The future of technology services: Key trends for 2025

How can businesses seize the opportunities as the technology services industry emerges from its longest years of slowdown?

Every year begins with questions about what lies ahead, and 2025 is no exception. As we stand on the cusp of what looks to be a pivotal year for technology services, it’s essential to assess where we are and where we’re going.

Are we emerging from the longest slowdown in recent memory, or are we simply stalling before the next wave of challenges? More importantly, what strategies will determine success in this changing landscape?

State of the technological services market

The technology services market has been in a prolonged slowdown for eight straight quarters, a longer slump than the seven-quarter slump that followed the recession of 2008. History tells us that prolonged slowdowns like this are rare and finite. Typically, as discretionary spending declines, a natural build-up of unsatisfied demand drives a recovery. However, this time has been longer than all the others.

This prolonged decline reflects a combination of factors. Globally, Europe continues to face economic strains, while in the US, optimism for a possible economic acceleration remains cautious at best. For tech services, this has meant an uneven landscape – some industries are starting to invest again, while others remain hesitant.

Early signs of recovery: What to look for

Encouragingly, we see signs that we may have reached the end of the cycle in North America. Our conversations with executives across industries reveal a growing willingness to restart investment in modernization and transformation. Banking has already led the charge, and sectors like CPG, retail and technology are now cautiously joining the fray.

What stands out in these investments is a clear demand for ROI-driven solutions. Enterprises are not looking for piecemeal technology upgrades; they want holistic and integrated solutions that deliver measurable results. COVID-era investments in technology created capabilities, but many remain underutilized. Leaders are now looking to unlock this value by aligning operations and technology in a more strategic and long-term way.

Modernization: A revival with purpose

One of the most promising trends is the return of modernization to the strategic agenda. Over the past couple of years, many organizations attempted to modernize through DIY approaches, only to find that the complexity of integration, security, and scalability often led to sub-par results. Now, there is a shift to trusted technology partners who can provide robust, reliable and comprehensive modernization solutions.

This new wave of modernization is distinct. It is not driven by a race for new features, but by a desire to create stable and scalable platforms that can evolve alongside business needs. Businesses are looking for solutions with a clear focus on operational improvements and financial returns.

The Uneven Recovery: Industry and Regional Trends

Not all sectors or geographies are moving at the same pace. Banking and technology continue to lead in discretionary spending, while industries such as telecom and manufacturing remain more conservative. We anticipate that these lagging sectors will begin to gain momentum in the middle of the year, following a historic adoption curve.

Regionally, we see divergent trajectories. Europe may pursue large-scale cost-saving deals, while North America is likely to focus on modernization and holistic solutions. Service providers must recognize and adapt to these nuances, adapting strategies to meet the unique needs of their customers.

The Rise of GCCs: A Transformative Change

One of the most compelling shifts we are witnessing is the increasing focus on Global Capability Centers (GCCs). Enterprises are doubling down on GCCs, either by building new centers or expanding the scope of existing ones. This trend represents a strategic shift, with companies moving significant workloads from third-party providers to in-house centers.

Why the rise of GCCs? The answer lies in control and cost. GCCs allow enterprises to align technology-driven transformation directly with business goals while achieving significant cost savings. The market to support GCCs—estimated at $20 billion today—is expected to double within three to four years, creating a huge opportunity for technology providers.

What it means for service providers

For technology service providers, the message is clear: old engagement models must evolve. Businesses are no longer looking for isolated technology implementations. They want partners that can deliver end-to-end solutions, align with their strategic priorities and demonstrate tangible value.

Providers should also be positioned to support the GCC wave, providing expertise in building, scaling and optimizing these hubs. Those who can align their skills with the needs of GCCs will find themselves at the forefront of this market transformation.

Charting a path forward

The way forward will be defined by resilience, adaptability and a relentless focus on value creation. We are entering a period of cautious optimism, where investment is returning, but only in initiatives that promise clear and measurable impact.

For leaders, the imperative is twofold:

• Invest accurately: Focus on initiatives that unlock value from past investments while building for the future.
• Partner for Success: Look for technology partners who can provide integrated and scalable solutions tailored to your unique needs.

As we sail into 2025, let us recognize the opportunities embedded in this period of transition. The changes we are seeing—whether in modernization, the GCC, or regional dynamics—are not simply challenges to overcome, but opportunities to lead. The decisions we make now will shape not only our immediate recovery, but also the competitive landscape for years to come.