Technology services: Deal insights series H1 2026

Deal insights series 2026

Technology services M&A activity remained active in H1 2026 despite softer discretionary demand, macroeconomic uncertainty and AI-led disruption to traditional delivery models. Geopolitics, oil prices and inflation further weighed on IT spending, making growth elusive for many IT services players and prompting providers to pursue inorganic growth. The market operated at two speeds: well-capitalized strategic buyers pursued large deals for scale, geographic expansion and enhanced vertical capabilities, while private equity focused on selective consolidation of niche businesses and value-driven opportunities for their portfolios across the US and Europe. 

• Deal activity remained resilient, but disclosed value was concentrated in a few headline transactions. The seven largest deals contributed approximately US$10.3 billion, highlighting an active but increasingly selective market in which buyers prioritized value assets, sharper underwriting and reasonable multiples.

• At least 10 transactions with disclosed deal values exceeding US$300 million were announced in H1 2026, demonstrating continued appetite for scaled assets where the strategic logic was clear. AI shaped acquisition narratives, but client access, industry credibility and scale remained the assets changing hands. As standalone AI capabilities become more accessible, buyers increasingly value businesses combining scale, vertical depth and ecosystem positioning to participate in large enterprise AI transformation mandates. This represents a shift from the 2019 to 2023 cycle, when boutique capability differentiation commanded a premium. The democratization of AI capabilities through open-source models, hyperscaler tooling, and the rapid diffusion of engineering knowledge has compressed the shelf life of standalone AI differentiation, making proprietary capability alone difficult to sustain as a long-term competitive moat.

• Acquisition interest also extended into the infrastructure supporting enterprise AI. Accenture expanded across cybersecurity and network intelligence through Dragos and Ookla, while Cognizant’s acquisition of Astreya added data center and AI infrastructure services. These areas provide exposure to AI adoption while retaining relevance beyond any single AI application.

• Data and analytics also remained active, with buyers increasingly focused on the Databricks ecosystem. Compute, data and analytics and cybersecurity are likely to be the most durable areas, as demand should persist regardless of which AI applications dominate. Training data carries a higher conviction risk, as better models and synthetic data may reduce reliance on human annotation.

• AI’s commercial impact is becoming more visible despite limited and inconsistent revenue disclosure. Providers are gradually exploring outcome-based and services-as-software models as AI productivity makes headcount-linked pricing harder to defend, although adoption remains early and uneven.

• Public market valuations moderated amid slower growth, prolonged decision cycles and uncertainty around AI-led disruption. EBITDA margins remained more resilient than revenue growth, although continued AI investments partly offset benefits from improved utilization and currency tailwinds. 

Looking ahead, maturing private equity platforms and continued demand for vertical specialization are expected to shape deal activity. Healthcare and financial services should continue to attract buyer interest, as AI amplifies the value of domain knowledge in regulated sectors where institutional complexity and legal constraints matter as much as technology. However, AI capability alone is unlikely to command earlier-cycle premiums without scale, vertical depth or ecosystem positioning. Buyers are expected to favor a strong AI-era position where the underlying standalone economics remain sound.