IT Services - InSight Analysis - Italy

This InSight Analysis examines the Italian IT services market, detailing its key drivers and obstacles, the positioning of the main vendors, and medium-term investment trends.

In 2024, the Italian IT services market grew by just under 5%, driven mainly by application-related services, which expanded by around 6%. Application-related project services and application management contributed evenly. Within project services, process and application-related consulting performed best, supported by the need to evaluate and adopt emerging technologies. System integration also grew thanks to modernization programs covering analytics applications, vertical processes, and key horizontal areas, such as sales, HR, and administration. Application-related IT training remained small but continued to increase. Application management services posted significant growth in stand-alone models, which offer flexibility and reduced complexity, while embedded models grew at a moderate pace. BPO increased in line with the market, driven by the need for cost efficiency, specialized skills, and scalable back-office and customer-facing processes. Infrastructure-related services grew more slowly. Outsourcing was slow due to pressure on endpoint services, while managed services and cloud-driven transformation supported server outsourcing, and infrastructure projects grew. Looking ahead, PAC expects continued but slower grow, sustained by application initiatives, hybrid cloud evolution, and security, though economic and geopolitical uncertainties may dampen spending.

Survey findings show that Italian companies are strongly focused on data-driven transformation. Most have defined or are defining data & analytics strategies, prioritizing governance, security, quality, and the evolution of data platforms and architectures. AI adoption is widespread, especially in sectors with a high maturity level in data exploitation; initiatives are mostly led by IT departments and rely on technologies such as generative AI, machine learning, NLP, intelligent data processing, and computer vision. Companies increasingly seek service providers to automate back-office tasks, provide productivity support, enhance customer engagement, and optimize industrial processes. Cloud usage is nearly universal, with plans to expand SaaS and IaaS and growing reliance on partners to manage hybrid and multi-cloud complexity. Security remains a critical priority, driven by geopolitical risks, supply-chain exposure, and sophisticated attacks, prompting investment in EDR, IAM, cloud security, threat intelligence, and advisory services. Enterprise modernization across horizontal, vertical, and technical applications continues to accelerate, guided by cloud-first strategies and approaches such as refactoring, replatforming, SaaS replacement, and lift-and-shift migration.

Recommended advisory: PAC Leadership Session – Innovation Management