Translink Corporate Finance’s latest IT Services Valuation Index for H1 2025 reveals a sector in transition, balancing enduring long-term demand with short-term caution. The first half of the year was defined by economic volatility, shifting government policies and persistent geopolitical tensions, all of which impacted corporate confidence and delayed discretionary IT spend.
Despite these headwinds, the sector’s structural growth drivers remain intact, supported by cloud migration, cybersecurity imperatives and AI-driven transformation.
Headline trends
Valuations across IT services were mixed during the first half of 2025. The general IT services sub-sector continued its strong recovery, fueled by investor appetite for recurring revenues and the standout performance of Indian IT firms within the cohort. In contrast, digital consultancy & transformation businesses continued to face sluggish growth amid delayed projects and extended procurement cycles, while the cyber & data segment maintained resilient demand, even as valuations remained consistent.
- General IT Services EV: up from 11.0x to 15.9x LTM EBITDA
- DX & Transformation EV: down from 10.6x to 9.6x LTM EBITDA
- Cyber & Data EV: marginally down from 21.2x to 21.0x LTM EBITDA
A total of 76 IT services companies were included in the index.
Sub-Sector performance
Digital Consultancy & Transformation
Macroeconomic uncertainty and cautious corporate spending delayed large-scale digital transformation projects. While demand for AI, cloud migration and digital strategy remained conceptually strong, execution was slower. Firms with deep sector specialisation – particularly in energy, financial services and life sciences – outperformed broader consultancies. M&A activity was subdued, as investors favoured recurring-revenue models and firms with differentiated capabilities in AI and advanced analytics.
General IT Services
The sub-sector continued its impressive recovery through H1 2025, with investors drawn to businesses, higher levels of recurring revenue which offer predictable cash flows. The Indian IT services cohort were the standout performers, with average EBITDA multiples climbing from 23.3x in Q4 2024 to 28.1x in Q2 2025. M&A activity declined by around 9% but remained steady in valuation terms, as both strategic and private equity investors pursued selective bolt-on acquisitions to expand customer density and service depth.
Cyber & Data
Cybersecurity and data-driven services continued to be among the sector’s most resilient performers, supported by increased frequency and sophistication of global cyberattacks. Although valuations eased slightly – from 21.2x to 21.0x LTM EBITDA – investor appetite remained strong. Demand for scalable, differentiated cyber platforms with robust AI and analytics capabilities continues to underpin the sub-sector’s long-term growth trajectory.
M&A and market outlook
M&A activity across the broader IT services landscape was measured but consistent in H1 2025, signalling sustained confidence in the sector’s fundamentals. Strategic and financial buyers remain focused on assets with high-quality earnings, scalable delivery models and exposure to key growth themes such as AI, cloud computing, automation and cybersecurity.
Looking ahead to H2, the outlook is cautiously optimistic. While global uncertainty may continue to temper large discretionary spend, recurring and mission-critical services should underpin stable growth. Investor interest is expected to persist, particularly in businesses that demonstrate differentiated offerings, operational resilience and a clear pathway to scalability.
“Despite softer sentiment and valuation adjustments in certain areas, the IT services sector remains underpinned by powerful structural drivers,” said Marc Irisson, Partner and Head of the TMT Group. “We anticipate renewed momentum as confidence gradually returns and investment priorities refocus on efficiency, resilience and digital competitiveness.”
About the Translink CF IT Services Valuation Index
Translink Corporate Finance’s IT Services Valuation Index tracks the financial and market performance of 76 listed IT services companies globally, across three core sub-sectors: Digital consultancy & transformation, general IT services and cyber & data. The index analyses valuation trends, M&A activity and investor sentiment to provide insight into the evolving dynamics of the IT services landscape. With a vast global footprint and deep sector expertise, Translink CF is your partner to get the deal done. Connect with us to talk about your business needs.
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