Omdia Channels principal analyst Devan Adams presented a deep dive into the technology services distributors (TSD) market at Channel Futures Conference. He used Omdia’s data to outline TSDs’ impact on technology advisors (TAs) and the opportunities and challenges facing TSDs.

Adams said the top six TSDs -- Telarus, Intelisys, Avant, AppDirect, Sandler Partners and Bridgepointe – own 72% of market share and grew 14% in 2024. TAs accounted for 76% of those billings, but had lower annual contract value (ACV) than VARs, MSPs, and SIs.

In 2024 – the last year with full data available – the TSD market had $16.6 billion in gross billings and grew 15% year-over-year. Adams attributed the growth to market demand and the shift from telco-only services to all-technology services.

However, TSDs face obstacles to further expansion.

He said the heavy concentration on low-growth connectivity and intense competition in UCaaS, CCaas, and cybersecurity dampen opportunities for revenue growth. Another threat to TSDs comes from supplier programs, such as Zoom’s new partner program, which incentivizes across a customer lifecycle and uses a points-based system that differs from TSD programs.

“Connectivity and networking purely dominate the market from a share standpoint, but they're also some of the slowest growing markets,” Adams said. “You have cloud and cybersecurity, which are leading from a growth perspective due to high demand for multi-clouds as well as secured networks, but they have a very small share in the market today.”

He finished by highlighting specific steps TSDs must take to thrive:

• Shift from a TA-heavy partnership to higher ACV partners, expanding their recruitment.
• Prioritize hybrid solutions such as AI, which includes GenAI, agentic AI, cloud and cyber security.
• Use investment funds from venture capitalists and private equity to attract more partnerships and bigger brands.
• Advance enablement tools such as AI and add more modern programs such as the Zoom’s.

“All these things are interconnected and will ultimately decide who wins and who loses in the TSD market,” he said.