MSPs Face Profitability Challenges as 18% Operate at a Loss; OpenAI and CrowdStrike Innovate AI

Managed service providers (MSPs) are facing significant challenges as recent data reveals that 18% are operating at a loss, a concerning increase from 14% in the previous quarter. While overall managed service revenue growth has slowed to just 1%, profitability remains relatively high, with an average EBITDA of 11.1%. However, the decline in services revenue, particularly among value-added resellers (VARs), indicates a potential shift in client spending habits, raising questions about the sustainability of traditional service contracts. This trend suggests that clients may be reverting to transactional IT spending rather than fully managed services.

In the realm of artificial intelligence (AI), a report from NTT Data highlights a growing responsibility gap in AI adoption, with over 80% of business leaders acknowledging that governance is not keeping pace with technological advancements. The divide among executives regarding the prioritization of responsibility versus innovation complicates the landscape, as 89% express concerns about security risks associated with AI, yet only 24% feel prepared to manage these risks. This lack of alignment could hinder AI adoption and create compliance challenges, emphasizing the need for structured governance policies.

OpenAI has announced plans for its upcoming GPT-4.5 and GPT-5 models, aiming to unify its product lineup and enhance functionality across various tasks. The new models will offer different levels of intelligence based on user subscriptions, with a focus on addressing ethical concerns in AI, such as misinformation and self-harm. Meanwhile, Apple is partnering with Alibaba to integrate AI technology into its iPhones, reflecting a strategic move to enhance its AI capabilities while navigating regulatory landscapes.

CrowdStrike has introduced Charlotte AI Detection Triage, an AI-driven tool designed to automate alert assessments in security operations, achieving over 98% accuracy and significantly reducing manual workloads. This development underscores the increasing necessity for AI-driven automation in cybersecurity, as adversaries can now exploit vulnerabilities within minutes. The integration of AI into existing platforms, rather than as standalone tools, is preferred by cybersecurity professionals, highlighting the importance of delivering value through AI-enhanced solutions.

Three things to know today

00:00 Managed Services Hit Growth Wall as 18% of MSPs Operate at a Loss

06:08 OpenAI Plans GPT-4.5 and GPT-5 While Apple Taps Alibaba for AI

09:29 With Breaches Happening in Minutes, CrowdStrike Bets on AI-Driven Security Automation

Supported by: https://getflexpoint.com/msp-radio/

Event: https://www.nerdiocon.com

💼 All Our Sponsors

Support the vendors who support the show:

👉 https://businessof.tech/sponsors/

🚀 Join Business of Tech Plus

Get exclusive access to investigative reports, vendor analysis, leadership briefings, and more.

👉 https://businessof.tech/plus

🎧 Subscribe to the Business of Tech

Want the show on your favorite podcast app or prefer the written versions of each story?

📲 https://www.businessof.tech/subscribe

📰 Story Links & Sources

Looking for the links from today’s stories?

Every episode script — with full source links — is posted at:

🌐 https://www.businessof.tech

🎙 Want to Be a Guest?

Pitch your story or appear on Business of Tech: Daily 10-Minute IT Services Insights:

💬 https://www.podmatch.com/hostdetailpreview/businessoftech

🔗 Follow Business of Tech

LinkedIn: https://www.linkedin.com/company/28908079

YouTube: https://youtube.com/mspradio

Bluesky: https://bsky.app/profile/businessof.tech

Instagram: https://www.instagram.com/mspradio

TikTok: https://www.tiktok.com/@businessoftech

Facebook: https://www.facebook.com/mspradionews

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.