Why MSPs and IT Service Providers Are Overwhelmed and How Offshore Teams Can Help

The past few years have stretched Managed Service Providers (MSPs) and IT Service providers like never before. Rising wage costs, constant technology shifts, and increasing customer demands have created an environment where IT business leaders are spending more time fighting fires than focusing on growth.

Why are IT Businesses Overwhelmed?

1. Tool Sprawl

Auvik's 2025 IT Trends Report reveals stark operational realities with 44% of MSPs reporting decreased productivity attributed to inefficient layering of multiple tools. Alarmingly, half of all MSPs are grappling with over 10 disparate internal systems, undermining visibility and straining response capabilities. Technical complexity and fragmented workflows leave little bandwidth for upskilling or strategic gains.

2. Escalating Security Expectations

The cybersecurity burden facing IT businesses is mounting fast. According to CyberSmart, 84% of MSP customers now expect providers to handle their cybersecurity and IT infrastructure, up from 65% a year prior. Moreover, 58% believe their clients face greater cyber risk today than a year ago, while 69% of MSPs endured at least two breaches in the last 12 months highlighting growing trust pressure.

3. Pricing Pressure & Market Consolidation

CRN’s 2025 MSP 500 insights pinpoints a triad of concerns: squeezed profit margins, difficulty sourcing technical talent, and competitive price undercutting by low‑cost operators, all compounding the urgency to evolve business models. Across Australia and New Zealand, wages for IT roles have surged up more than 22% in just two years. to that climbing software and tooling costs, and profitability margins are being squeezed tighter than ever.

4. Rising Demand for Outcome-Based Services

Traditional "break‑fix" models are rapidly becoming obsolete. TSIA warns MSPs must transition from reactive service delivery to structured, value‑driven outcomes that align with business goals. Clients now expect not just uptime, but tangible ROI.

5. Skills Shortages

Finding and retaining technical talent is one of the sector’s biggest challenges. Whether it’s Level 2 Engineers, cybersecurity experts, or Modern Work and Power Platform specialists, demand far outweighs supply onshore. This leads to overworked teams and missed opportunities.

6. Expanding Customer Expectation

Clients are no longer satisfied with operational BAU. They want advanced solutions automation, business intelligence, cybersecurity, and digital transformation alongside traditional managed services. MSPs must be broader in their capabilities, but scaling quickly is difficult without access to new pools of talent.

7. Leadership Burnout

60% of MSPs report moderate to high burnout. Owners and managers are pulled in every direction: sales, service delivery, operations, compliance. Without a scalable team model, leaders risk burning out while their businesses plateau.

Offshore Teams: A Strategic Lever, Not Just a Cost-Cutting Tactic

1. Scale Talent Rapidly & Risk-Effectively

Offshore models enable rapid scaling in a little as 35 days, which is unattainable with conventional onshore hiring cycles. In addition, offshore teams deliver up to 75% in cost savings, with 85% of offshore staff holding industry‑recognised certifications versus 72% locally raising quality and reducing costs simultaneously.

2. Bridge Skill Gaps in Security & Custom Software

As custom solutions and cybersecurity services rise in demand, offshore teams offer flexibility, enabling MSPs to meet evolving needs without increasing headcount especially when budgets and hiring are frozen.

3. Achieve 24/7 Support & Response Excellence

By leveraging global time zones, offshore teams can deliver round‑the‑clock ticketing and monitoring, transforming geographical distance into an operational advantage and improving responsiveness and client retention.

4. Boost Innovation via Global Perspective

Contrary to dated assumptions, offshore teams often bring cutting‑edge expertise in areas like AI, machine learning, and advanced cybersecurity. Cross‑cultural collaboration fosters creative problem‑solving and provides a strategic advantage in a crowded MSP market.

The Dijital Team Difference

At Dijital Team, we do not just “outsource.” We design and build dedicated teams in Sri Lanka that operate as an extension of your business. Our people are culturally aligned, technically skilled, and motivated by the same values that drive your success.

For MSPs and IT providers who feel overwhelmed, building an offshore team is not just a cost-saving strategy, it is the key to unlocking potential and achieving more.

👉 Learn how we can help: www.dijitalteam.com

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