situation facing MSPs today. Agility is essential for any business to survive and thrive in this business climate. Companies that are too locked into their conventional business models and revenue strategies will be “disrupted” by hungry, agile competitors that are able to adapt as demands change and opportunities emerge.

The Great Technology Reset is leading to much greater volatility in field service needs for service organizations: More technology deployments, infrastructure implementations and other less-predictable project-based work. It’s the type of work that has traditionally been difficult to execute. But savvy service organizations recognize that their customers need trusted partners to help them make this crucial transformation. If they don’t grab the opportunity, their competitors will.

Some of the most innovative MSPs are shifting toward a strategy that directly addresses the need for greater agility. They’re adopting a blended workforce model — and bringing in on-site talent platforms as a secret weapon to directly address the logistical and cost barriers that have traditionally made volatile projectbased work less desirable. By building out an on-demand workforce to complement their full-time and third-party employees, MSPs are gaining the flexibility to right-size in real time to project-based needs. They’re retaining control over service quality — to protect brand and customer loyalty — without taking on the burden of full-time employees. And they’re gaining the pricing visibility they need to optimize field service delivery and competitively price RFPs to win more business without losing profit margins.

Armed with the agility, control and efficiency of on-demand talent, MSPs can build and deepen loyalty with their customers by meeting their needs in a critical time as they transform in-store experiences — while also capturing a bigger share-of-wallet through an offering that uniquely differentiates them from their core competitors. And they’re turning this highly volatile flow of deployment work into reliable new revenue streams, leveraging their price-competitiveness and flexible workforce efficiency to tap exponential growth potential while driving profitability.