Disaster Recovery as a Service (DRaaS) trends for Managed Service Providers (MSPs)

As organizations embrace hybrid, multi-cloud, and edge computing architectures in 2025, MSPs must evolve their Data Protection services, including Backup as a Service, to provide more efficient, flexible, affordable, and scalable offerings.

According to ” The MSP Horizons Report 2024 ” from N-Able, approximately 60% of MSPs already provide managed backup services, complete cloud management, and disaster recovery (DR) as standard services, but these are still ways off.

In disaster recovery, two critical factors are minimizing downtime and preventing data loss. These are measured by RTO (Recovery Time Objective), which defines how quickly operations can resume, and RPO (Recovery Point Objective), which measures the volume of data that could be lost.

Backups are necessary for any IT environment, but they must be complemented by a Disaster Recovery solution to meet more strict RPO and RTO recovery demands for critical applications and data. Even newer mechanisms present in backup solutions, such as instant recovery, cannot meet these Disaster Recovery demands.

Continuous Data Protection (CDP) is the ultimate technology that achieves RTOs in minutes and RPOs in seconds (near-zero RPO), ensuring rapid recovery and minimal data loss. We will discuss CDP in the following paragraphs.

According to The Business Research Company, the growing need for reliable data protection for critical and strategic applications, alongside the astounding amount of data generated daily, is accelerating the expansion of the Disaster Recovery as a Service (DRaaS) market.

As more organizations are expected to adopt DRaaS solutions in the coming years, MSPs are expected to increasingly use consumption-based contracting models such as Infrastructure as a Service (IaaS), SaaS (software as a service),  scalable public-hybrid model, and on-demand cloud services. A recent Canalys survey with partners sustains this tendency:

These new ways of contracting resources will allow MSPs to meet client expectations regarding service consumption and payment. For example, offering pay-as-you-go pricing models, paying only for your disaster recovery resources. It is a critical model as it ensures that DRaaS remains financially accessible for organizations of all sizes.

DRaaS Market Size in 2025 And Growth Rate

According to The Business Research Company, the Disaster Recovery as a Service (DRaaS) market has experienced substantial growth in recent years. It is projected to expand from $11.99 billion in 2024 to $15.14 billion in 2025, reflecting a compound annual growth rate (CAGR) of 26.2%. This growth trajectory is expected to continue, with the market reaching $44.2 billion by 2029, driven by a robust CAGR of 30.7%.

Several factors fuel this remarkable growth during the forecast period, including integrating AI and Machine Learning, continuous data protection (CDP), enhanced resilience through edge computing, advanced ransomware mitigation solutions, multi-cloud recovery capabilities, and increased cloud mobility.

Key trends shaping the DRaaS landscape over the next few years include cost optimization, scalability, and improved resilience against natural disasters. Additionally, automation and orchestration will be critical in streamlining DR operations, while real-time recovery expectations will become increasingly important.

Artificial Intelligence Driving DRaaS

As Managed Service Providers (MSPs) integrate Artificial Intelligence (AI) into their Disaster Recovery (DR) services, they will unlock powerful predictive capabilities that significantly enhance business continuity strategies.

By leveraging AI and ML-driven Predictive Analytics, MSPs can anticipate and address potential issues before they disrupt operations.

In general terms, LXT’s recent survey into AI adoption in enterprises, Path to AI Maturity 2023, highlights three key areas where organizations are investing in AI:

• Client Service Applications: AI-driven chatbots and interactive support tools are prevalent, improving client interaction without constant human oversight.
• Forecasting and Demand Generation: AI predicts necessary capital expenditures and manages inventory more efficiently in industries with significant logistics and supply chain dependencies.
• Sales and Marketing Optimization: AI helps pinpoint where marketing efforts should be concentrated, optimize resource allocation, and improve target market identification.

There are several ways in which these advanced technologies, embedded or not in products,  can improve Disaster Recovery services, including:

Ransomware and Cyber Threats Identification: AI-powered predictive analytics can assess system behaviors to detect potential cybersecurity threats, including ransomware attacks, in near real-time.

It enables immediate automated responses, such as isolating affected systems, initiating diagnostic scans, or triggering a recovery process from an air-gapped or immutable environment.

Monitoring Application Health and Performance: Predictive analytics allows real-time monitoring of the health of essential applications. By analyzing usage patterns and system performance, AI can detect early signs of issues, such as resource exhaustion, that could cause slowdowns.

Predicting Anomalies and Failures: AI continuously analyzes data from servers, storage devices, and network components to detect early hardware degradation or failure indicators. It includes monitoring for unusual temperature fluctuations, increased error rates in the network, or declining performance metrics in applications.

By identifying these issues early, businesses can proactively take corrective actions before hardware failures lead to downtime or system disruptions.

Acknowledging AI and ML’s limitations and avoiding relying on them exclusively for critical processes and decisions like disaster recovery is vital. Human expertise, contextual understanding, and ethical considerations should always be at the core of any MSP’s strategy.

According to “The MSP Horizons Report 2024,” over 75% of MSPs already use Generative AI in some way in their offerings or processes.

Automated Recovery Optimization for DRaaS

According to Kaseya’s 2024 MSP Benchmarking Survey Report, the predominant challenge affecting MSPs’ workload is their inability to fully utilize their software solutions, a concern shared by executives and technicians. Technicians also expressed frustration with the time spent switching between applications.

Automation is the key to unlocking MSPs’ next stage of growth: the road to higher efficiency, productivity, improved workflows, streamlined operations, and more.

Furthermore, MSPs prioritize investing in IT management solutions with built-in automation and integration capabilities. About 85% of executives and technicians assert that automation is a must-have.

Regarding Disaster Recovery services, Automated Recovery Optimization is essential for Managed Service Providers (MSPs) because it improves efficiency, reliability, and scalability:

Here are some key examples of how to improve the Automation Recovery for DRaaS:

Prioritization of Critical Workloads: These systems automatically prioritize the recovery of critical applications, allocating resources to bring them online first. Non-essential systems, such as internal reporting tools or administrative dashboards, are deprioritized and can be restored later.

Orchestrated Failover and Failback: Automated recovery optimization ensures that resources are dynamically adjusted in near real-time on the MSP’s Cloud (or multi-clod). It can scale up virtual machines, storage, networking, and load balancers on actual usage. The DR solution must have this capability natively.

Cost Optimization: These systems continuously adjust the cloud resources, scaling down when traffic normalizes, ensuring cost efficiency without sacrificing system performance.

Remote Monitoring and Management (RMM): This is the core of MSP automation. RMM tools allow MSPs to monitor and manage their clients’ Infrastructure remotely.

In conjunction with other solutions, RMM tools can also monitor the health of disaster recovery systems, ensuring that processes and systems are functioning as intended after a failover or failback.

Ticketing and Reporting: Automation is widely used to create and manage support tickets. Automation can categorize, prioritize, and route tickets to the appropriate personnel or teams when incidents occur.

In the context of DRaaS, a ticket can automatically be created within the ticketing system when a disaster recovery issue is detected.

Integrating automated reporting with DRaaS improves management, transparency, and efficiency of disaster recovery processes.

This automation provides MSPs and businesses with ongoing visibility into the effectiveness and status of their recovery efforts, helping ensure that recovery objectives are achieved and compliance requirements are met.

Infrastructure Automation: MSPs can use Infrastructure as Code (IaC) platforms like Terraform and Ansible.

These platforms allow them, for example, to automate cloud deployments and version control of their disaster recovery environments, making DR more agile and responsive.

DRaaS and Cybersecurity Services

According to “The MSP Horizons Report 2024” from N-Able, 81% of MSPs taking the survey said they would see growth in their cybersecurity services in the next three years. The most in-demand solutions are EDR, MDR, XDR, and SOC-aaS.

Over a third of those surveyed are looking to deliver some of these solutions themselves, and an even more significant proportion are leveraging third parties to provide the majority of the service, often through specialist vendors or Managed Security Service Providers (MSSPs) partners.

Moving from an MSP (Managed Service Provider) to an MSSP (Managed Security Service Provider) model can be challenging. It is a significant transformation that involves changes across people, processes, tools, and client relationships. It requires careful planning, strategic investment, and a commitment to building expertise in cybersecurity.

When MSPs transition to an MSSP model, they can typically take three main approaches to make this shift. These approaches depend on the MSP’s existing capabilities, resources, and long-term strategy.

Partnering with other MSSPs: the MSP collaborates with an established MSSP to offer security services under its brand. This is often a white-label partnership in which the MSP resells the MSSP’s services without having to develop or manage the security infrastructure themselves.

Partnering with vendors through MSSP programs: by partnering with vendors, MSPs can quickly enhance their security offerings, scale up services, and stay competitive in the evolving cybersecurity landscape. These partnerships allow them to leverage the specialized expertise of leading security companies while avoiding the complexities of building and maintaining these technologies in-house.

For example, in a co-managed security program, the MSP partners with a vendor to deliver clients operational support and security services. The MSP manages day-to-day operations, while the vendor provides the security tools and expertise for threat monitoring, incident response, and vulnerability management. There are also options like SOC-as-a-Service, where MSPs partner with vendors to outsource the function of a Security Operations Center (SOC).

Build their own Security Operations Center (SOC): building in-house capabilities involves developing internal cybersecurity expertise and infrastructure. It offers complete control but requires significant investment and time. It is an expensive approach and must be carefully planned.

Canalys data from channel polls show Cybersecurity has been the strongest pillar of growth for MSPs and other partners building managed services.

98% of MSPs focused on building cyber security-managed services. Headlines about cyberattacks build awareness and fear, and clients can sometimes feel crushed between the rock of ransomware and the hard place of compliance.

Disaster Recovery as a Service is critical to deploying a comprehensive cybersecurity policy to clients, particularly for MSPs starting to offer cybersecurity services.

DRaaS ensures that businesses can recover their data and continue operations during a cybersecurity incident, such as a ransomware attack, data breach, or other disruptions.

For MSSPs, references such as the NIST Cybersecurity Framework 2.0 and NIST SP 800-61r2 are vital guides for ensuring that their incident response processes are effective, well-documented, and aligned with industry standards.

Additionally, integrating disaster recovery solutions within the incident response plan can directly support several key aspects outlined in the NIST guidelines, especially recovery, resilience, and continuity during and after an incident.

The integration of DRaaS is most apparent in the “Containment, Eradication, and Recovery” phase of NIST SP 800-61r2. NIST outlines the importance of containing the incident to prevent further damage, eradicating the threat, and recovering operations to normal.

DR solutions help MSSPs recover systems, data, and applications quickly after an incident. For instance, if malware or ransomware compromises systems, DRaaS can facilitate the restoration of clean, secure copies of data, minimizing data loss and downtime.

Conclusion

As the demand for more resilient, scalable, and cost-effective disaster recovery solutions continues rising, MSPs are in a prime position to evolve and expand their service offerings, particularly with Disaster Recovery as a Service.

By incorporating DRaaS into their portfolios, MSPs can ensure that businesses protect their critical data/applications and enhance operational continuity in the face of unexpected disruptions.

Integrating advanced technologies like AI and automation paves the way for MSPs to reach the next growth stage, generating more significant revenue through improved efficiency, productivity, and streamlined operations.

A holistic service offering for data/application protection, Cybersecurity, and disaster recovery positions Managed Service Providers to meet evolving customer demands. Additionally, Managed Security Service Providers can offer DRaaS to their clients as part of a robust and complete portfolio of Cybersecurity as a Service.

References

The MSP Horizons Report – 2024 – N-Able

https://www.kaseya.com/resource/2024-msp-benchmark-survey-report

https://cybersmart.co.uk/the-cybersmart-msp-survey-2024

https://www.thebusinessresearchcompany.com/report/managed-services-global-market-report

https://csrc.nist.gov/pubs/sp/800/61/r2/final

Click to access NIST.CSWP.29.pdf