Managed services providers are facing customer calls for price reductions and more features without rising fees as the impact of the fragile economic conditions dictate customer attitudes towards outsourced support.
The tough state of the market has been revealed in statements made by Charles Davis, CEO of the SAS Group, which accompanied the managed network and professional services specialist's third quarter results.
Davis revealed that although revenue had increased by 20% year-on-year for the three months ended 31 may to £2.6m and net income rose by 33% to £0.37m the current customer landscape was presenting real challenges.
"Trading conditions are quite challenging for the larger managed service providers at the moment. A lot of our competitors are experiencing delivery stress as their customers demand the same or higher levels of service for less cost," he said.
Davis said the results of those market conditions didn't faze SAS, which expected to pick up pace in its fiscal Q4 and hit its numbers for the year, but were certinalty causing headaches for some in the managed services market.
"The challenges of managing 30-40% price reductions in voice and data charges, as well as the pressure on hardware and software margins from cloud based opex models, means that larger carriers, systems integrators and outsourcers don't have a lot of margin within their cost models to play with," he added.