‘I want to see more entrepreneurial thinking and a limitless mindset among MSP leaders. Many small to midsize MSPs are the backbone of our economy, and I believe they can achieve great things by thinking beyond their immediate environments and embracing innovative strategies,’ says Sunny Kaila, CEO of IT By Design.

Sunny Kaila wants to help MSPs remain competitive.

“Our focus will be on helping MSPs adopt boundary-less thinking and leverage our cost-plus model to enhance their capabilities,” Kaila, CEO of Marlboro, N.J.-based IT By Design, told CRN. “We believe that fostering a growth mindset and providing the necessary tools will be crucial for their survival and success in a competitive landscape.”

Last week at IT By Design’s Build IT Live show in Orlando, Fla., the master MSP launched its cost-plus delivery model to enhance transparency and predictability in staffing costs. The model, tailored toward larger MSPs, enables them to manage resources more effectively and scale their operations.

It also allows MSPs to pay only for the actual costs of IT By Design’s engineers, with a small fixed-percentage markup. This aims to eliminate additional management fees and provides MSPs with the flexibility to recruit operational roles as needed.

“Many are considering setting up their own entities in low-cost markets like the Philippines or India but face challenges such as local labor laws and compliance risks,” Kaila said. “The cost- plus model allows MSPs to gain better control over staffing expenses while eliminating the need for them to establish foreign operations.”

IT By Design also launched group meetings as a new feature in its Team GPS platform to further empower MSPs by optimizing team performance and talent management.

Team GPS is a tool that encompasses employee engagement elements such as goal-setting, performance management and peer-to-peer recognition. The new group meetings feature helps MSP leaders align business objectives with individual contributions.

“The group meetings feature addresses the need for better integration and execution of strategies within MSPs,” Kaila said. “Previously, teams were using multiple tools for meetings and strategy execution, leading to confusion. With this feature, all relevant data and progress tracking are centralized within Team GPS, reducing tool noise and enhancing efficiency.”

IT By Design also said that it is bringing its show back to New Jersey. Build It Live 2025 will be held in Jersey City from Aug. 4 to 6.

CRN spoke with Kaila to discuss this year’s announcements, how MSPs can remain competitive and what’s next for the company.

What motivated IT By Design to develop the cost-plus model?

The primary motivation came from the increasing demand among larger and midsize MSPs for more transparent pricing. Many are considering setting up their own entities in low-cost markets like the Philippines or India but face challenges such as local labor laws and compliance risks. The cost-plus model allows MSPs to gain better control over staffing expenses while eliminating the need for them to establish foreign operations. By acting as the employer of record, we provide the benefits of offshore teams without the associated risks.

The model enhances profitability and valuation for MSPs. With transparent pricing, MSPs can understand their actual staffing costs, which helps them make informed decisions about salaries and resource allocation. This not only empowers MSPs but also allows them to scale their teams effectively. It supports their operations by ensuring they have access to 24×7 delivery capabilities, which is crucial for servicing clients in different time zones.

What are the key benefits of having full visibility into staffing expenses?

Full visibility provides MSPs with greater control over their costs, allowing them to know exactly what they are spending on resources. This sense of control, combined with the ability to co-create their operational capabilities, enhances their confidence in managing expenses and scaling effectively.

How does the model contribute to operational optimization for MSPs?

It enables MSPs to categorize their activities into ‘front stage’ and ‘back stage.’ By offloading low-cost, non-customer-facing tasks to offshore teams, MSPs can focus their in-house resources on high-value activities. This not only improves efficiency but also allows them to maintain high- service quality without overextending their local teams.

Our case studies show that MSPs utilizing the cost-plus model can save between 30 percent and 70 percent on direct labor costs. For instance, an MSP with $5 million in revenue can significantly increase their EBITDA from about 15 percent to upward of 22 percent, effectively doubling their valuation. This allows them to become more competitive and prepares them for potential acquisitions or exits.

How does IT By Design plan to support MSPs in adapting to market changes?

We anticipate a trend toward larger platform companies through M&A and consolidation, making it essential for smaller MSPs to remain competitive. Our focus will be on helping MSPs adopt boundary-less thinking and leverage our cost-plus model to enhance their capabilities. We believe that fostering a growth mindset and providing the necessary tools will be crucial for their survival and success in a competitive landscape.

What do you hope to see more of in the MSP channel?

I want to see more entrepreneurial thinking and a limitless mindset among MSP leaders. Many small to midsize MSPs are the backbone of our economy, and I believe they can achieve great things by thinking beyond their immediate environments and embracing innovative strategies.

What will IT By Design be focusing on in 2025?

In 2025, we plan to expand our capabilities to include nearshore operations, potentially in locations like Costa Rica or Mexico. Additionally, we’ll continue to emphasize our boundary-less approach and aim to host more frequent local events, building on the success of Build IT LIVE to foster community and collaboration among MSPs.