The 'Death' Of It Services Is Greatly Exaggerated
Forrester, Tuesday, February 24th, 2026
We're seeing a spate of disruptive headlines and predictions around the demise of IT services. With the progress made by AI, specifically in software development, it's easy to opine that traditional IT services are on their way out.
This narrative is fundamentally flawed. Yes, AI-driven automation deflates the unit cost of technology work, but it also inflates the volume and complexity of that work even faster. The net effect is more demand for IT services, not less.
We've seen this scenario play out before through waves of offshoring, cloud migration, and platform engineering. But not every IT services firm will capture this growth. The winners will be those that build proprietary AI platforms, invest in domain expertise, and shift to outcome-based delivery. The losers will be those still selling labor arbitrage by the hour. The key questions for CIOs are about which operating model will win and whether their current providers are on the right side of that divide.