Technology services: Taking the global center stage

The tech services sector has seen a sharp increase in scaled players, driven by strong tailwinds and sustained growth. Over the last decade, transformative deal-making has surpassed $330 billion, highlighting impressive deal velocity. This momentum is further propelled by targeted investment and acquisition themes within high-growth sub-segments, shaping the industry's future landscape.

Tech services have emerged as a preferred investment destination globally, expanding the capital pool chasing opportunities. In the last decade, 80+ new buyers, including both strategic and financial players, have actively participated in transformative deal-making. The demand-supply gap of high-quality targets, along with an expanding universe of strategic and financial buyers, continues to drive valuations.

The Tech Services industry continues to provide lucrative monetization opportunities for founders and investors, with both private and public markets delivering highly attractive returns across regions. Private equity investors, in particular, have achieved remarkable success, generating an average Multiple on Invested Capital (MOIC) of 3x+ across transformative deals.

Multiple sub-segments, including DES, Healthcare RCM, ER&D services, cloud services, and analytics services, are expected to continue driving transformative transactions in the tech services space. Over 15 highly attractive scaled assets within each of these sub-segments are anticipated to emerge as potential M&A targets, further fuelling deal momentum.

As the propensity for large deals rises, newer buyers are expected to emerge, with strategic players from APAC and large companies expanding into services offerings actively participating in transactions over the next few years.

The number of transformative deals by the top 20 PE funds has surged by over 700% between 2013-24 compared to 2003-12, reinforcing the expectation that PE firms will continue to dominate transformative deals in Tech Services. Meanwhile, strategic buyers have remained competitive and are expected to accelerate their deal-making velocity in the near future.