Small businesses in the U.S. are facing rising costs and job losses, with 70% of owners citing inflation as their primary concern, according to a recent Bank of America study. Despite this, 75% of small business owners remain optimistic about revenue growth in the coming year. However, the disparity in employment trends is stark, as small firms shed 88,000 jobs while larger companies gained 151,000. This economic environment is leading to a reduction in discretionary tech spending, as small businesses prioritize survival and cost control over technology investments.

The global tech consulting market is projected to exceed $400 billion in revenue by 2026, driven by a surge in technology upgrades. A report indicates that 84% of buyers plan to upgrade their technology within the next year, with a notable increase in demand for consulting services. However, a significant number of personal computers are delaying upgrades to Windows 11, indicating a gap between modernization goals and actual implementation. This presents an opportunity for IT providers to position Windows 11 migration not merely as an OS upgrade but as essential for achieving desired business outcomes.

In the hardware sector, Dell reported record revenues of $27 billion for the quarter ending October 31, 2025, largely attributed to its AI infrastructure business. Conversely, HP announced plans to cut 4,000 to 6,000 jobs as part of a restructuring initiative aimed at enhancing productivity through AI. Both companies are navigating challenges, including a projected memory shortage that could lead to increased prices in the second half of the fiscal year. These developments highlight the shifting dynamics in the tech industry, where AI is reshaping hardware strategies and vendor support is expected to diminish.

For Managed Service Providers (MSPs) and IT decision-makers, the current economic landscape necessitates a strategic approach to technology investments. As small businesses tighten their budgets, IT providers must focus on demonstrating the financial impact of their solutions and offering flexible purchasing options. The convergence of rising consulting demand, hardware inflation, and vendor financial repositioning underscores the importance of aligning technology refresh cycles with business outcomes. By proactively addressing these challenges, MSPs can position themselves as essential partners in navigating the complexities of modernization and economic pressure.

 

Four things to know today

 

00:00 SMB Costs Surge, Hiring Drops, and Confidence Splits—Forcing IT Providers to Tie Tech Directly to Business Value05:19 Everyone Says They Want Digital Transformation, but a Billion PCs Say Otherwise08:29 AI Server Demand Boosts Dell While HP Restructures and Warns of Memory Shortages, Pressuring SMB Refresh Cycles12:52 N-able Takes On More Debt — Here’s Why MSPs Should Pay Attention

 

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