Managed Service Providers are of the few groups of companies experiencing a boost in their businesses while many others are carefully watching every dollar they spend.

Though IT staffs aren’t experiencing the difficulty they did in 2000-2002, they are being careful - particularly those in the financial-services, real-estate, and retail sectors. In fact, 44% of companies are projecting flat IT spending for 2009, and branch growth (though still positive) has slowed from 11.9% to 6.8% year over year.

It’s not uncommon for organizations to “hold off” on new hiring to see what happens tomorrow, next week, next month. That attitude also applies to many new capital projects: Vendors report sales cycles (from lead to close) shifting from six to 12 months to 12 to 24 months.

With these concerns in mind, I recently headed to the two-day MSP Alliance conference in Chicago, anticipating I’d hear that even the managed-services space was slowing, along with the rest of the economy. In fact, I prepared some discussion points ahead of time, hoping to understand how MSPs, particularly small companies, were weathering the storm.

Just about two minutes into MSP President Charles Weaver’s opening remarks, I was pleasantly surprised. No doom and gloom here. Unlike their vendors and pure-play hardware resellers, MSPs are not experiencing a slow down. The majority of MSPs are experiencing growth - in fact, because of the economy. Additionally, sales cycles are shortening from six to 12 months down to two to six months.

The 120 MSPs in attendance were not only sustaining their businesses, but growing, and about 25% of them said they were actually able to increase prices for services in the past six months. IT staffs still must get the job done, and without headcount, third-party service partners are the only answer. Managed services have increased from 46% in 2007 to 65% this year.

Weaver later shared with me additional trends and organizational strategies he’s heard from the 7,000 MSP Alliance members, which aligns with some of our research findings. We centered on the top three reasons for growth in the MSP industry:

* Many types of companies are in massive reorganization mode. They’re re-evaluating what is core and not core, and looking at each employee’s job under a microscope. They’re deciding whether each job is critical or can be outsourced.

Robin Gareiss is executive vice president and senior founding partner of Nemertes Research. Click  here for the newsletter archive.