Very few IT businesses organically grow beyond about 35 employees. Many reach this stage, only to find themselves fighting the same fires they thought they had already solved—client dissatisfaction, internal miscommunication, and profit erosion. The question is, why? What creates this invisible ceiling, and how can MSPs prepare to move beyond it without losing control or culture?
The answer lies in the unique nature of the MSP business model itself. It’s an industry that combines high technical complexity with high-touch customer relationships, all managed in environments the provider doesn’t fully control. This combination creates a perfect storm that requires not just great technicians, but a disciplined, process-driven organization built to handle chaos at scale.
The Unique Challenges of the MSP Industry
Before we can address the 35-employee barrier, it’s important to understand what makes MSP operations so complex. While the industry shares characteristics with other service and technology businesses, the combination of these traits makes scaling particularly difficult.
The first challenge is the need for highly technical employees. MSPs rely on experts with deep knowledge across a wide range of technologies—networking, cloud infrastructure, cybersecurity, endpoint management, and more. These individuals must stay constantly up to date, adapt quickly, and troubleshoot problems across varied client environments. The result is a workforce with incredible talent, but one that is difficult to recruit, train, and standardize.
The second challenge is that MSPs operate in a relationship-driven business. Success depends not only on technical results, but also on the daily interactions between engineers and clients. Unlike most industries, where customer service is a separate function, MSP technicians often serve as the front line of communication. Balancing technical expertise with client empathy requires a rare blend of high IQ and high EQ—something that’s difficult to find and even harder to scale across an entire team.
The third challenge is managing thousands of data points in loosely controlled environments. Every day, MSPs monitor backups, patch compliance, security threats, and end-user behavior across dozens or hundreds of client networks. Each of these systems generates continuous data that must be tracked, analyzed, and acted upon. Yet, because MSPs don’t own the environments they manage, they must constantly adapt to changing conditions. This requires both precision and flexibility in equal measure.
Finally, there is the requirement for an operationally mature culture. Operating a successful MSP depends on disciplined, proactive, process-driven behavior. However, many MSP employees come from self-taught or vocational backgrounds where individual problem-solving is valued more than structured teamwork. While these technicians excel in crisis situations, they often struggle in environments that require consistency, documentation, and collaboration. Building a culture that supports process adherence and continuous improvement is a significant hurdle for many growing MSPs.
Why Growth Stalls Around 35 Employees
These challenges exist from day one, but their impact multiplies as the business grows. Most MSPs can effectively manage operations up to a certain size because communication and coordination are still largely personal and direct. But once a company reaches around 30 to 35 employees—typically translating to $5–7 million in annual revenue—the old ways of operating start to break down.
At smaller scales, information transfer happens naturally. A few people handle multiple functions, and the same individuals oversee a project from beginning to end. As headcount increases, roles become specialized, and information begins to pass between departments—sales, engineering, projects, procurement, and accounting. This introduces more handoffs, more tools, and more opportunities for communication gaps.
By the time an MSP reaches 35 people, the strain becomes visible. Projects experience delays, client expectations are missed, and internal rework increases. Teams begin to operate in silos, accountability blurs, and what once felt like a tight-knit culture starts to feel chaotic. The organization is bigger, but not necessarily better. Growth slows, profit margins tighten, and employee turnover increases.
It’s important to recognize that this situation is not unique. Every organization reaches inflection points where old systems and habits no longer support new levels of complexity. The critical distinction lies in how leaders respond. Companies that continue to rely on instinct, firefighting, and ad-hoc fixes eventually plateau. Those that take a structured, process-oriented approach break through and set themselves up for scalable, repeatable success.
The Root Cause: Operational Immaturity
At its core, the 35-employee barrier is a problem of operational maturity. Most MSPs grow quickly by delivering great work and maintaining close client relationships. In the early stages, quality depends heavily on individual engineers and the owner’s involvement. This model works well when the team is small, but it doesn’t scale.
When quality is tied to individuals rather than systems, it becomes inconsistent. A great client experience one day can become a frustration the next, depending on which technician is assigned. Over time, this inconsistency erodes trust and profitability. Without clear processes and accountability, the company becomes vulnerable to turnover, burnout, and churn.
What feels like external bad luck—a key client acquisition, a top engineer leaving, or a sudden dip in margins—is often the symptom of deeper internal dysfunction. These issues don’t stem from one event but from an operating model that can’t sustain growth beyond a certain size.
MSPs that reach this point often find that the same flexibility and hustle that got them here are now holding them back. The company can no longer rely on a few individuals making heroic efforts to hold everything together. To move forward, the business must replace heroics with systems.
How to Break Through the Barrier
Breaking through the 35-employee ceiling requires a shift in mindset and a commitment to disciplined change. It’s not about adding more tools or hiring more people—it’s about transforming how the organization operates at its core.
First, leadership must fully commit to change. Building a scalable MSP means investing in structure, process, and accountability. This often feels uncomfortable, especially for organizations that have thrived on flexibility and problem-solving. The process will be time-consuming and, at times, costly—but the payoff is long-term stability and growth.
Second, problems must be addressed systematically, not reactively. Instead of applying temporary fixes, organizations need to diagnose root causes, design solutions that address them holistically, and align those solutions across departments. Every process—from service delivery to sales handoffs—should be documented, measured, and continuously improved.
Third, the company must align people to processes, not the other way around. Operational improvement depends on consistent behavior and role clarity. If certain individuals resist following defined procedures or struggle to adapt, leadership must be willing to make tough staffing decisions. Growth requires a team that embraces structure and accountability.
Finally, leadership behavior must model the same discipline expected from the rest of the organization. A process-driven culture only works when it’s demonstrated from the top down. When leaders bypass systems or make exceptions, it sends a signal that processes are optional. By leading through consistency, management creates the foundation for cultural change that sustains itself over time.
Building a Foundation for Sustainable Growth
Recognizing and addressing growth barriers is essential to building a sustainable, profitable MSP. The transition from a reactive, hero-based model to a proactive, process-driven organization doesn’t happen overnight—but it’s the only way to achieve predictable, long-term results.
MSPs that make this shift experience fewer crises, stronger client relationships, and higher employee engagement. They create operational clarity, align incentives with outcomes, and ultimately improve profitability.
Breaking the 35-employee barrier isn’t about working harder—it’s about working smarter. By embracing structure, culture, and process discipline, MSPs can unlock the next phase of growth and build an organization that scales with confidence.
