The saying that two opposite things can both be true appears especially relevant for channel partners today.
A survey of 400 decision-makers at IT solution providers in North America and Western Europe conducted by Futurum Group found that more than half (52 percent) expect revenue growth exceeding 10 percent. Another 40 percent expect growth between 1 percent and 10 percent.
AI spending is creating budget pressure
At the same time, a separate survey of 767 IT leaders found that nearly half have already exceeded their artificial intelligence (AI) budgets. Among those respondents, 61 percent plan to reduce costs elsewhere to offset the overspending.
One of the first areas under scrutiny is spending on external IT services. Those findings align with a smaller survey of IT leaders that found many organizations are also looking to reduce their reliance on global systems integrators (GSIs).
Partners remain confident in AI opportunities
Solution providers are investing heavily in AI as well. More than two-thirds of surveyed partners expressed confidence in the AI-based solutions they are developing.
In fact, 78 percent expect AI software to be a major driver of future growth. Cybersecurity followed at 62 percent, while cloud infrastructure also ranked highly. By comparison, only 26 percent cited enterprise applications as a significant growth opportunity.
The battle for IT ownership is heating up
The idea that service providers and internal IT teams have different views on who should deliver technology services is nothing new. However, AI is intensifying that competition, especially during a period of economic uncertainty.
Historically, organizations have scaled back spending when operating costs rise. Today, AI is the wildcard. Many businesses view it as a strategic investment that cannot be delayed.
As a result, organizations are redirecting budgets away from other initiatives. Some are even reducing IT headcount to fund AI projects.
AI is changing the economics of IT services
External service providers still face a familiar challenge: proving they can deliver equal or better capabilities at a lower cost than an internal IT team.
Traditionally, service providers benefited from economies of scale. They could spread costs across multiple customers while attracting specialized talent that many organizations could not afford to hire or retain.
AI is beginning to alter that equation. Tasks that once required specialists can increasingly be automated. As a result, lower-cost IT generalists can now manage work that previously demanded deep expertise.
It is still too early to know how competition between external service providers and internal IT teams will evolve in the AI era. One thing is certain: as AI investments continue to grow, so will the pressure to prove measurable business value.
Photo: Taris Tonsa/ Shutterstock
This post originally appeared on Smarter MSP.