Failing to transform in AI age, geopolitical shifts and macro-related changes could cost firms up to half their enterprise value; leaders that reshape offerings, delivery, and talent can grow twice as fast
BOSTON, Nov. 18, 2025 /PRNewswire/ — The global technology services industry faces major disruption, according to a new report, The New Growth Equation for Tech Services, by Bain & Company. The report finds that continuing to operate with a business-as-usual approach could erode revenue by 30% or more. Across the sector, margins have fallen by more than 200 basis points, and valuations have returned to pre-pandemic levels.
“Technology services firms stand at a defining moment,” said Kushal Raja, partner at Bain & Company. “AI and other structural shifts are redrawing the industry’s growth map. The next wave of winners will be those that reimagine strategy using a micro-battle approach, leverage AI to transform processes and move to platform-based value-driven delivery. They are the ones that lead the way in revamping their talent and culture models to fully capture the value of this change.”
AI is the biggest disrupter in tech services, but it is not the only one. Economic nationalism, aging population and the energy transition are also forcing change across the industry. Together, these factors are reshaping how tech services providers operate, deliver value and compete.
Analysis by Bain shows that these factors also create new opportunities. The rise of an AI-driven economy is fueling growth in areas such as data operations, systems modernization and chip design, while the modernization of legacy platforms is unlocking new opportunities for core transformation. As technology becomes central to every enterprise, AI-first models are redefining how organizations manage processes and operations, creating a new wave of demand for tech-enabled transformation.
Bain’s research suggests that continuing to operate with a business-as-usual approach could erode revenue by 30% or more. Firms stand to lose 5 to 7 points of EBIT margin from deal discounting to win more work, which could contribute to an enterprise value loss of 45% to 50% over the next five years. To this, leading providers that reshape their offerings, delivery models, talent and are able to move to value-based pricing are positioned to grow by 8% to 10%, sustain or expand margins, and increase revenue multiples by 3 to 3.5 times.
To stay competitive, Bain identifies eight imperatives for success in technology services:
- Shift strategy to focus on targeted “micro-battles” at the intersection of industries, geographies and spending themes.
- Build multiservice solutions that transform processes by integrating service design, technology, data and operations to address high-priority client challenges.
- Revamp go-to-market models to enable AI-led, consultative selling supported by new frontline skills and continuous learning loops.
- Adopt platform-based delivery and value-based pricing to scale outcomes efficiently, improve speed and transparency, and tie pricing to business results.
- Reimagine talent strategy to build flexible, competency-based teams, nurture forward-deployed engineering capabilities, and appeal to a more diverse, next-generation workforce.
- Reset organizational culture by moving from rigid hierarchies to empowered, agile teams and from people-first to tech-first mindsets across the enterprise.
- Strengthen partnerships through joint investment, shared account planning, and co-creation of repeatable IP.
- Use M&A to accelerate differentiation and leapfrog competitors in data management, AI platforms, and emerging technologies.
Technology services providers need to take decisive action now. Firms will need to deploy AI not only in client solutions but also across their own operations. By taking a zero-based approach – rebuilding internal processes with AI at the core – tech services providers can unlock 200 to 300 basis points of margin improvement. This efficiency gain can then fund further investments in innovation, delivery and talent.
Firms can focus investments on the core delivery, operations and talent areas that drive performance, rather than spreading resources thin across support functions. Additionally, identify high impact ‘micro-battles’ such as industry or functional niches where there is potential to build specialized expertise and become leading players. Technology service providers that act decisively will be best positioned to capture this next wave of growth.
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About Bain & Company
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SOURCE Bain & Company
