AI-driven digital transformation prompts upheaval in tech services market

As AI commands a growing share of IT budgets and companies seek integrated solutions, Bain & Company highlights a shift towards outcome-based delivery models and talent reskilling to harness the technology’s strategic potential.

Artificial intelligence is emerging as one of the clearest growth paths for technology services firms, with Bain & Company arguing that the market is entering a phase where clients are shifting more spending towards AI, cybersecurity and integrated digital platforms. In its latest buyer survey, Bain said overall IT budgets among customers are expected to hold roughly steady in 2026 versus 2025, but technology services spending should edge higher as companies look for support in AI and security.

The consultancy surveyed 280 executives across North America and Europe and found that three quarters expect at least 5% to 10% of their technology budgets to go to AI and machine learning. According to Bain, some industries are moving faster: retail, institutional banking and oil and gas respondents were among those signalling that more than a fifth of spend could be directed to AI initiatives. Bain has separately said AI is shifting from pilot projects into production and becoming a top strategic priority for many companies.

That shift is already changing what buyers want from providers. Bain says customers are increasingly looking for joined-up offerings that combine AI, data, cloud and security rather than isolated services, while expectations for measurable productivity gains are also rising. The firm said executives now anticipate improvements of roughly 15% to 17% in areas such as software development, testing and contact-centre automation, which means providers will face more pressure to show outcomes rather than sell time and materials.

Bain also warned that delivery models will need to change if firms want to capture the opportunity. It says platform-based delivery, reusable assets and outcome-linked pricing will matter more as buyers reward scalable offerings with clearer business results. At the same time, the company said talent shortages remain a major constraint, particularly in cybersecurity, AI engineering and data science, and that providers will need to reskill staff and redesign roles as automation takes over routine work. Megha Chawla, head of Bain’s global technology services sector, said AI is becoming part of the CIO agenda, while partner Parvathy Kailasam said firms that treat talent transformation as a strategic priority will be best placed to serve converging client needs.

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Source: Fuse Wire Services