Tech Services Face Market Contraction in 2026

An industry analysis warns tech services will recalibrate in 2026 as AI-driven productivity compresses traditional revenues. After eight flat quarters and current code-generation productivity gains of 25–35%, firms and service providers face potential 60–70% productivity improvements in parts of the SDLC by late 2026, driving revenue pressure, greater insourcing, and uneven growth focused on BPO and midmarket clients. The shift emphasizes operating-model change and consulting demand.