Managed Services weather recession better

OAKBROOK, USA: Companies delivering technology solutions through a managed services model have weathered the current economic recession better than companies focused on more traditional product and support sales, new research from CompTIA reveals.

“Managed services represent the best opportunity in some years for technology solution providers to create significant shareholder value,” said Todd Thibodeaux, president and chief executive officer, CompTIA in a press note.

The benchmark survey of 158 technology providers in North America was conducted during February and early March 2009; and examined financial performance for a 15-month period, from Q1 2008 through Q1 2009.

One factor examined in the survey was earnings before interest, taxes, depreciation, and amortization (EBITDA), an adjusted net income figure that is a reasonable proxy for a company’s ability to generate cash flow. The survey found that the median managed services company had higher EBITDA in Q1 2009 (5.3 percent), even after four quarters of economic pressure, than did the median traditional technology solution provider in Q1 2008 (5.1 percent).

Though profits from both groups have been negatively affected by the economy in the past year, managed services providers have been better able to generate cash flow, avoid wild quarter-to-quarter fluctuations in income and generally out-performed traditional technology resellers.

The top managed services providers surveyed tended to hold their profits longer even as the economy headed down; and began their recovery sooner, the survey revealed.