Will 2025 Be A Tougher Year For UK IT Services Suppliers?

We has just published its latest rankings of the leading IT services vendors in the UK. The leading pack has a familiar look, with TCS extending its leadership position over Accenture and Capgemini taking the final podium spot. But the main question posed as we looked through the rankings was, will 2025 prove to be as challenging a year for the sector as the previous one?

Only six out of the top 20 players increased their UK IT services revenue last year, reflecting the tougher market conditions. TCS was the strongest performer (+10%); it benefited from the ongoing expansion of its business process services activities in the financial services sector and rapid growth in the public sector.

However, the majority of suppliers reported a reverse in top-line development last year, due to a number of factors. Some had specific operational challenges (Atos, Fujitsu), while others continued to adapt their portfolios away from legacy service lines and deals (DXC, Capita). The disruption caused by the general elections also pushed back spending decisions across the public sector. Accenture and Capgemini had flat years (both with a 1% revenue decline) as consulting spending was squeezed.

But is 2025 shaping up to be a better year? The shockwaves from the Trump administration’s tariffs have led many UK organisations to pause or push back some initiatives as they wait to understand the full impact on their business. As a result, PAC has very recently dialled down our market outlook for UK IT services spending, but we currently maintain that the overall health of the market will improve compared to last year.

There are several major market drivers that we see driving new opportunities for vendors. In the commercial sector, we continue to see large and midsize organisations lean more heavily on external partners to accelerate their digital transformation programs. Taylor Wimpey’s deal with HCLTech to support its target of becoming a “digital-first house builder” is one recent example.

Legacy modernisation programs continue apace, with ERP modernisation cycles continuing to tick over to meet support phase-out deadlines (evident in Wipro’s deal to deploy S/4HANA at publishing group Hachette UK). Services vendors with strong SAP and ServiceNow practices continued to experience strong demand as clients implemented modern, cloud-based platforms to provide them with a basis for harnessing the potential of AI and intelligent automation. 

The banking sector remains a strong source of activity, with core system modernisation projects unveiled by multiple building societies, including Cumberland (with TCS), Yorkshire (with Infosys) and West Brom (working with Deloitte).

The public sector remains a more important source of business for IT services vendors in the UK than in any other territory in Europe, and new opportunities continue to come to market under the Labour Government. This week, HMRC started initial engagement with suppliers over a major potential project to upgrade its customer relationship management platform. In the coming weeks, the Government will unveil new strategies for both Defence and Healthcare, which are widely expected to prioritise digital elements.

Along with the start of major asset modernisation programs in the utilities sector, these will present the key drivers for a market that will not reach the high growth rates of the post-Covid boom (2021-2023) but will represent an improvement over last year. PAC expects next year’s rankings to be led by those vendors that are best aligned to these growth topics.

Are you a SITSI customer? Access the vendor rankings now: IT Services – Preliminary Vendor Rankings – UK. Not yet a client and want access to the rankings? Contact-us