Red Flags to Look Out for When Choosing a Managed Services Provider

Choosing the right managed services provider for your business is essential. It can make all the difference in your business’s success.

In today’s digital age, managed services providers (MSPs) play a critical role in business success by supporting IT (Information Technology) and ensuring that technology systems run smoothly to support productivity. MSPs offer a range of services, including but not limited to monitoring and maintenance, support, strategic consulting, security, and disaster recovery. However, not all MSPs are created equal. Here are some of the top red flags to look out for when choosing a managed services provider.

1. Lack of Experience

When selecting a managed services provider, it is crucial to assess their level of experience in general and areas relevant to your needs. An MSP that has been in business for a long time and has a proven track record of success with many clients is more likely to provide high-quality services than a new company without a track record. When evaluating an MSP’s experience, you should ask about and consider their client base, how long they have been in business, their industry expertise and experience, and their demonstrated experience with technology systems like those employed by your organization.

2. Poor Communication

Effective communication is critical to success when working with a managed services provider. A managed services provider needs to communicate clearly and effectively. When a managed services provider fails to communicate clearly and effectively, it can result in various adverse consequences, such as misunderstandings, mistakes, unsatisfactory support experiences, reduced productivity, chaotic and problematic projects, and many other issues. When evaluating an MSP’s communication skills, consider how responsive they are, how they communicate and explain technical issues and concepts, and how they handle customer service inquiries. You can begin to gauge their communication maturity during their sales process by assessing how responsive they are, and how detailed and thorough they are in explaining their service delivery processes. The sales team’s communication may not be a perfect proxy for the level of communication you can expect as a client; however, if the sales communications leave much to be desired, you can certainly expect the communications during the partnership to be equally lackluster.

3. Limited Services

A managed services provider that only offers a limited range of services may not be the best fit for your business, depending on your situation, current needs, and anticipated future needs. A reliable MSP should offer a wide range of services to cover all your IT needs. This includes monitoring and maintenance, support, security, disaster recovery, strategy, etc. By doing so, you will not have to work with multiple vendors to meet your IT requirements, which can be too complicated for small and mid-sized businesses. The MSP will handle everything, ensuring your IT needs are met comprehensively.

Many managed services providers oversell their ability to deliver a wide range of services with expertise – Be sure to delve into questions about what services they offer in-house versus what they outsource or rely on upstream partners to deliver. Outsourcing portions of the service may either harm or benefit you as the client, depending on which service it is, why they are doing it, and who they are partnering with to meet that need, so be sure to ask pointed questions to uncover the true extent of their services and delivery capabilities.

4. Lack of Transparency

Transparency is essential when working with a managed services provider. A good managed services provider should be transparent about its service delivery capabilities, processes, pricing, service level agreements, and other terms and conditions. If an MSP does not provide transparent information about certain aspects of their business during the sales process, it may suggest that they:

  1. They are unclear, lack formal processes and systems, and are, therefore, immature service providers more likely to provide inconsistent quality.
  2. Are being intentionally opaque, which could indicate a lack of integrity and a willingness to obscure unfavorable information from a potential client.
  3. Value new revenue and contracts above quality, long-term, sustainable relationships, and are not setting realistic expectations.

5. Lack of Security Expertise

Security is a top concern for all businesses, especially with the increasing threat landscape, and it’s critical to work with an MSP with expertise in this area to protect your business. An MSP must have a solid understanding of security best practices and a competent, professional approach to managing security. Otherwise, it can lead to security breaches and data loss. When evaluating a managed services provider’s security expertise, consider their certifications, experience with security protocols, and approach to security.

6. Poor Customer Service

Customer service is another critical factor when choosing a managed services provider. A good MSP should be responsive, available when needed, and provide excellent customer service. Suppose an MSP is slow to respond to customer inquiries. In that case, it can lead to frustration and lost productivity. Ultimately your staff may avoid using the service, undermining the return on investment. When evaluating an MSP’s customer service, consider their response times, approach to customer service, overall reputation, references, customer satisfaction (CSAT) scores, and other key performance indicators that can validate their salespeople’s assertion that they provide excellent customer service.

7. Lack of Scalability

A good managed services provider should be able to grow with your business. Your IT needs will change as your business expands, often producing more complex demand on the service provider, and you’ll require more support, strategy, and security services from your MSP. If an MSP cannot scale services to meet your changing needs, it can be a red flag and will eventually hamper your business’s growth. When evaluating an MSP’s scalability, consider their ability to add or remove services as needed and their approach to working with growing businesses like yours.

Additionally, inquire about the MSP’s experience working with expanding and growing companies—request references who can confirm their ability to scale their services. Moreover, ask about the development of their MSP in the last five, three, two, and one year. If the MSP claims that they can keep up with your organization’s plan for quick expansion, but their own business has hardly progressed in the last three years, it is fair to be doubtful they can effectively manage the requirements of your organization.

Finally, if you are a rapidly growing organization, avoid smaller MSPs with under 20 employees, even if your organization is similar. There are thousands of MSPs with under 20 employees in the United States. However, the percentage of MSPs that exceed 20 employees is tiny. Starting an MSP business is relatively easy, as there are low barriers to entry, but effectively scaling one is very challenging, and most MSPs fail to move past this ceiling. Therefore, it is fair to be skeptical that a small MSP will keep up with your skyrocketing growth.


In conclusion, choosing the right MSP for your business is essential for success. When evaluating an MSP, look for red flags such as lack of experience, poor communication, limited services, lack of transparency, inflexible long-term contracts, lack of security expertise, poor customer service, and lack of scalability. Ask targeted questions to uncover whether these red flags are present. Consider them heavily as you evaluate your options and decide on a partner. Your managed services provider will be a critical vendor for your organization’s success. It’s not a partnership you want to have to change constantly. Do thorough diligence to make the right decision for your business.

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