Iron Mountain Inc., a physical records management services firm in Boston, jumped into the MSSP market with its acquisitions of Connected Corp. (for backup of desktop and laptop data) and LiveVault Corp. (for backup and recovery of server data). Revenue from those services is expected to rise from $90 million in 2005 to $140 million to $150 million this year, says John Clancy, executive vice president of Iron Mountain Digital.

But Doug Chandler, an analyst at IDC, estimates that MSSPs sold $215 million in services in 2005, less than 5 percent of the overall market for backup hardware, software and services, and that by 2009, the market will have grown to only $450 million. Chandler says the largest, most sophisticated customers will still choose to handle storage themselves, while smaller companies willing to outsource storage will buy it as part of a service package from an established vendor rather than from a relatively unknown MSSP.

He's also skeptical that stand-alone storage providers are large enough to achieve the economies of scale that would let them provide services at lower costs than in-house storage managers could.

MSSPs can be less expensive when a customer considers all the costs of maintaining storage staff and hardware at multiple locations, says Steve Siegel, vice president of marketing at Arsenal Digital Solutions Worldwide Inc. in Cary, N.C.

Sonparote says he's saving 30 percent to 40 percent on capital expenses using an online service, and 100 percent on expenses such as labor.