The long and the short of IT

Who's on First

What’s on second. We need to start looking into the future now as October recedes. When Q3 reporting season started investor sentiment around large IT Professional Services firms was notably cautious. The perceived threat of AI loomed large, especially for Indian players whose models have long relied on human capital over proprietary IP. Now as the US tech giants initiate yet another wave of mass layoffs, and AI is increasingly cited as the culprit, is any of this obvious from Q3 reporting in the IT Professional Services industry? With companies responsible for 3.3m FTEs (out of my 3.6m+ universe) reported, I have examined the data across headcount, attrition, and utilisation, reviewing the proposition: If GenAI is truly a lever for efficiency and productivity, is any of this showing up in the data (Spoiler: it is not just India, cohort margins are +240bps Y/Y.)

Now with 56 shopping days to Christmas, it isn’t too early to start thinking about 2026? The year ahead promises to be eventful; In the US there are celebrations to mark its 250th anniversary, in the UK, Winnie the Pooh has his 100th birthday birthday. Next years celebrations will be played out against an accelerating pace of technology insertion, and an increasingly befuddled regulatory backdrop. Early signals suggest a busy, transformative year. Finally, with another UK-listed software company heading for a public-to-private transition, we revisit the trend in undisturbed premiums. (Spoiler: A sobering picture for shareholders.) We ask, what does the data say?

Tech Universe results and updates from the past week span UK Software (GB Group); IT Infrastructure Services (Computacenter); IT Professional Services (Capgemini, Coforge, Cognizant, Persistent Systems, Sopra Steria, Netcompany, Indra); AI-RAG (Capita); Accounting & Financial (Microsoft, Visma); AI-natives (RobinAI, Synthesia); IaaS (AWS); Travel-Tech (Booking).

Tech drivers and Points to Ponder

1. As we bid adieu to the month, what are October’s key valuation messages

Tech Universe Valuation Heatmap as October ends, and the most talked about cohort