Australian managed service providers (MSPs) are reporting smaller deal sizes and tighter client budgets, with a new survey from Kaseya pointing to macro-economic pressure as a factor reshaping channel growth.
The findings come from Kaseya’s 2026 State of the MSP Report, based on a survey of more than 1,000 MSPs globally. In the report, Kaseya said the share of MSPs reporting typical customer spending above $25,000 per year fell to 41%, down from 75% the prior year. The report also found 24% of MSPs said customers are reducing their IT spend.
Customer acquisition has become the leading challenge for MSPs in the survey. Kaseya reported 71% of respondents ranked acquiring new customers as their top challenge, overtaking cybersecurity, and one-third cited slower new-client acquisition as a key economic factor affecting growth.
The report also suggests the market for new business is becoming more competitive, with 33% of respondents saying most of their new clients are switching from other MSPs rather than representing net-new demand.
Alongside budget pressure, Kaseya’s data highlights a gap between interest in AI and the revenue MSPs currently generate from it. The report found 48% of MSPs identified AI and automation as the top client need for 2026, but only 13% said it is a meaningful revenue stream.
Internally, the survey indicates MSPs are applying AI to automate operational tasks. Kaseya reported 53% of respondents are using AI to automate ticketing, patching and monitoring, though it said most are still early in adoption, with more than half having automated about a quarter of their workload.
Hiring constraints remain a concern in the report’s findings. Kaseya said the share of MSPs reporting difficulty hiring skilled technicians rose from 9% to 16% year over year.
“The MSP market is maturing, and rising competition is forcing providers to rethink how they grow,” said Dan Tomaszewski, Executive Vice President of Channel at Kaseya. “The strongest MSPs are tightening their operations, prioritising efficiency and using data to clearly prove their value to customers.”
Despite shifting priorities, the report positions cybersecurity and backup as key revenue areas for MSPs. Kaseya reported 71% of respondents saw year-over-year revenue growth in cybersecurity, while 50% reported growth in business continuity and disaster recovery.
