The MSP 501 is the gold standard of MSP awards, recognizing elite service providers based on performance. But when sifting through the mounds of data we collect to pick the top 501, we notice true trailblazers that can shake up the industry with cutting-edge strategies and groundbreaking solutions.

That was the basis for our MSP Next Generation list, which recognizes the most innovative MSPs poised to skyrocket in the industry, from AI integration pioneers to operational efficiency champions. These innovators are mainly MSP 501 winners, but the list includes others that failed to qualify for the 501 mainly because of the revenue threshold but performed better than average in certain key areas. See the MSP Next Gen list here.

The 2025 Next Gen list consists of 151 MSPs, including 20 that failed to crack the 501. The honor roll consists of companies that met at least 10 of the following key criteria: 

• Above averages for percentage of revenue generated from: managed services, professional services or recurring cloud services.
• Serves the communications/telecom, financial/banking/accounting, federal, state or local government, healthcare/pharmaceutical, or technology industries. 
• Partners with AWS, Google Cloud, or MS Azure to sell solutions 
• Expects significant 2025 revenue gains from AI, communications services, infrastructure-as-a-service (IaaS), managed compliance services (HIPAA, PCI, etc.), managed security, network-as-a-service, or SaaS/cloud backup and restore.
• Uses AI or sells AI-powered solutions for cloud services, cybersecurity, data analytics/ business intelligence, IT support, network optimization, or sales/marketing.

While some of these services are long-standing MSP staples, others such as AI require the ability to adapt quickly. Even cybersecurity – which MSPs have offered for years – always requires new ways to deal with evolving threat challenges.

“You always have to be on top of your game and in constant communication with your partners and clients,” said Rich McKinnon, CEO and founder of 2025 Next Gen MSP DVBE Technology Group. “Technology changes so fast, but we as individuals must be prepared and ready to adapt to those changes.

“We believe the traditional methods of delivering IT support don’t apply today,” said Bryan Lukralle, chief strategy officer at Charter Technology Solutions (CTS), a Next Gen winner and No. 480 on the MSP 501. “People are overwhelmed with emails and can’t wait for 30 minutes to get assistance, particularly when technology issues disrupt their already limited workday. CTS is integrating automation, generative AI, and chat-based support to deliver faster resolutions, enable multitasking, and improve the overall client experience. We’re also using AI to speed up secure cloud deployments, enabling clients to quickly and effectively embrace new technologies.”

Here’s a snapshot of the Next Gen MSPs:

They averaged $69 million in revenue and $44.8 million of recurring revenue. They reinvest just under half of profits in the business. Nearly three-quarters (73%) expect their MSP revenue and profits to increase at least 11% with 26% expecting more than 20% growth. Most listed small businesses of 26-100 employees as their primary customer target and 35% mainly sell to midmarket (101-999 employee) companies. One-third acquired another company in the past year, and 48% expect to make at least one acquisition in the next year.

Several types of services stand out: security, cloud infrastructure, compliance and AI among them.

Managed security is a major source of MSP revenue, so it’s not surprising that 76% of 2025 Next Gen winners said it was a top five source of revenue last year and the same number expect it will be a top growth area in 2025. Security spans many services.

Ahmed Mahmood, founder of Ocean Solutions, ticked off penetration testing-as-a-service, vulnerability remediations, tabletop exercises, incident response discussions, and DR planning and training as essential cybersecurity services.

“We see security as an onion. It has multiple layers, and there’s no guarantee that every layer of the onion is going to resist,” Mahmood said. “Each layer is about 90 percent and we’re combining these 90 percent layers on top of each other to reduce the attack surface to slim to none.”

Cloud services play a major role in the Next Gen MSPs’ success, as 49% listed it as a top revenue producer in 2024 and 43% expect it to be one of its biggest 2025 growth areas.

Expedient CEO Bryan Smith said cloud services are central to many clients today because of factors such as unhappiness with Broadcom’s changes for VMware and organizations exploring repatriation from public clouds.

“We really help match clients to the cloud, protect their workloads,” said Smith, whose company placed No. 3 on the 2025 MSP 501. “People are having conversations about all their workloads, so we’re really leaning in to give them options, no matter if it's in one of our data centers, if it's in a private cloud or even a managed hyperscale, trying to really provide guidance and value for that workload placement has been one of the biggest pieces, and it's really driven heavily through the channel.”

Managed compliance services is an area poised for growth, as 43% of Next Gen MSPs forecast high growth in that area this year. Compliance services are especially important for MSPs who sell heavily into regulated industries such as finance and healthcare. CloudWave, which ranked No. 15 on the MSP 501 and is laser focused on healthcare, beefed up its compliance services by acquiring Blue Orange Compliance this year.

“Clients really look to us to help lead with respect to changes in compliance and regulations,” CloudWave CEO Erik Littlejohn said. “That’s a reason Blue Orange Compliance made a lot of sense, because there are changes that customers need to respond to. We can bring that thought leadership to the table in how they think about changes to their environments and IT investments, as well as needing to constantly evolve our services and managed solutions so that we're keeping pace with ever-changing and complex regulatory environments.”

While only 9% of the Next Gen MSPs listed AI as a top five revenue producer in 2024, 63% said they expect it to be one of their biggest growth areas this year.

Xtium, ranked No. 9 on the MSP 501, was created by the merger of ATSG and Evolve IP, and is buoyed by a focus on AI.

“We believe the future belongs to organizations that leverage technology not just to automate, but to amplify human potential,” Xtium CEO Russ Reeder said. “This [Next Gen] award validates our relentless commitment to our customers and underscores our dedication to delivering transformative, AI-driven solutions that empower our clients and our people to achieve extraordinary outcomes.”