The Rise of Ultra-Specialized Managed Service Providers

By Gaidar Magdanurov | 4 March 2025

Following up on the article about MSP strategy, I received many questions regarding vertical market strategy and targeting specific industries. I must admit that I have recently noticed more MSPs moving towards ultra-specialization. Instead of serving multiple verticals, they are focusing on a specific niche and managing to outgrow their less selective competitors.

Lately, I have been talking to an MSP in New York that solely focuses on hedge funds, a New Jersey-based company focused on insurance brokers, and a Massachusetts-based company that serves dental clinics. Those companies have a few things in common: they have a very small team of only a few technicians, yet they have a sizable number of customers and significant revenue. They also have a standardized technology stack and very deep knowledge of specific applications and processes relevant to their customers.

Those three companies were living proof that “less is more.” By focusing on very specific segments, they were able to simplify their operations, increase their productivity and virtually avoid sales and marketing costs, acquiring customers through referrals.

The ultra-specialized advantage

While “traditional” MSPs are trying to serve everyone, ultra-specialized MSPs define a strategy to go after a specific niche. This gives them a few advantages over “generic” competition:

  • Deeper expertise in specific industry and technologies used there, continuously accumulating more knowledge, and being a trusted adviser to their customers
  • Ability to offer more value besides managing IT infrastructure – offering ways to improve employee productivity, improve efficiency of the business processes, implement compliance requirements
  • Image of an expert in the vertical – inspiring word-of-mouth and customer references, reducing the need for marketing to acquire new customers
  • More predictable service delivery – having standard operating procedures and automation, freeing up time for technicians to serve more customers, or spend the time learning new technology to stay relevant to the market
  • Much stronger client relationships – being not “yet another IT guy”, instead being a trusted technology adviser and long-term business partner

Finding a niche

The opportunity may come from experience or deliberate action, such as deciding on the opportunity and recruiting the team to go after the opportunity. There are two common ways to define the niche for MSPs:

1. Industry and compliance expertise

  • Healthcare, and regulations like HIPAA
  • Finance, and regulations like SOX, PCI/DSS
  • Legal and data privacy laws
  • Manufacturing and the ISO standards
  • Government and certifications like CMMC

2. Technology specialization

  • Cloud and cloud security
  • Data analytics platforms
  • AI tools and services
  • IoT and operational technology
  • Legacy system upgrades

Building the niche expertise

Building an ultra-specialized practice requires market knowledge, technology expertise and network building.

Starting with market knowledge, you need to know industry-specific regulations, top vendors, and solutions for software, hardware, and specialized machinery. Getting industry-specific training and certification and continuously participating in industry-specific events makes sense.

Technology expertise includes industry-specific software, typical infrastructure patterns, common issues, cybersecurity threats, and case studies of challenges and cyber-attacks on industry companies.

Networking is necessary to establish a name in the industry. Attending events and participating in trade associations, participating in online groups and providing valuable comments, and hosting your own online and offline events to share best practices all require dedicated effort, yet they pay off in the long run.

Speaking at events, publishing thought-leadership content, and sharing stories based on experience on the website and social media also help build an expert image and attract customers without additional marketing.

Of course, building strong relationships with your customers and using them for referrals is an absolute must. In addition to referrals, customers can participate in your events, provide quotes, or even represent you at industry events. Treat your customers as your evangelists—if they are happy about your services and the value you bring to them, they may sell your services to prospects for you.

Partnerships

To be an ultra-specialized MSP, you don’t have to provide all types of services to your customers. You may not have and may not need staff to provide certain expertise on a daily basis, and partnering with other service providers for some of the services is a way to focus on your unique area of expertise.

Ultra-specialized MSPs tend to outsource one-off and infrequent projects, like setting up physical network infrastructure. They may also outsource basic helpdesk for generic IT support and to provide quick on-site presence in case a ticket requires physical presence, such as plugging in a disconnected server or rebooting a frozen printer.

The ultra-specialized MSP focuses on unique industry expertise and maintaining customer relationships. To avoid distractions, subcontractors can cover some of the workload.

Partners may be a valuable source of referrals and projects specific to the subject matter expertise.

Pricing strategy

Being a well-known expert in a specific industry also offers the advantage of value-based pricing. Instead of competing with other MSPs for the lowest bid per endpoint or per user, you compete on the value offering for that industry.

Ultra-specialized MSPs focus on offering packaged solutions instead of per-endpoint or per-user pricing. They may offer an industry-specific package with pricing based on the size of the infrastructure. The package includes a complete set of services (management, monitoring, backup, cybersecurity, disaster recovery, incident remediation, investigation, and so on) and compliance with industry-specific regulations.

In addition to the service packages, they may offer custom consulting services for IT strategy, infrastructure modernization, Cloud migration, and integration after mergers and acquisitions. These can be long-term, high-value projects that generate significant revenue for the MSPs.

Staying relevant

Ultra-specialized MSP strategies are gradually becoming increasingly popular. While some MSPs focus on standardizing and scaling their technology stack and improving the productivity of their technicians to serve more customers and compete on price, others choose to avoid head-to-head competition and select the niches to serve. Given that the MSP market worldwide has over 200,000 companies offering or selling managed services and is expected to almost double in the next 5-6 years, the competition will only get tougher.

Therefore, for those choosing an ultra-specialized strategy it is essential to stay relevant and follow a simple checklist:

  1. Conduct regular market assessment, and continuously monitor news about the market – stay up-to-date with the trends and regulations
  2. Monitor technology trends affecting the industry, and come up with relevant proposals to modernize and improve the infrastructure of your customers
  3. Regularly execute skill analysis of your team, identify gaps and implement development plans
  4. Develop partnerships with vendors, distributors, industry associations, and collaborate with industry experts
  5. Frequently review your service portfolio and refresh it as needed

It is relatively easy to become an ultra-specialized MSP now and gain a customer base; however, in the next few years, it will become increasingly difficult. Earlier entry is not a long-term advantage if you don’t keep your expertise up to date.

Conclusions

Looking at what is going on right now, it is easy to envision that in the near future the competition between MSPs will become even more fierce. While the IT infrastructure is growing and the market size for the MSPs is growing rapidly, there are more and more large MSPs that are winning on efficiency, productivity, and, therefore, able to offer lower prices. In the pricing wars smaller MSPs rarely stand a chance against larger MSPs, and the ultra-specialized strategy may be a way to establish a strong position and defend your business.

Implementing the ultra-specialized MSP strategy requires significant market research and critically evaluating your strengths and capabilities. Building a brand in the industry will also take time and effort. However, in the long term, this strategy has proven to pay off for those who are able to build and maintain the required expertise.