Industry benchmarks suggest that for every $1 on spent on Microsoft 365 and Azure consumption, customers spend between $5 and $9 on consulting, professional services and managed services. With margin estimates ranging from 10% to 20% on Microsoft Cloud Services, the services opportunity for Microsoft CSPs exceeds resale margins by more than 25x.
Managed services in particular provide a critical opportunity for Microsoft CSPs, warranting long-standing customer relationships and recurring revenues. Shared responsibility and compliance for applications and data require customers to continuously maintain, secure, backup, monitor and manage their cloud services. For customers it is difficult and expensive to resource the talent and tooling to meet their requirements internally, creating strong demand for Managed Cloud Services.