Running a services business has never been easy, but the past few years have been among the toughest. Challenges won’t ease in the year ahead as leaders grapple with political, economic, and technological upheavals, along with evolving demands from customers and employees. Change has always been part of the job, but it’s coming faster than ever.
We believe 2025 will usher in gusts of growth for IT services. It won’t match the highs of 2021, but spending is rebounding. With the right strategies and teams in place, leaders can position their firms for the future.
That future will involve AI. Will we live in a utopia or dystopia run by AI-powered robots while knowledge workers eat bon bons or scroll LinkedIn for hours? Maybe the latter, but not the former. Is AI forcing traditional services firms to rethink the models and playbooks they’ve used for decades? Yes. And 2025 will be a pivotal year for making some of these changes.
Here are 10 trends we believe will impact the tech services market in the year ahead.
- 1. Pockets of growth return
- 2. Game-time for GenAI: Production projects double
- 3. AI-native consultancies challenge public firms
- 4. Focus shifts from hours to outcomes
- 5. The HAIDaMo mafia tightens its grip
- 6. Partners trade monogamy for polyamory
- 7. The return of on-prem priorities
- 8. Employers retain control
- 9. Africa on the rise
- 10. All eyes on the Trump administration
1. Pockets of growth return
Businesses that held off on transformation projects pick their head up and realize they need to modernize or get left behind. This will create tailwinds in some sectors like data modernization, AI and cyber, along with insurance, healthcare and energy that have been technology laggards.
Gartner is predicting 9.4% revenue growth for IT services in 2025. That is up from 5.6% growth in 2024, and 2025 already feels off to a stronger start. While demand may be creeping back, some more dated ecosystems will continue to lag, and the push for smaller, more phased projects and continued cost efficiencies will continue to put pressure on bookings and backlog.
Services firms should start looking to where gusts of growth are forming. Consider how their chosen sectors and ecosystems could be impacted by macro trends and AI, and plan accordingly. Find ways to deliver more efficiently and increase margins to fund investments in growth areas.
Services firms should start looking to where gusts of growth are forming. Consider how their chosen sectors and ecosystems could be impacted by macro trends and AI, and plan accordingly. Find ways to deliver more efficiently and increase margins to fund investments in growth areas.
2. Game-time for GenAI: Production projects double
Prior to 2025 only a small fraction of AI pilots actually got off the ground. For reasons ranging from data issues to process and workforce readiness, only an estimated 10% of AI pilots actually moved into production.
This year, customers will get better at measuring ROI and resolving the data and security issues holding them back. Those that did move into production will start to see real results, creating FOMO and pressure from boards to “try harder”. Because of this, we expect the number of pilots moving into production to double this year. It’s still early days, and these projects will be bigger than pilots but short of transformation.
For IT services firms, that means it’s game time. Firms will need to quickly get production projects under their belt so they’re not just pitching pilots, and more importantly, be experts themselves in using GenAI to move faster and deliver better results.
Firms will need to quickly get production projects under their belt so they’re not just pitching pilots, and more importantly, be experts themselves in using GenAI to move faster and deliver better results.
3. AI-native consultancies challenge public firms
A new era of AI-native services firms is emerging. We’re seeing more and more firms built from the ground up to deliver services cheaper and faster using reusable IP, autonomous AI agents and low-code/no-code automation. As the market matures, they’re gaining traction with both enterprises, and large software vendors looking for nimble, hungry and innovative partners.
This is putting pressure on traditional firms, especially public firms constrained by quarterly results and entrenched business models. As a result, we’ll see more firms like Thoughtworks taken private to make the pivot.
Traditional firms should expect to compete with these AI-native partners if they aren’t already.
Customers will expect more from service providers when it comes to time to value, which should be factored into how deals are structured and delivered.
Customers will expect more from service providers when it comes to time to value, which should be factored into how deals are structured and delivered.
4. Focus shifts from hours to outcomes
For years, IT services firms have experimented with value-based selling, where fees are partially tied to achieving business goals. However, few have succeeded. External influences on client results, and procurement teams’ reliance on traditional processes, have made it difficult.
One GSI executive estimated their firm pursues a value-based component in about 30% of their deals, yet only a fraction of those make it through the procurement process. By sheer necessity, that will start to change this year. With AI, projects can be completed faster with fewer resources, helping with margins but putting pressure on revenue and deal sizes. Services firms that continue using only time-and-materials-based billing could be at risk.
Service providers should start to get creative with pricing, more focused on output and outcomes not just headcount and hours.
Service providers should start to get creative with pricing, more focused on output and outcomes not just headcount and hours.
This won’t happen overnight, and it will require significant change management with buyers, procurement and internal staff. Procurement will be the long pole in the tent.
5. The HAIDaMo mafia tightens its grip
Hyperscalers, AI Providers, and Data Modernization (HAIDaMo) players are at the front lines of the AI revolution. AWS, Microsoft and Google Cloud already control 82% of the IaaS and PaaS market, and last year posted double-digit year-over-year growth on some pretty large numbers.
More than half (54%) of the 250+ tech services firms we surveyed listed one of these companies as their primary partner; and on average, the partners in these ecosystems outperformed their peers.
These hyperscalers, along with the data platforms and AI providers in our Tercera 30 (Databricks, Snowflake, MongoDB, OpenAI, Anthropic, Nvidia) are all becoming critical cogs in the IT stack. It’s not just these players. IBM and Oracle are regaining their luster, and are positioned well for the growing focus on hybrid environments (more on that later).
Services firms that want to meet the needs of large, complex enterprises will need to have capabilities across the HAIDaMo mafia. At the same time, forming partnerships with these powerhouses will get harder as their partner ecosystems get more competitive. Find your niche.
Services firms that want to meet the needs of large, complex enterprises will need to have capabilities across the HAIDaMo mafia. At the same time, forming partnerships with these powerhouses will get harder as their partner ecosystems get more competitive. Find your niche.
6. Partners trade monogamy for polyamory
The days of services firms being able to reach $50 million in revenue off one partner may be over. Last year was tough for many firms that depended on a single partner as some ISVs shifted go-to-market motions, swapped out sales teams, and even leaned into internal professional services to earn revenue. In our annual Tercera 30 survey, we found services firms with two to three partners grew faster than those with one (see chart below).
Diversification offers a variety of advantages. Firms can provide more value to customers with complex environments, continue relationships after an initial engagement ends, and they can manage risk better if they have a wider set of capabilities. However, spreading oneself too thin can also be risky.
Pure play service providers should evaluate existing partner strategies in 2025, and consider an ecosystem of ecosystems approach. It may be time to pick up another anchor partner to complement an existing partnership. But choose wisely, because not all partners are created equal and forming these partnerships takes time and money.
Pure play service providers should evaluate existing partner strategies in 2025, and consider an ecosystem of ecosystems approach.

7. The return of on-prem priorities
Services firms have made a fortune helping companies move off private data centers and into the cloud. While those cloud migrations will continue for the foreseeable future, companies are considering on-premise options in order to optimize bandwidth, meet latency demands and create resiliency.
Data centers in general are in high demand. Hyperscalers, AI startups and other tech companies, all vying to host the world’s AI workloads, are pouring vast sums into compute capabilities. Investors as well. KKR and Blackrock alone have earmarked $80 billion for data centers and energy investments to support AI growth.
This creates big opportunities for services firms that specialize in data centers, power build out, and those that can work across hybrid environments. It’s also causing hyperscalers to divert attention and expenditures away from other areas of the business. Partners should expect a shift in priorities, and those servicing less sexy products may need to watch carefully.
This creates big opportunities for services firms that specialize in data centers, power build out, and those that can work across hybrid environments. It’s also causing hyperscalers to divert attention and expenditures away from other areas of the business.
8. Employers retain control
The balance of power between employees and employers flipped quickly between the Great Resignation panic of 2021, and mass layoffs in 2022. Since then, companies have cut staff, limited hiring and even cut pay to remain profitable as growth slowed. Employees have held on tight as LinkedIn feeds filled with “Open to Work” and horror stories about job searches.
Employers will continue to stay lean and squeeze productivity from existing employees, having learned their lesson from overhiring and overpaying for talent during the boom times. However, hiring will pick up as demand slowly returns, providing more opportunities for people who have held off making a move. There will be job movement, but it won’t be big gains. More a ripple than a wave.
Much of that hiring will be in the middle of the delivery pyramid – experienced client-facing consultants, architects and industry advisors with the soft skills required for demanding clients. Senior partners at major firms continue to face transitions, with some opting for early retirement and others launching their own AI-driven ventures. Jobs at the bottom of the pyramid (now more of a hexagon) may begin contracting, making it challenging for new grads and generalists.
Leaders must remember that market dynamics shift quickly. While profitability serves employers and employees alike, culture and employee engagement can’t be ignored. Otherwise, great talent will leave, no matter who has the upper hand.
Leaders must remember that market dynamics shift quickly. While profitability serves employers and employees alike, culture and employee engagement can’t be ignored. Otherwise, great talent will leave, no matter who has the upper hand.
9. Africa on the rise
To date, India, Latin America, and Eastern Europe have been the top destinations for those seeking low-cost, high-quality talent. As companies go hunting for in-demand data scientists and proven AI engineers and consultants, they’ll turn to new regions.
Africa, home to the youngest population in the world, is gaining traction and many of the GSIs have already established their presence in Africa. Accenture, Deloitte, PwC, Atos, Genpact, EY and Infosys (to name a few) all have a presence in Africa, some across multiple countries.
As wages rise in India and Latin America, and data and AI talent becomes harder to hire, companies would be well served to take a look at Africa. Especially countries like Nigeria, Egypt, Kenya and South Africa, which are anecdotally referred to as “big Four” or “gateways to Africa” due to their stronger economies and relative ease of doing business.
As wages rise in India and Latin America, and data and AI talent becomes harder to hire, companies would be well served to take a look at Africa.
10. All eyes on the Trump administration
Tea-leaf reading is a time-honored tradition when a new US administration takes power, but President Trump has telegraphed the dramatic changes he intends to make since Day 1. His tone on deregulation, tariffs, immigration and reshoring could spell risk and opportunity for firms, depending on which markets they operate in and where they source their talent.
Trump has promised drastic cuts to the national budget, with the creation of a new Department of Government Efficiency (DOGE). Yet we believe federal spending will remain lucrative for software and services companies in 2025. First, the government is vast and complex, and change will take time. Second, to reap efficiencies, the administration is likely to invest in automation and commercial software. Sometimes you need to spend money to save money.
Services firms serving the federal market should stay the course, while they keep reading those tea leaves. However, if they’re not reshaping their narrative to government buyers to focus on outcomes, efficiency and value, they can be assured their competitors are.
Services firms serving the federal market should stay the course, while they keep reading those tea leaves.
We pondered a number of other topics for this list. Will the back-to-the-office movement impact consultants going back on site? Will there be a backlash against AI notetakers? How soon until AI bots and mouse movers enable the return of long martini (or NA beer) lunches?
But this list is already long enough.
If you have thoughts, please share them on LinkedIn or send us an email at info@tercera.io. We’ll be expanding on many of these trends in our monthly newsletter. If you’re not already a subscriber, you can remedy that here.