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Remember when Anand Mahindra said, “I believe that the rumours that the advent of AI will be the death of IT services are grossly exaggerated.” Well, he was absolutely right.
Every major technology wave brings the same prediction: “Tech Services are dead.” Outsourcing has peaked. Labor arbitrage is obsolete. The traditional time-and-material model has run its course. And yet, every cycle later, Tech Services firms haven’t disappeared. They’ve evolved.
At Zinnov, we’ve partnered with over 250 CEOs of Technology Services firms to help them crystallize and execute their strategic vision. We’ve seen firsthand how they reshape business models, create new revenue streams, acquire and integrate companies, and reinvent delivery mechanisms. The story has never been about decline; it has always been about reinvention.
As we step into 2026, the question isn’t whether Tech Services will survive, it’s which version will thrive. Because the mechanics of value have changed. The architecture of delivery, the meaning of scale, and the nature of talent and profit are all being rewritten.
In what follows, we lay out 6 trends that, in our view, will define the next chapter for technology services in 2026.
For decades, Tech Services firms ran on people and billable hours, the traditional “time-and-material (T&M)” model. If something broke or needed building, you hired more people, and they logged more hours fixing it. Most of the work ran through large teams handling tickets, maintenance, and execution manually.
But by 2026, that model will look very different.
Instead of scaling headcount to solve problems, firms will scale software, automation, and systems. This shift, described in Zinnov’s 2030 Tech Services Firm whitepaper as “automation-first delivery” — will redefine how work gets done.
Routine fixes will happen automatically. Systems will monitor and heal themselves. Advanced telemetry will predict and prevent failures before they occur.
The teams driving this new approach won’t operate like support groups, they’ll work like product engineers, building self-service, always-on delivery platforms. These Site Reliability Engineering (SRE)-style squads will design “golden paths” so that problems are solved consistently and efficiently, with humans stepping in only for truly complex cases.
Put simply, Tech Services will evolve from a labor-driven industry to a software- and system-driven one. The result will be faster delivery, lower costs, and more consistent outcomes, with fewer people required for everyday operations.
It won’t just be a new operating model; it’ll be a new mindset about how value is created and scaled.
The business of Technology Services was built on effort. The more hours a project took, the more revenue it generated. But that logic will no longer hold in 2026, when clients start paying for what they actually get, not just what they use.
Pricing will shift from effort-based to impact-based models. Contracts will increasingly tie costs to measurable outcomes: system reliability, transaction volume, automation yield, or service-level performance.
As Zinnov’s report outlines, “commercials will follow controllability,” meaning that pricing will align to what can be measured and improved.
Managed services will be priced through base SLAs with usage-linked meters and tiered SLOs, while business process work will move toward per-transaction or per-resolution pricing. In many cases, gain-share models will emerge, allowing providers and clients to split the automation dividend.
This shift will make Tech Services firms accountable for performance, not presence. Revenue will depend less on how many people are deployed and more on how efficiently outcomes are delivered.
In short, 2026 will be the year pricing becomes a reflection of trust and transparency. The clearer the link between price and performance, the stronger the partnership will grow.
By 2026, growth in Tech Services will no longer come from chasing one deal at a time, it will come from engineering distribution.
The next wave of growth will happen inside ecosystems. Hyperscalers, SaaS leaders, and even enterprise clients will become distribution platforms, not just partners.
Firms will increasingly co-build, co-market, and co-sell, designing reusable industry accelerators and listing solutions on partner marketplaces instead of submitting bespoke proposals.
Zinnov’s State of Partnership report calls this the “new GTM architecture”:
“Co-sell kits and outcome-priced offers replace bespoke proposals, while marketplaces become acquisition channels, not afterthoughts.”
The impact will be:
In other words, firms won’t just sell into platforms, they’ll scale through them.
In 2026, the strength of a firm’s partnerships will define its growth velocity. The ones that build ecosystems, not just pipelines, will expand faster, sell smarter, and win more sustainably.
As automation takes over generic work, differentiation in 2026 will come from domain depth, not breadth.
Clients will no longer reward scale; they’ll reward understanding, the ability to connect technology decisions to P&L outcomes. Firms that combine engineering expertise with deep industry knowledge will command the premium.
Zinnov analysis highlights this shift clearly:
“Domain expertise becomes the primary differentiator. Ex-operators serve as value owners; domain engineers blend process, data, and regulation.”
This means ex-operators, people who have actually run Retail Supply Chains, insurance underwriting, or manufacturing operations, will become the new value owners inside services firms. Their insight will allow firms to design AI and automation solutions that are not just efficient, but economically relevant.
The payoff will be tangible. Domain-led firms will charge higher rates, win longer contracts, and face fewer penalties, because they’ll be solving the right problems in the right context.
By 2026, Tech Services firms won’t ask clients “what do you need built?” They’ll start saying, “here’s how we’ll move your margin.”
Domain depth will become the real moat, the difference between being a vendor and being indispensable.
By 2026, the straight-line, people-based growth model that powered Tech Services for decades will start to break.
Zinnov’s 2030 Tech Services Firm report describes this as the end of the “straight-line people business.” Top-performing firms will start generating a significant share of revenue from subscriptions, IP rights, and success fees, replacing volume-based billing with value-based returns.
Automation will become the new margin engine. As repetitive work gets productized, every software-led efficiency will add directly to the bottom line. Meanwhile, proprietary IP will start contributing steady, high-margin income streams, some firms already see 15% of revenue from IP/subscriptions at 75% gross margins, improving operating margins by more than 200 basis points.
This rewiring will also show up in revenue per employee, expected to rise by at least 60% over 2024 levels for leaders who successfully shift from people-dependency to platform leverage.
The message is clear: in 2026, profitability won’t come from how many people a firm employs, it will come from how much leverage its technology creates.
By 2026, the traditional pyramid model — a wide base of junior engineers tapering toward a small layer of leaders — will no longer work. Automation will handle the base. The real value will move to the middle.
Zinnov’s blog “Why Tech Services Must Reinvent or Risk Redundancy” calls this the rise of the “diamond-shaped talent model.” The middle of the organization, made up of domain experts, platform engineers, and product leaders — will become the largest and most critical layer.
Junior roles will shrink to about one-fifth of total headcount. The rest will be mid-career specialists who can connect process insight with technical depth, and architects and consultants who can scale that value through automation and AI.
New guilds will emerge: SRE, ModelOps, DataOps, and AgentOps, each defining how teams build, run, and continuously improve intelligent systems.
This shift will reshape how firms think about scale, training, and leadership. Instead of career ladders that climb vertically, employees will build horizontally, across engineering, domain, and design.
The outcome will be a workforce that’s smaller, denser in expertise, and far more adaptive.
By 2026, the firms that invest in this middle layer, the fusion of domain and platform talent — will unlock the true compounding power of human capital.
Because the future of services won’t be defined by how many people are hired, but by how capable each person becomes.
Across all these shifts, one truth stands out: Tech Services will not be replaced by technology, they will be redefined by it.
2026 will be the year Tech Services stops being a people business and becomes a systems business, where automation, data, and domain work together to deliver scale and intelligence.
At Zinnov, we see this transformation up close, across hundreds of firms, thousands of leaders, and billions in market impact. Every time the industry is called “dead,” it reinvents what “alive” looks like. And as the next wave.
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