MSP Risk: Continuing to Sell Predictable Execution as AI Removes Price Floor

The dominant structural shift underlined in this episode is the removal of the pricing floor for undifferentiated, repeatable IT work due to agentic AI adoption, especially in IT services and MSP operations. As described by Dave Sobel, this shift is not about wholesale job elimination but about AI absorbing routine, predictable execution, leaving human operators responsible for judgment and oversight. This change is illustrated by organizations such as OpenAI, where 97.9% of employees use AI agents, and by sector-wide hiring data tracked by SignalFire, revealing that software engineers—previously considered vulnerable—remain the largest share of new hires.

The most consequential development is the clear division between executional work and judgment-based roles. Data from SignalFire shows that software engineers make up 55% of new tech hires, contrary to predictions of their displacement by AI. Similarly, ISC2's Cybersecurity Workforce Survey, reported by Dark Reading, finds entry-level cybersecurity roles are evolving rather than disappearing, with AI taking over routine triage and increasing demand for higher-level judgment skills. OpenAI's near-universal internal AI adoption supports the notion that employees are adapting their roles rather than being replaced outright.

Further supporting developments include evidence from SplashTop, which measured that 53% of IT team capacity is spent on endpoint maintenance and repetitive tasks, areas highly susceptible to automation. The effect is heightened by macro trends—cited from Axios Macro and the NFIB—showing small businesses are actively reducing hiring plans and seeking solutions that remove the need for headcount growth. New MSP offerings, such as managed support teams available within 30 days, are scrutinized for repackaging traditional labor models vulnerable to rapid automation.

For MSPs and IT service providers, the operational implication is the urgent need to reevaluate service lines, staffing, and pricing models. Services based on predictable, repeatable execution now face competition from AI-driven agentic work that operates with negligible marginal cost, eroding the business case for labor arbitrage and body-shopping models. The path to defensibility shifts toward services that require human judgment, oversight, and outcome-based delivery, with increased risk for firms reliant on commoditized execution. Sorting offerings by their exposure to automation and focusing investment in non-automatable, judgment-driven roles becomes a practical risk mitigation approach.

00:00 The Most-Hired Casualty

04:19 Which Half It Eats

07:06 The Rent-a-Team Trap

09:47 Why Do We Care?

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