The future of cloud services may be a good deal cloudier than commonly thought, if analyst group AMI-Partners is right. A recent report found that many SMB channel partners are able to deliver a broader service menu on a managed, round-the-clock basis at lower cost, both in terms of capex and IT staff, particularly in Seas and managed IT services. That’s great news for management, but AMI sees storm clouds gathering over these SMB channel partners, who could lose more than 200,000 IT jobs within the next 10 years because of new efficiencies from these services, like automation and centralized management.
“The great recession of the last year and a half has significantly increased SMBs’ interest in adopting various cloud-based services as they look for ways to meet their IT needs while keeping costs under control,” said Anil Miglani, senior vice president of IT Infrastructure Research at AMI-Partners. To keep up, many local channel partners have moved to quickly grow their cloud services portfolio for SMBs. “However, cloud computing cuts two ways for small SMB channel partners. It allows them to offer new kinds of services and solutions to their SMB customers without having to incur high initial capital expenditures. But automated service delivery via the cloud will also reduce the need for internal IT staff.”
True, AMI does expect channel partners to take on additional sales and account management personnel to handle business growth for the high-touch hosted services market, but fears the IT staff losses will be greater. The net result? Anywhere from 200,000 to 250,000 lost jobs, out of the more than 1.3 million existing U.S. SMB channel partner IT staff, by 2020.
It’s a cruel irony, since SMB channel partners are expected to play a pivotal role in marketing, selling and deploying cloud services to their customers over the next few years. But if AMI is right, larger IT companies with greater scale and resources will increasingly turn to automated solutions, effectively minimizing the need for dedicated SMB channel partners, long a key part of the SMB’s telecom spend. This wave of attrition will bring on further industry consolidation.
It’s a predictable pattern. Just as industry consolidation has come to computing hardware and software over the last few decades, so too will the same market forces come to bear on telecom services, usually thought of as one of the more resilient IT segments.
“We have already seen some early signs of IT services job attrition at the high end of the market as a result of software automation,” said Miglani. “It is only a mater of time before this begins to affect the IT services jobs in the SMB market.”
AMI expects providers such as AT&T and Verizon Business, as well as retailers like Best Buy and well-positioned vendors such as Dell to go after the SMB market directly with greater urgency than in the past. On the plus side, though, some vendors and distributors may prove to be a boon for smaller SBM channel partners by acting as aggregators and master MSPs for cloud services.