2025 Opportunities for IT Consultancies - Strategic Insights for Boards
How technology consultancies can navigate a pivotal year of AI disruption, renewed consolidation and market opportunity
James Preece sets the scene for our CEO IT Consulting Sector Seminar on 26th February. Interested in attending? We always reserve a number of complimentary seats for CEOs who are not yet Megabuyte subscribers. Register your interest here.
2025: A Positive, Yet Polarising Year
2025 is shaping up to be a more positive, albeit polarising, year for technology consultancies. With rapid innovation in AI set to redefine demand, those on the right side of this shift stand to benefit from stronger financial performance and rising valuations.
For the boards of IT consulting companies, this is a pivotal moment. It’s time to rethink strategies, embrace calculated risks, and position for what’s next. In this article, we unpack why bold decisions today could pave the way for success amid consolidation and innovation.
I will set the market context in my keynote presentation before hosting a panel session with BJSS 's Glynn Robinson , and Littlefish CEO, and former Atos and Cognizant executive, Ursula Morgenstern , who will share their insights on building longevity into technology consultancies.
2024: A Challenging Year for IT Consultancies
2024 was a difficult year for the sector.?Megabuyte’s growth tracker points to an average revenue contraction of around 1% across the sector’s listed players as economic and political uncertainty put discretionary spending under a microscope. Digital services projects faced scope adjustments, delays, or cancellations, impacting consultancies. Moreover, the explosion of interest in AI which fuelled proof-of-concept projects and experimental use cases failed to move into production at the rate and quantum initially anticipated, dashing hopes of a potential industry bright spot.
The net result has been a fiercely competitive market. Global suppliers have dropped down into a tier of engagement below their typical hunting ground, intensifying pressure on mid-market organisations as a result.
The change from a supply-constrained to a demand-constrained market has also caught many in the consulting sector flat-footed. Consequential restructuring exercises to trim the fat and maintain utilisation rates are rife. The land-grab growth model at the expense of profitability is no more, replaced by a renewed focus on the ‘fundamentals’ of clear strategic positioning and execution.
Signs of Resilience Amidst Challenges
Despite these tough conditions, there are still strong performers in the market if you look hard enough. Hotspots like intelligent automation and cyber security were key growth areas, but success ultimately hinged on clearly defined strategy and strong execution.
Pureplay offshore giants like 塔塔咨询服务公司 and 印孚瑟斯 , for example, which are geared up like no other to deliver massive run programmes with vast low-cost resource (so leveraging scale and cost advantages), continue to enjoy premium margin profiles and sector-leading valuations.
Likewise, deep domain specialists (by vertical/sub vertical, technology stack, or both) were able to leverage their point of differentiation to win and expand market share despite a low-growth market and premium pricing. Examples include companies such as digital products specialist Apadmi , complex systems engineering company DIGI2AL , intelligent automation consultancy Robiquity , and government-focused consultancy UBDS Digital .
In some ways, these strategies got lost during the boom times of 2020-2023, when many IT consultancies could expand into almost any adjacent markets with ease. But 2024 reminded the sector of the value of playing to one’s strengths.?By going narrower and refocusing on ‘what you’re good at’, consultancies may achieve a higher pipeline conversion rate, providing stability in an otherwise very difficult market.
2025: The Road Ahead
We are quietly confident that IT consultancies are in for a better 2025. Our Megabuyte growth tracker index predicts growth of around 8%, a sharp improvement over 2024 with an almost 10pp swing to the upside. Early signals from Q4 earnings of the larger listed consultancies suggests this may be achievable.
Technology-wise, all eyes are, of course, on AI. The pace of development and innovation around LLMs, and the pace at which the ecosystem of ISVs are integrating AI into their product portfolio, cannot be overstated. At Megabuyte, we are characterising 2025 as the ‘AI Goldilocks’ period – where the balance of technological maturity and commercial readiness creates significant opportunities to capitalise on the accelerated transformation and disruption that AI will bring.
Megabuyte Founder and Chairman Ian Spence goes into more detail on these predictions "The AI Goldilocks Period: Are You Prepared?", but, in short, consultancies have a critical role in enabling the next generation of technology. Whether implementing the foundational data platforms on which new platforms will sit, strengthening security postures against vastly more complex IT estates, advising on compliance risks of AI, or simply augmenting delivery with AI tooling, the rewards of correct positioning will be significant.
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Renewed Consolidation on the Horizon
We expect to see a renewed wave of industry consolidation in 2025. Rapid technology changes and an improving economic picture are setting the stage for a period of significant disruption, and a well-planned but highly selective acquisition strategy will be key for many to ride the wave. Early hotspots are likely to include data-related capability (across its various flavours – engineering, visualisation, advanced analytics, governance etc), cyber security, automation, and AI-enabled vendor product ecosystems. Those consultancies failing to align with growth areas risk becoming legacy players, and fast.
The good news??Companies that move with the times and can demonstrate double-digit growth and healthy margins (20%+) will continue to attract significant interest, with EBITDA multiples as high as 15x achievable for the right buyer, despite a lack of contractually recurring revenue.
How To Take Advantage: Key Actions for Boards in 2025
In short, 2025 is likely to a more positive but polarising year, presenting both opportunities and challenges for IT consultancies. Some of the decisions being made today may well be the most important decisions a consultancy will have made for the last decade.
Success will depend on clearly defined strategies and strong execution, and we are advising boards to prioritise the following:
We are currently working with a number of companies around their ‘AI readiness’ positioning, using our proprietary Megabuyte AI Strategy Readiness Framework. If this is something you’d like to know more about, please drop me a message.
In summary, 2025 will expose weaknesses but also create opportunities for consultancies to achieve stronger growth, premium valuations, and greater investor interest. Boards that make the right decisions now will set their companies up for long-term success, with strong growth, premium valuations and no shortage of interest from acquirers and investors alike.
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Interested in attending a Megabuyte event?
We have 23 CxO events in our 2025 programme. Events that IT Consulting CxOs may find particularly interesting are:
26th February 2025 I IT Consulting Sector Seminar
5th & 6th June 2025 I Mid-market CEOStrategy Offsite
6th November 2025 I ICT Channel Sector Seminar
See our full events programme, including dedicated mid-market and scale-up events, and CEO, CFO and NED streams, at megabuyte.com