Earlier today I was at a media briefing with Microsoft describing their move to cloud services. Among the various case studies were two principals from IT support companies describing how the online products were good for their businesses.
The truth is there is little good news for the industry — the IT support industry in the US has shrunk 1.2% each year for the past half decade and the prognosis is things aren’t going to get any better.
It’s been two major factors that have hurt the sector; the first was the end of the PC upgrade cycle upon which many support businesses based their models while the shift to the cloud has reduced the need for inhouse servers.
While many companies, like the two profiled today, have switched to reselling cloud products they are finding the margins on both the products and the associated services are nothing like those of the old PC and server business.
Overall it’s a tough place to be and the companies that do survive will be nowhere near as profitable as their equivalents two decades ago. It’s one of those businesses that’s doomed to decline.
All of us need to think if our industry could be like the PC repair business. If margins are collapsing due to technological change, then you need to get out.