With ever-increasing complexity related to security, cloud infrastructure, and data across applications, businesses of all sizes need reliable, cost-effective IT support and managed services. Additionally, investors continue to pursue opportunities in the IT services sector, given multi-year contracts, recurring revenue, and predictable cash flow within highly fragmented subsectors that create an opportunity to scale meaningfully through M&A.

Here, our senior professionals discuss key trends driving growth in IT services and five particularly appealing areas to watch. They also highlight relevant Harris Williams clients that exemplify the investment opportunity.

A Need for Outsourced Experts

In a world with constantly evolving technology and ever-increasing security and compliance threats, many companies are turning to third-party experts to manage IT support. In addition to lacking in-house capabilities, companies typically find that the cost of outsourcing managed IT services is relatively small compared to the cost of a failure or security breach.

“Broad-based IT managed services, compliance and security solutions, and access to leading technology products are critical for companies,” says Derek Lewis, a managing director in our Business Services Group. “Without them, businesses are more susceptible to security breaches, lapses in operational continuity, and an inability to serve customers.”

As cyber threats and regulatory requirements increase, companies are also placing greater focus on partnering with IT services providers with demonstrated vertical experience and specialized capabilities. “It takes in-depth expertise to effectively manage sector-specific IT services, especially in areas with complex regulations and expectations regarding compliance and protection of personal information,” adds Priyanka Naithani, a managing director in our Technology Group. “IT services providers with differentiated industry knowledge enhance customer relationships while creating natural barriers to entry and driving incremental value for companies and their investors.”

Seeking Vertical Experience

Rapid technology evolution and adoption, constant regulatory changes, and increasingly sophisticated security threats make it challenging for companies to personally manage their IT operations. These factors underpin the sustained growth of a robust IT services sector and signal opportunity for providers with vertical-specific expertise and an ability to scale.

To discuss M&A opportunities across IT services, please contact our senior professionals.