Economic pressures and rising costs are driving managed service providers to adopt AI and automation as essential tools for survival and growth.

The managed-service sector is at an inflection point. Once viewed as a dependable source of recurring revenue and predictable profitability, managed service providers (MSPs) are now confronting an economic and operational reality that is more complex, competitive, and costly than ever. The combination of inflation, rising labor expenses, increasing software licensing costs, and escalating customer expectations has eroded margins and forced MSPs to rethink their business fundamentals.

At this year’s MSP Global conference in Tarragona, Spain, and at the Acronis True Summit that preceded it, the prevailing theme wasn’t merely innovation — it was optimization. Across panels, workshops, and hallway conversations, MSP leaders and vendors alike echoed a shared realization: Maintaining profitability in today’s environment depends on running leaner, smarter operations powered by automation and artificial intelligence.

While some MSPs remain cautious, a growing number are embracing AI-driven workflows to relieve pressure on their human teams. One European MSP leader described deploying 87 AI agents across their organization — more than double their head count of 30 employees. These agents now handle the routine and repetitive tasks that once consumed countless hours, freeing technicians and account managers to focus on high-value activities like customer engagement, solution design, and strategic growth initiatives.

This shift reflects a broader pattern. AI isn’t simply a tool for technical troubleshooting or data analysis; it’s becoming a structural component of MSP operations, reshaping how services are delivered, priced, and scaled. Whether through automated monitoring, predictive maintenance, or intelligent ticket triage, AI allows MSPs to improve efficiency while mitigating the rising cost of labor and training.

Still, adopting AI isn't without challenges. Integration costs, security concerns, and cultural resistance can slow implementation. Many smaller MSPs lack the resources or expertise to operationalize AI effectively, while others struggle to measure its financial return. Nevertheless, the economic incentives are too strong to ignore. The pressure on margins is relentless, and the next stage of MSP maturity requires mastering automation as a core competency, not an optional enhancement.

Vendors such as Acronis are aligning their partner strategies with this new reality. They’re not only showcasing their technical solutions but also emphasizing business optimization and profitability enablement. By focusing on how partners can operate more efficiently and deliver greater customer value, vendors are helping shift the narrative from “what technology does” to “what technology makes possible.”

Ultimately, the managed-service model must evolve. Success will increasingly depend on whether MSPs can balance technical excellence with financial discipline, operational automation, and business acumen. AI, properly implemented, represents the bridge between these objectives — a way to scale capabilities without inflating costs, do more with less, and keep pace with ever-rising client expectations.

For a deeper look into how MSPs are navigating these pressures and redefining their businesses through AI and optimization, Larry Walsh reports from Tarragona, Spain, at MSP Global on the latest episode of In the Margins.