JEGI CLARITY’S 21ST Annual Media & Technology Conference in New York brought together senior executives and investors from across the global media, marketing, information, and technology sectors.
Hugh Boston and Bob Lockwood explored the evolving landscape of the Tech Services sector, key industry trends, the impact of M&A, and winning strategies for tech businesses looking to stay competitive. Here’s a brief overview of their insightful presentation.
Introduction
Technology services are at the core of business transformation, enabling organizations to operate more efficiently, scale effectively, and deliver greater value. With global IT services revenue projected to reach $1.88Tn by 2025¹, the sector is poised for continued growth.
Key Industry Trends
The Growing Demand for Digital Transformation
Technology services are increasingly seen as mission-critical for organizations seeking to modernize their operations. Businesses are prioritizing digital transformation initiatives, including cloud migration, software integration, and AI adoption. For instance, 75% of EPAM’s top clients are engaged in GenAI programs, underscoring its growing influence on business strategies.
Cloud migration continues to be a major focus, with companies accelerating their shift to cloud platforms to improve agility, scalability, and cost efficiency. This trend is driven by the need for businesses to remain competitive and respond quickly to market changes.
AI and Automation as Catalysts for Growth
Artificial intelligence is playing a pivotal role in transforming the tech services landscape. In 2024, Globant generated $350M from AI projects, while Accenture reported a $4Bn run rate for new GenAI bookings.
AI adoption is driving efficiency through automation, predictive analytics, and personalized customer experiences. Additionally, AI-powered data engineering, analysis, and cybersecurity solutions are becoming essential for businesses looking to safeguard their operations and optimize performance.
Post-COVID Revenue Growth and Stabilization
The tech services sector experienced a significant revenue spike in 2021 due to increased demand during the pandemic, which led to a temporary “COVID bump.”
Following a period of slower growth, the market is now stabilizing, with projected revenue increases of 4% to 5% annually through 2025. Companies like Accenture, CGI, and Cognizant are seeing renewed growth momentum, driven by rising client demand for digital services and consulting. This recovery signals a return to steady, long-term expansion in the tech services industry.
Increased Private Equity Interest
Private equity (PE) firms are heavily investing in tech services, drawn by the sector’s flexible, cash-flowing models and its growth potential. In 2024 alone, the deal value for North American tech services reached $44Bn, with $109Bn² in total global deal value. PE firms are particularly interested in platform-based acquisitions, creating large-scale service providers through strategic add-ons. This consolidation trend is enabling firms to expand their service offerings, enter new geographies, and target emerging customer verticals.
PE has been aggressively building platforms with add-on acquisitions:
The Impact of M&A on Tech Services
Driving Scale and Capabilities
Mergers and acquisitions are reshaping the tech services landscape by creating larger, more versatile players. Companies are pursuing M&A strategies to:
• Expand geographical reach – Acquiring firms in new regions to diversify their market presence.
• Enhance capabilities – Gaining access to specialized services, such as AI consulting or cybersecurity solutions.
• Increase customer verticals – Entering new industry sectors through targeted acquisitions.
Platform Growth and Add-On Acquisitions
PE-backed platform companies are actively acquiring smaller firms to scale their operations. This approach is driving significant growth, with add-on acquisitions accounting for a large portion of deal activity. This trend allows firms to rapidly expand their service portfolios while benefiting from economies of scale. It also makes them more attractive to larger buyers, creating favorable exit opportunities for investors.
Consolidation Among Major Players
The industry is witnessing significant consolidation among established tech service providers. Larger firms are acquiring smaller, niche players to offer integrated, end-to-end solutions. This creates stronger, full-service providers capable of meeting the growing demand for comprehensive technology consulting and implementation services.
Winning Strategies for Tech Businesses
To remain competitive in today’s fast-changing environment, tech businesses need to embrace fresh, forward-thinking strategies. Here are five essential approaches to fuel growth and boost marketing performance:
- Prioritize AI-Driven Innovation – Tech businesses that embrace AI-driven solutions will be better positioned to capture market share. Investing in AI-powered data analytics, machine learning (ML), and automation tools can help companies improve efficiency, reduce costs, and deliver more sophisticated services for clients.
- Leverage Cloud Migration Opportunities – With cloud adoption accelerating, tech service providers should focus on cloud migration expertise. Offering specialized services in cloud infrastructure, data engineering, and cybersecurity will attract clients seeking to modernize their operations.
- Pursue Strategic M&A for Growth – Businesses should consider strategic acquisitions that enhance their capabilities and expand their market reach. This could include acquiring firms with complementary technologies or entering new geographical markets.
- Focus on Customer-Centric Solutions – As businesses prioritize digital transformation, tech service firms should offer tailored solutions that align with their clients’ specific needs. Customizing services based on industry verticals and providing measurable ROI will strengthen client relationships.
- Strengthen Cybersecurity and Data Capabilities – With increasing concerns around data privacy and security, offering robust cybersecurity solutions is essential. Investing in data protection, risk management, and compliance services will be a key differentiator.
Conclusion
The tech services sector is entering a period of sustained growth, fueled by digital transformation, AI adoption, and M&A activity. Companies that invest in AI, cloud migration, and strategic partnerships will be best positioned to capitalize on emerging opportunities. With private equity interest driving further consolidation and platform expansion, the sector is set to remain a key driver of business transformation in 2025 and beyond.
For further information, please contact Hugh Boston or Bob Lockwood
¹ Statista ((IT Services revenue consists of four markets: IT Consulting & Implementation, Business Process Outsourcing, IT Outsourcing & Other IT Services including system integration, software installation & support and IT education & training), ² Gartner, JEGI CLARITY
