It Services: 2023 Industry Snapshot

In December, Aalto Capital released its latest Insight Paper, "IT Services: 2023 Industry Snapshot," exploring key aspects of the IT Services sector. The report describes the current market environment, emerging trends, growth impediments, and M&A dynamics.

Our research highlights the sustained growth of the IT Services industry, positioning itself as a prime investment hub. M&A data underscores increasing deal volume and size, driven by both private equity and strategic acquisitions. Notably, SaaS implementation firms and managed service providers dominate M&A and equity capital investment.

Continuing its focus over the past few years, the industry remains centred on cloud technology and its diverse applications. Major players, such as Amazon, Microsoft, and Google, continue to dominate this space. With the rise of AI and quantum computing, cybersecurity is paramount, prompting businesses to dedicate substantial efforts to safeguard their cloud environments and data.

The paper also addresses the prevailing trend of IT Services buy-and-build strategies. Private equity firms pursue platform acquisitions then integrate targets to form end-to-end service providers. This strategy benefits both users and providers, enhancing the likelihood of recurring revenues.

Our research indicates a continued upward trajectory for the sector, attracting substantial investment. The prevalence of buy-and-build strategies suggests ongoing consolidation and significant opportunity in the evolving IT Services market.

Aalto Capital Insights