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VARs vs. MSPs: Everything You Need to Know

Posted by Allison Boccamazzo on April 6, 2017 at 9:14 AM

Today, there are hundreds of thousands of Value Added Resellers (VARs) and even more Managed Service Providers (MSPs) competing for marketing share. Chances are, you know what a VAR is. These companies resell computer software, hardware and/or networking products. They fill gaps that direct sales teams typically can’t to provide as much added value to the customer as possible (hence, the name).

Your local computer or iPhone repair shop is in many ways a VAR; this business provides computing components that consumers want, or break-fix services when upgrades or repairs are needed. That time you cracked your laptop screen? Dropped your phone in a puddle of water? If you didn’t take your device to a dedicated carrier or an Apple store, chances are you took it to some variation of a VAR.

What are VARs and MSPs?Today’s most successful VARs, however, tend to fly under the radar. Do a quick Google search for top ranked VARs and you’ll find that you haven’t heard of most—if any—of them. These companies do their jobs well though, with research estimating that only about 20,000-30,000 VARs are able to thrive amidst today’s continually evolving market. The rest usually try their hand at becoming a Managed Service Provider (MSP).

In short, an MSP is a company that remotely manages a customer's IT infrastructure, typically under a subscription model. Instead of simply working to fulfill a customer’s product or service, MSPs assume direct responsibility for and ownership of a customer’s IT environment. These companies specialize in remotely managing everything from web hosting to email to phone services, acquired through trusted wholesale providers. With research showing that overall spending on managed services is expected to reach $242 billion by 2021—a CAGR of 10.8 percent from 2016—many VARs today are working to strategically transition into the MSP space to increase profits and more dynamically compete.

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Tags: Telecom, VAR, MSP

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