Bain Warns Tech Services Firms: AI And Global Shifts Could Slash Revenues By 30%

The global technology services industry faces disruption, with artificial intelligence emerging as the biggest game-changer, according to Bain & Company’s latest report, The New Growth Equation for Tech Services. As per PTI the consultancy cautions that a business-as-usual approach could erode revenues by 30% or more, as economic nationalism, demographic shifts, and the energy transition reshape how providers operate and compete.

Yet, Bain notes these challenges also open new growth avenues in areas like data operations, systems modernisation, and chip design, PTI said.

Economic nationalism, aging population and the energy transition are also forcing change across the industry. Together, these factors are reshaping how tech services providers operate, deliver value and compete, PTI said citing report.

Analysis by Bain shows that these factors, however, also create fresh opportunities.

The rise of an AI-driven economy is fuelling growth in areas such as data operations, systems modernisation and chip design, while makeover of legacy platforms is unlocking new opportunities for core transformation.

Leading providers that reshape their offerings, delivery models, talent and are able to move to value-based pricing are positioned to grow by 8% to 10%, sustain or expand margins, and increase revenue multiples by 3-3.5 times, according to it.

“As technology becomes central to every enterprise, AI-first models are redefining how organisations manage processes and operations, creating a new wave of demand for tech-enabled transformation,” PTI said citing report.

The report further added that, “Bain's research suggests that continuing to operate with a business-as-usual approach could erode revenue by 30% or more. Firms stand to lose 5 to 7 points of EBIT margin from deal discounting to win more work, which could contribute to an enterprise value loss of 45% to 50% over the next five years.”

(With inputs from PTI)