Kaseya boss on Datto redundancies: 'It surprises me that anyone in this sector is making layoffs'

Fred Voccola on how the pandemic is putting digital transformation "on steroids" and why MSPs will thrive post-pandemic

Kaseya CEO Fred Voccola was "surprised" by the news that rival Datto was laying off employees, he told CRN.

Voccola emphasised the financial health of the Dublin-based IT management software vendor, adding that tech companies should be "profitable" due to the demand on services throughout the pandemic.

"I'm very surprised that anyone in this sector is doing layoffs," he stated.

"I think that their business must be really hurting because any good software company is very profitable, and if you're very profitable, you can make adjustments. We haven't done layoffs - a lot of folks haven't done layoffs - and there's no intention of doing them, period.

"[Datto] may be having challenges because their business is all around appliance-based backup and maybe their MSPs just can't physically go to the locations to install an appliance. So maybe they're just seeing a slowdown.

"We've been doing well; we're growing, we're very profitable and we are so financially healthy that we are providing direct financial assistance to our customer base through our Kaseya Cares initiative."

MSPs will find their services in high demand for the foreseeable future as SMBs are forced to alter their digital transformation plans, he continued. This will see MSPs come out the other side of the crisis "in a better hsape than before".

"This most recent crisis is spurring another wave of human innovation and business innovation, which is making most of these small businesses digitally transform now," he explained.

"Digital transformation has been happening very gradually in the SMB world for 10 years. This crisis just kicked it right in the ass and put steroids in it. In 60 days, people who are not digitally transformed won't generate revenue.

"When things "go back to normal" - it'll be a new normal for a while - it'll be months if not years before it goes back to the ‘old normal', and the ‘old normal' companies that haven't digitally transformed will die. They need MSPs now more than they did before because if they can't do these things, they won't exist."

However, he warned that MSPs can't rest on their laurels as customers will go out of the business as a result of the global recession, resulting in stronger competition in the marketplace.

"If you're not delivering the type of managed service that a customer needs, they will leave in a blink of an eye and get it somewhere else - that's new and wasn't always the case," he stated.

"You have to have a comprehensive suite of offerings and you need to make sure that the kit that you're using is comprehensive and less expensive, but that it's also integrated so that your technicians can be more efficient.

"I think that a lot of MSPs have allowed the technicians to make the decisions about what kit they should use and how to use it and they spent an astronomical amount of money and created a lot of inefficiencies because of that.

"MSP owners need to realise that that's a lever point they have to adjust because they're going to need to lower their prices a little bit to compete. They're probably going to have to do the same amount of work with fewer technicians and they're going to be generating less profit."

Voccola revealed to CRN in January the company's plans to undergo an IPO by the second quarter of 2021. He said that this was still the plan and that the current pandemic has strengthened its position even further to IPO next year.

"Our cash is growing at a very rapid rate and we are very profitable and that's a rare combination," he stated.

"That combination is continuing in this in this economic climate. The bankers are telling me that we'll be out in the second quarter of next year, no doubt. I don't know what the IPO markets are going to do. But I do know that once they open, we will be one of the first to go out because the financial profile of Kaseya and the macro trends that we're riding on are just too good.

"I hate to forecast, but I don't have any reason to think that it won't be sometime in the first half of next year."