Imagine you’re at a cocktail party, and a newly introduced guest at the high-top table you’re socializing around asks you a pretty standard small-talk question, “So you’re in the computer business, what kind of company do you run?”
What do you say?
Based on new research from the GTIA State of the Channel 2025 report, most of you will describe your business as services based. Specifically, 37% of you will tell this new acquaintance that you are in the technology services market, while 32% will say you run a consultative firm that delivers business-oriented solutions via technology.
That leaves 31% of you that will identify your business as one selling computer/tech products to customers on a transactional basis. That’s a far cry from a decade ago when a much higher percentage, likely the majority, of channel business owners would put themselves in this camp, describing what they do as hardware and software product reselling with some value added.
That so many channel firms today identify as services companies should come as no surprise. We have been moving in that direction as an industry for some years now, led in many ways by the transition to managed services and more recently by the embrace of consulting services as a primary and/or adjacent business model.
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A services focus is a wise choice. It’s where the money is. Gartner says worldwide spending on IT services will reach $1.73T this year, up from $1.59T in 2024. This represents a 9% spending increase year over year. This momentum is a continuation from 2024 when global spending on IT services increased 5.6% from 2023. It’s also where the profits lie. Margins for services gigs tend to eclipse those for product transactions by double digits, and these lucrative gigs tend to involve longer-term, repeat engagements with the customer.
Bottom line? Robust IT services spend is a harbinger of opportunity for the channel, both for the largest integrators to the smallest MSPs and solution providers that benefit downstream. Why? Customers are looking for expertise and guidance around their technology strategies and investments, as well as showing ample interest in third-party managed services to oversee it all. Spending in these areas is driving many channel firms to embrace services as a prime source of revenue as they decrease—though not abandon entirely—their reliance on product sales transactions.
State of the Channel 2025 findings on what channel firms say they are selling today make clear that the services bug is no fluke. From general consulting and data services to cloud services and cybersecurity services, these items dominate the typical portfolio today.
But what’s especially interesting, to get back to our cocktail party conversation, are the permutations of services-based businesses. They are not monolithic. Companies that focus on technical services are often those more traditional MSPs that oversee remote management and monitoring of customer networks and devices on a recurring revenue model. Or they are cybersecurity specialists that stick exclusively to outfitting and protecting customer data and systems. On the flip side, those business solutions-based services firms could be mainly consultative, much like a large system integrator or global services conglomerate, and spend their time focusing on designing vertical sector solutions or consulting around AI strategy, for example.
Depending on what your strengths and weaknesses are, you have options when it comes to building your services practices and business. That diversity is one of the drivers behind the channel ecosystem’s continued health. Product reselling isn’t dead, in fact it can be quite a stable business with new opportunities in AI and cybersecurity to pursue every day. Yet in a world where online marketplaces pose fierce competition to product resellers on price and convenience, the pivot to services—whether purely technical or business consulting—is a shrewd offensive move that could pay off in increased revenue, profitability, and ultimately, relevance.
