Despite the continued development of cloud based ‘as-a-service’ platforms that can offer communications and collaboration services on a global basis, it’s interesting to see that most of the largest UK MSPs and integrators are still very UK focused with the services they offer. Those undertaking acquisitions also appear to be only focusing on UK assets.
This is in contrast to what we are starting to see from US based MSPs – such as CallTower, Momentum, BCM One, NUSO and others – which are employing a strategy of entering both UK and European markets. This strategic geographic expansion can also be seen with domestic European players expanding internationally.
Domestic potential
At our recent Cavell Invest event we explored the reasons behind this. There is certainly a large element related to customer requirement, with US mid-market and large enterprise customers routinely having international subsidiaries. We also see countries who have natural trading relationships with other countries and, therefore, are more likely to have businesses of all sizes with offices in multiple countries. For example, we often see businesses present in Belgium and the Netherlands, for example.
The other reason that is often stated is that the UK is a large market with 33 million employees and offers plenty of opportunity domestically without having to expand overseas. Whereas, if you were in a market such as Belgium with 5 million employees, the opportunity is a lot smaller.
Daan De Wever, CEO of Dstny, spoke at our recent Invest event explaining his impressive story of international growth into multiple markets, and how starting the business in Belgium meant that he was considering international growth from the outset.
Expansion strategies
International strategy is often initially based on serving existing customers’ international sites. For example, US MSPs wanting to serve existing US headquartered businesses’ requirements for their international sites.
However, serving a UK customer with a French subsidiary is very different to entering the French market to serve all customers. We often see people looking to address a new market undertaking M&A to achieve this, with players such as Enreach and Dstny undertaking extensive international expansion via M&A.
Another key trend is international expansion based on sector knowledge. We have seen UK businesses such as The Voice Factory (now owned by Evolve IP) and Fourteen IP expand internationally through their deep knowledge of a specific sector - in this case hospitality.
Big success stories
One thing very clear is that the spread of global communications and collaboration platforms such as Zoom, Teams, Webex and RingCentral, does enable customers to now have a consistent platform in multiple countries.
In the UK, we see that more than 50 per cent of customers have already moved to cloud-based solutions and the global platform providers listed above are seeing very strong growth. The good news for partners is all the above rely on MSPs and broader channel organisations to take their products to market. We are also seeing wholesale providers setting up to help partners address this global requirement, helping handle the local voice regulation and servicing challenges.
The main fear is a customer in the UK who has a subsidiary in the US might find their subsidiaries’ US communications partner highlighting that they can service their global needs and leads to them losing that customer.
On the other hand, there are of course big success stories – with businesses such as Vodafone that started in Newbury and has gone onto become one of the largest communications companies globally, with operating companies in 15 European and African countries, and an additional 45 partner countries.
Also, we have seen some local successes with UK companies like Pure IP that expanded based on its strong Microsoft enablement capabilities globally and ultimately went on to be acquired by BCM One.
Changes to technology market maturity and customer requirements will mean that UK MSPs and partners now have to address their customers’ international strategies as they witness new competition and new opportunity driven by global platform availability.
We will continue to see pioneering businesses exploit some of these opportunities, but my fear is that the long-term UK channel businesses will continue be affected by a lack of willingness to service this international customer requirement.
This article appeared in our September 2024 print issue. You can read the magazine in full here.