IT Services Outlook
Wednesday, January 13th 2016 by Kirill Bensonoff
Do you ever wonder what the future holds? I do. Having spent the last 10 years running an IT services company, one of my many jobs is making sure our products are aligned with the ever-changing forces of technology. Being advanced is excellent, though being on the cutting edge isn’t always great for business. I have taken my organization through a few different paradigm shifts – from hourly to managed services, from on-site to mostly remote, from on-premise to cloud. And it’s not going to end there.

Here is what the industry will look like in 2018.

  1. Shift to the cloud continues, and now over 75% of the services consumed by small and medium businesses are delivered from the cloud.

  2. Mobile devices outnumber non-mobiles 3 to 1. Apple devices proliferate the consumer and SMB spaces, but still haven’t made inroads to enterprises. Devices and software are more stable, and as most applications have shifted to the cloud, the desktop is even less important than it was in 2015.

  3. As more companies develop their own software, DevOps has become critical, and permeates companies of all sizes.

  4. Hiring great talent is even more difficult than it was in 2015.

As a result of these changes, the need for general break/fix IT support services has decreased, especially in businesses with less than 50 employees. Support and proactive managed services are not as important, especially for smaller organizations, and can be had at commodity cost. Tech savvy startups in Silicon Valley and elsewhere constantly come up with innovative ways to reduce the need for tech support, or deliver it at an even lower cost.

What customers are clamoring for is high-end expertise, and value partners who provide end-to-end services, at scale. Customers need those that can architect and manage their public clouds and their global networks, make their applications interact, and help them deploy code and measure their customers’ in-app experiences. They need partners who can consult them on IT security and strategy. And they are willing to pay a premium for these services.

This is because hiring great people is even more difficult than it was in 2015. Most college graduates who are interested in technology become coders. The demand for skilled IT infrastructure engineers continues to increase, and the government hasn’t stepped in to relax the H1B quotas, which could help close the gap. This continues to push demand for outsourcing, as IT departments are struggling to find qualified candidates. However, many partners face this same exact challenge in hiring.

This really impacts smaller partners. As talent gets more expensive and harder to recruit, especially in “tech hub” cities, those who haven’t adopted will find their growth stunted and future prospects limited. Reselling other vendors’ cloud services is a low margin, highly competitive business, and some vendors have moved into providing the vertical stack of services for SMBs – cloud as well as local IT support, at a low cost. Competing with them is difficult.

Not to be a pessimist, but this is reality. For business owners reading this, there is still time and a choice to be made. Many will choose to exit, and that may be the right decision. For those who would like to continue to innovate and grow, looking at those high-skill, high-margin services should be a priority. Develop a cloud and a DevOps offering, start looking into how managed services can be adopted to IaaS clouds, because IaaS is the now the datacenter. Partner with those providers who you think will be around in 3 years (hint: AWS, Google and Microsoft).

And, most importantly, start transforming your talent today, because this will be your major hurdle tomorrow. Put your sys admins through training at places like (disclosure: we are a customer).

Start training for DevOps techniques like scripting highly available cloud infrastructures, self-healing, continuous code deployment. Learn Linux, understand Docker. I know adopting internal resources who are comfortable where they are can be tough, so lead by example – get certified yourself first, and others will follow. Always promote education and enable your people to take time to study, this will do wonders for your growth.
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