More small businesses than ever are using managed services firms. Here’s why.

Computer viruses. “Phishing” messages. Spyware. Password compromises. These are just some of the biggest IT security threats facing small businesses this year, and the best way to minimize them is by moving data and applications to a managed service provider.

That’s according to a new survey of more than 1,500 managed service providers, or MSPs — third-party companies that take on the day-to-day tasks and responsibilities for managing data and applications in the cloud. Managed service providers have seen a spike in growth over the past few years and have become a common replacement for “on-premise” computer systems.

According to a recent report, approximately 58% of organizations are using managed service providers for managing their cloud environments. Fueled by small businesses looking to outsource IT activities, the managed service provider industry is expected to grow from about $281 billion in 2024 to more than $400 billion in the next five years.

Small businesses are relying on these outsourced IT firms to back up their data, make sure their systems are accessible at all times, run the latest technologies, and be a resource if there’s an unforeseen business interruption.

Is your company using a managed service provider? If not — or even if you are — here’s how to leverage their capabilities.

In this cloud-based world, many business applications for accounting or customer relationship management are already hosted by the software vendor. However, it’s important to arrange for backups of this data and then to store this information, as well as documents, spreadsheets, and other files, separately with a well-known managed service provider.

“We usually recommend that if our clients are going to host, that they host with an established company like Microsoft Azure or Amazon Web Services,” said Jeff Sumner, the owner of Tech Guides, a computer support and services firm based in Newtown Square. “If their needs are simpler and they don’t want to incur the cost, they can look to moving all of their data and files to services like Dropbox or Google Drive.”

Sometimes it’s helpful to have an outside, independent IT consultant make use of an MSP for data and applications but serve as a main point of contact. Brian Pickell, who runs KPInterface, a Phoenixville firm that provides IT managed services to organizations throughout the United States, said that a good independent IT consultant can also help vet the services and capabilities of an MSP.

“A good consultant will have standard questionnaires that are sent out to providers,” including verification that the company is in compliance with organizations like the National Institute of Standards and Technology, he said.

Anthony Mongeluzo, whose Moorestown IT consulting and service firm PCS oftentimes provides consulting services to its clients, said they work in conjunction with a managed service provider because some providers don’t offer day-to-day IT support, as well as strategy and consulting.

“An IT consultant would and should act as your CIO (chief information officer) and your IT team,” he said. “The consultant can work directly with the MSP to ensure your operations run as they should and let their organization focus on their core business and service offerings while not having to worry about their technology or security posture.”

Having a firm host your data and applications isn’t much use unless you and your people can access them. Pickell said that making the data accessible should be a priority on your service level agreement.

“When there’s downtime, there’s a loss of productivity and time and money, whereas a verified professional hosting provider is going to have the technology and the systems in place to ensure this rarely, if ever, happens, he said.

Hosting your data and applications with an MSP has some downsides. For one thing, the monthly payments can get expensive.

You could also face disruptions. If your MSP goes down, your business could be interrupted, and if an MSP is sold to another company, the level of services previously provided may be subject to change.

MSP service agreements can also be complicated and heavily weighted in the provider’s favor, so having an attorney and an IT consultant review these contracts regularly is important.

There can also be limitations for organizations that work with the government or have other sensitive data, Mongeluzo said. But for most, using an MSP has more upsides than downsides.

“We have worked with organizations as large as 25,000 team members in some way shape or form, and most organizations especially today are facing budgeting issues, high amounts of turnover, and a shortage in work force,” he said. “MSPs help to take that pain away and can provide the right resource when needed.”