It's probably impossible to know for certain now what Dickens's thought process was when he came up with the name Magwitch - we can't exactly ask him, and "interviews with authors" were much less common in his time than today - but there has been some speculation about this by critics.
The site JohnDClare.net, which describes itself as a GCSE revision site, has this to say about the significance of the names "Magwitch", "Provis", and "Abel":
‘Mag’ is a slang name for a magpie (a bird associated with theft), but a ‘Mage’ is a wise man (after the Magi who visited Jesus in the Bible story). Magwitch carries a bible he has stolen ‘as a sort of legal spell or charm’ to keep him from capture. The idea of ‘magic’ in both ‘mag’ and ‘witch’ also perhaps hints at his amazing powers (to escape, to make money), but the idea of a ‘witch’ also suggests a person unfairly condemned by society and the laws.
Coming to London at the end of the novel, Magwitch takes the name ‘Provis’ – ‘providence’ means ‘God’s plan for your life’/ ‘your fate’. It reminds us that Magwitch’s interactions with Pip direct the whole of Pip’s life – first in the churchyard, then as his anonymous benefactor, and finally as the cause of his downfall.
Magwitch’s first name is Abel. In the Bible, Abel is a sheep-herder who is killed by his brother Cain. Magwitch makes all his money in Australia as a sheep-herder, and he is tricked and betrayed by Compeyson, whom he wants to kill in revenge.
The academic article Joseph A. Hynes, "Image and Symbol in Great Expectations", ELH 30(3) (1963), pp. 258-92 talks a great deal about the various uses of symbolism in the novel, including a brief analysis of the names of Magwitch and Miss Havisham:
Further, we might note that both of these puppeteer-characters are associated with labels which help symbolize the ambiguity of their roles. "Satis House" is in plain enough ironic opposition to "Miss Have-a-sham (e)" ("Half-a-sham[e]"?), while the innocent "Abel" of Magwitch's name, and his pseudonym of "Provis" ("Provider," probably), must be qualified by the suggestions present in "Magwitch" ("magus" or "magician" + "witch").
There's also an article Stanley Friedman, "The Complex Origins of Pip and Magwitch", Dickens Studies Annual 15 (1986), pp. 221-31 which may be relevant. I was unable to access the full text of this one, but perhaps you or someone else here will have the right subscription or membership.
Regarding the association of Magwitch with magpies, it's worth noting (as Hynes does in the article cited above) firstly that the convict's clothes are black and white like a magpie, and secondly that this wouldn't be the only bird metaphor associated with him:
"I know'd my name to be Magwitch, chrisen'd Abel. How did I know it? Much as I know'd the birds' names in the hedges to be chaffinch, sparrer, thrush. I might have thought it was all lies together, only as the birds' names come out true, I supposed mine did."
TL;DR: "Magwitch" = "mage/magus" + "witch", suggesting someone with surprising powers who is pursued by the law, with also a hint of "magpie", a bird which is disliked and clad in black and white.