Direct Answer
98 SEC filers are classified under the Standard Industrial Classification codes that describe the it services industry, and their latest annual reports show $763.0 billion of combined revenue and a median operating margin of -4.8%. Investors should still evaluate its revenue model, industry-specific KPIs, valuation framework and the risks that can change the group's economics.
Industry Overview
IT service companies run, build and support technology systems for clients, including outsourcing, applications, infrastructure and cloud services. Multi-year contracts give revenue visibility, and pricing and automation shape margins. The first numbers to compare across companies here are revenue and organic growth, bookings and book-to-bill and operating margin.
Key Industry Metrics
- Revenue and organic growth: Sales and growth excluding acquisitions and currency effects. It shows the underlying demand for outsourcing and application work, which is steadier than project-based consulting.
- Bookings and book-to-bill: New contract value signed and its ratio to revenue. A ratio above one suggests growth ahead, though multi-year deals have uneven timing, so read it over several quarters.
- Operating margin: Profit after labor and overhead as a share of revenue. Offshore delivery, pricing and automation all matter, and fixed-price deals can erode it when projects overrun.
- Utilization: The share of delivery staff billed to clients. Higher use lifts margin and signals demand, but very high use can precede burnout and higher turnover.
- Attrition: The rate at which employees leave. High attrition raises recruiting and training cost and can disrupt client work, and it often rises when demand for skills is strong.
Primary Macro Drivers
- Technology and cloud spending: Clients that spend more on technology and cloud systems buy more services, driving bookings and revenue.
- Outsourcing: Companies handing operations to vendors sign multi-year contracts, supporting revenue visibility and book-to-bill.
- Digital projects: Application and data projects add billable work beyond run contracts, lifting growth and utilization.
- Offshore labor costs: Delivery from lower-cost locations holds down service cost per hour, supporting margin; rising wages narrow that advantage.
Major Risks
- Pricing pressure: Competition and client demands for savings reduce rates at renewal, squeezing operating margin; watch book-to-bill and pricing commentary.
- Automation: Tools that automate coding and operations reduce billable effort per contract, so revenue may grow slower than work; watch utilization and the shift to outcome-based pricing.
- Client concentration: A few clients account for much of sales, so a lost or reduced contract matters; watch top-client share and renewal commentary.
- Wage inflation: Pay raises across delivery centers raise cost faster than price in fixed contracts; watch operating margin, attrition and wage commentary.
Industry Characteristics
| Characteristic | Profile |
|---|---|
| Cyclicality | Mixed |
| Capital Intensity | Low |
| Regulatory Intensity | Low |
| Industry Maturity | Mature |
| Geographic Importance | U.S. / Global |
IT Services Filers in the SEC Record
98 companies with annual reports in the dataset are classified by the SEC in the Standard Industrial Classification codes 7370, 7371, 7373, 8742. Their latest fiscal years end between 2023 and 2026, and together they reported $763.0 billion of revenue. Median revenue growth over the prior year was 5.9%. Median operating margin was -4.8% and median net margin -6.4%. Median total liabilities were 51% of total assets, and 40 of 98 reported a profit in their latest year.
| Company | Revenue | Growth | Operating margin | Net margin | Year |
|---|---|---|---|---|---|
| Alphabet Inc. | $402.8 billion | 15.1% | 32.0% | 32.8% | FY 2025 |
| Meta Platforms, Inc. | $201.0 billion | 22.2% | 41.4% | 30.1% | FY 2025 |
| Cognizant Technology Solutions Corp | $21.1 billion | 7.0% | 16.1% | 10.6% | FY 2025 |
| Leidos Holdings, Inc. | $17.2 billion | 3.1% | 12.3% | 8.4% | FY 2026 |
| Kyndryl Holdings, Inc. | $15.1 billion | 0.2% | n/a | 1.2% | FY 2026 |
| Booz Allen Hamilton Holding Corp | $11.2 billion | -6.4% | 9.2% | 7.6% | FY 2026 |
| Caci International Inc | $8.6 billion | 12.6% | 8.9% | 5.8% | FY 2025 |
| Science Applications International Corp | $7.3 billion | -2.9% | 7.2% | 4.9% | FY 2026 |
The 8 largest of 98 by revenue. Source: each company's own annual report as filed with the SEC (XBRL data), figures in U.S. dollars. A company's SIC code reflects its main business as the SEC records it, so it can differ from how an index provider or analyst classifies the company, and a diversified group appears under only one code.
Where to Go Next
The IT Services guide describes how the industry earns money, what to measure and what can go wrong. To see how it compares, read the neighbouring industries in the same sector, then apply the same checks to a specific company.
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Frequently Asked Questions
What are the main KPIs for the IT Services industry?
Key performance indicators for the IT Services industry include: Revenue and organic growth, Bookings and book-to-bill, Operating margin, Utilization, Attrition. Which matter most depends on the company's model, so compare them across several companies rather than relying on one.
How cyclical is the IT Services industry?
The IT Services industry exhibits mixed cyclicality characteristics. Some segments move with the broader economy while others maintain more stable demand, making stock selection within the group particularly important.
What are the biggest risks in the IT Services industry?
The primary risks for IT Services companies include: Pricing pressure, Automation, Client concentration, Wage inflation. Investors should assess each company's exposure to these factors and its track record of navigating them.