IT budgets are rising again. Global technology spend is growing 7-9%, driven by data centres and the AI build-out. Yet the services business tells a very different story. Revenues are largely flat, and where growth exists, it’s typically low to mid-single digits – well short of the double-digit momentum services firms enjoyed not long ago. 

That gap is striking given what enterprises are dealing with: GenAI and early agentic AI rollouts, S/4HANA upgrades, Salesforce modernisation, rising cybersecurity spend, ServiceNow adoption, and increasingly complex cloud and VMware migrations that often require rearchitecture rather than lift-and-shift. On paper, demand for services should be strong. 

However, this apparent underperformance is clearer when considering that enterprise IT budgets are not growing at 7-9%. In many countries, budgets remain relatively flat, often increasing only in line with overall economic growth, around 2-4%. Global economic uncertainty is prompting businesses to take a more cautious approach, which helps explain the recent uptick in mergers and acquisitions across multiple sectors. 

The result is a services market where demand exists, but growth is constrained. The issue is not a lack of transformation, but a tighter, more selective spending environment where services firms are competing harder for a smaller share of enterprise budgets. 

AI as the Key Opportunity 

Despite flat budgets, significant opportunities exist for tech services firms. Tech services firms are investing heavily in agentic AI capabilities, both for client solutions and their own operations. Companies such as PWC and Accenture, for example, have developed proven AI services with partners like Microsoft, ServiceNow, Salesforce, AWS, and Google. These offerings include data discovery, cleansing, GraphDB relationship mapping, and auditing and compliance monitoring, ensuring AI agents are deployed with minimal risk and maximum benefit. 

Internally, these firms are also using AI to improve efficiency. Accenture reports that over 90% of its marketing processes are now handled by AI agents, demonstrating how operational adoption complements client-facing capabilities. 

Opportunity Areas for Tech Services Players

AI reshaping systems integration & change management. An increasing proportion of systems integration work is moving to AI. Systems can discover APIs and write their own connectors. AI can map legacy systems and processes and map data to new systems and processes. AI is writing and running test scripts for these new systems. AI-native software tools and platforms (like Sana – recently acquired by Workday) can build training courses for new systems and information with no human intervention at all. 

Even change management – a traditional “human” capability – can now being handled by AI. Software platforms are all working to ensure that the historic 1:3 ratio of software to services spend is behind us, seeing AI as crucial to making solutions more affordable and accessible. 

Managed services holding steady in the AI transition. The transition to AI will be uneven. Some organisations will embrace it rapidly, others more cautiously, so revenue for services firms will not fall off a cliff. Managed services remain a stable business, and the increasing adoption of AI-based solutions gives companies more opportunities to outsource the management, maintenance, and improvement of these systems. For the next 3-5 years, AI will largely be incremental, meaning it won’t replace existing solutions but will create more systems to manage, test, and improve. 

Security services gaining momentum. As AI adoption increases, so do AI-driven threats. Security services – from consulting to systems integration to managed services – are expected to see rising demand. The deeper the AI investment, the more likely security spend will increase. 

Upskilling becoming non-negotiable. Despite AI adoption in L&D, training services will see healthy growth as businesses need new skills across the board. The successful organisation of the future is one that can continuously upskill employees as AI automates more tasks. Investing in employees remains critical. Not all training will be internal, so external upskilling for new tech and business skills will continue to see demand. 

Architecture & sustainability moving to the core. Agentic AI has the ability to fundamentally reshape technology architectures, replacing application layers, changing data strategies, and rethinking user interfaces. Organisations will demand assistance with this significant change, and industry experience will add real value. 

Environmental sustainability services (measurement, mapping, reporting, etc.) will see increased interest as governments legislate net zero policies and compliance requirements. The increased energy demands of AI solutions may accelerate greenhouse gas regulations. Embedding sustainability capabilities across all tech services will likely be required to measure the environmental cost of all tech spend. 

Impact, ROI, and Pricing

These AI solutions can transform customer operations immediately, but the costing model and ROI remain uncertain. Valuing AI agents is straightforward if measured by hours saved (and corresponding headcount reductions), but far more complex when considering time saved and the ability to perform “higher value work.” When these efficiencies benefit clients, it raises the question of pricing: will costs be passed on to clients, or will firms retain some or all of the increased margin? Initially, prices appear to be holding, with a premium charged for faster time to value. Over time, as more tech services firms use AI internally to reduce costs, prices are expected to adjust downward accordingly.