Tech providers shift to AI and industry services through acquisitions

Technology service providers are shifting their acquisition strategies amid challenging market conditions, with a sharp focus on AI capabilities and industry-specific services. The number of acquisitions by major tech service firms plummeted from 164 in 2021 to just 63 in 2023, rebounding only slightly to 74 deals in 2024. This strategic pivot reflects not just economic constraints but also a deliberate repositioning toward higher-value services as providers adapt to an AI-centric business landscape and increasingly specialized client demands.

The big picture: Accenture has emerged as the dominant acquirer in the services industry, accounting for nearly half of all tracked acquisitions in the past two years while other major players dramatically scaled back their deal-making.

• Accenture added 66 firms between 2023-2024, maintaining its aggressive acquisition pace despite market headwinds that deterred competitors.
• The next largest acquirer, Deloitte, completed just nine deals in the same period—a dramatic drop from its previous pace of 55 acquisitions between 2019 and 2022.
• This acquisition disparity positions Accenture as the bellwether for expansion strategy in the technology services industry.

Why deals slowed: Three primary factors have suppressed acquisition activity across the technology services sector since 2021.

• Unrealistically high company valuations deterred potential acquisitions, making many targets financially unfeasible.
• Technology services demand has remained flat or only slowly increasing, reducing the urgency for capacity expansion.
• High interest rates have significantly increased capital costs, making debt-financed acquisitions less attractive.

Key acquisition trends: Service providers are strategically targeting four emerging service categories to position themselves for future growth.

• Industry consulting services are becoming priority acquisition targets, as these specialists offer deeper enterprise context than general systems integrators.
• Business application implementation services, particularly for ServiceNow platforms, have become hot acquisition targets for firms like Cognizant, EY, and NTT DATA.
• Capital project management capabilities for large infrastructure initiatives are attracting significant investment, especially from Accenture and Deloitte.
• Training services have gained importance amid AI-driven workforce changes, with Accenture recently acquiring Udacity and Award Solutions to expand its learning platforms.

Why this matters: Enterprise technology executives should carefully monitor their service providers’ acquisition strategies as these directly impact service quality and capabilities.

• The average enterprise now spends 28% of its IT budget on third-party service providers, creating significant dependency on these strategic partners.
• Executives should evaluate providers’ acquisition approaches during initial vetting and annual service agreement reviews to ensure alignment with evolving business needs.
• Procurement teams should implement contract protections against service disruptions resulting from provider acquisitions or organizational changes.