MSP Industry Shifts: AI Investments Rise, Flamingo Challenges RMM Costs, and Accountability Looms

The 2025 State of the MSP Report from TechPartners reveals a rapidly evolving managed service provider (MSP) industry, with nearly half of surveyed MSPs reporting revenues below $5 million. This indicates a market ripe for consolidation, as 60% of MSPs express interest in acquiring other firms while 28% are open to being acquired. The report highlights a shift in MSP roles, with 68% positioning themselves as one-stop-shop partners and 44% identifying as security partners, reflecting a growing demand for enhanced service offerings. However, only 16% of MSPs have audited their internal processes for compliance, suggesting that many are investing in advanced technologies like artificial intelligence (AI) on unstable foundations.Flamingo, a Miami-based startup, has launched OpenFrame, an open-source platform designed to reduce costs for MSPs, which typically operate on low-profit margins of 8-12%. With $2.2 million in pre-seed funding, Flamingo aims to enhance operational efficiency and profitability, potentially increasing margins to 50-60%. Meanwhile, SuperOps has introduced an AI-native unified endpoint management platform targeting IT departments directly, consolidating workflows across various operating systems. This shift raises questions for MSPs about competition and the evolving landscape of IT service delivery.Air IT Group has rebranded to focus on empowering small and medium-sized enterprises in the UK by integrating AI and automation into their service model. This approach aims to transform technology from a burden into a growth enabler, addressing the underutilization of technology among SMEs. The company emphasizes the importance of enhancing customer experience and improving internal resource utilization, showcasing a trend where MSPs are moving from merely fixing technology to driving business outcomes.For MSPs and IT service leaders, the implications of these developments are significant. As the industry matures, those who standardize, document, and measure outcomes will gain leverage in a consolidating market. The focus on governance and accountability in AI deployment will be crucial, as automation increasingly takes on operational tasks. MSPs must adapt their business models to prioritize outcome-based delivery rather than traditional billing methods, ensuring they remain competitive in a landscape where AI capabilities are becoming commonplace.Three things to know today00:00 TechPartner’s 2025 MSP Report: Small Firms Chase AI, While Consolidation Accelerates04:12 Flamingo’s OpenFrame Challenges Legacy RMMs as SuperOps Goes Direct and Air IT Doubles Down on AI07:47 Agentic AI Forces a Redesign: Why Governance, Not Gadgets, Will Define the Next MSP Era This is the Business of Tech.    Supported by:  https://saasalerts.com/mspradio/ 💼 All Our SponsorsMSP Radio is supported by our partners: ABC Solutions · CometBackup · Guardz · HaloPSA · LogMeIn · OpenText · Pax8 · Proofpoint · Rythmz · ScalePad · TimeZest · Transit AI · USecureSupporting the IT services community through insights, analysis, and transparency. 🚀 Join Business of Tech PlusGet exclusive access to investigative reports, vendor analysis, leadership briefings, and more.👉 https://businessof.tech/plus 🎧 Subscribe to the Business of TechWant the show on your favorite podcast app or prefer the written versions of each story?📲 https://www.businessof.tech/subscribe 📰 Story Links & SourcesLooking for the links from today’s stories?Every episode script — with full source links — is posted at:🌐 https://www.businessof.tech 🎙 Want to Be a Guest?Pitch your story or appear on Business of Tech: Daily 10-Minute IT Services Insights:💬 https://www.podmatch.com/hostdetailpreview/businessoftech 🔗 Follow Business of Tech LinkedIn: https://www.linkedin.com/company/28908079YouTube: https://youtube.com/mspradioBluesky: https://bsky.app/profile/businessof.techInstagram: https://www.instagram.com/mspradioTikTok: https://www.tiktok.com/@businessoftechFacebook: https://www.facebook.com/mspradionews Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.