Translation: Original published in Finnish on 8/28/2026 at 9:13 am EEST.

At the end of last year, we saw positive signs in the IT services sector for the first time in a long while, and organic revenue returned to growth at the sector level. However, Q1'26 did not confirm this turnaround across the entire sector, as company-specific differences widened and grew even further in Q2'26.

Key findings

• The divide deepened: the turnaround seen at the end of last year did not extend to the sector as a whole, and differences between companies widened even further in Q2.
• Revenue: median organic growth was -3% (excluding Reaktor -6%). Reaktor and Digital Workforce performed best (+11%), while Witted and Gofore saw slight growth (+2%). Solteq (-10%), Siili (-12%), Vincit (-16%), and Netum (-26%) saw clear declines. Compared to our estimates, 0 were above, 3 in line with and 5 below.
• Profitability: the average adjusted EBIT margin was 3.2% (Q2'25: 3.8%), median 6%. Netum's -7% dragged down the average. In terms of our estimates, 2 exceeded them, 2 were in line with them, and 4 fell below them; the net effect was -21 pp.
• Rule of 20: The sector median is 4, which, in our view, indicates that the level is still very weak. Only Digital Workforce and Reaktor (18) exceeded the "good" level (threshold of 15), while the figures for the weakest companies ranged from -4 to -32.
• Drivers: savings in the public sector and intense price competition persist, while the private sector shows some signs of recovery. Six out of eight companies have restructured their operations, and Netum and Siili issued profit warnings. Acquisitions support reported growth. Artificial intelligence is both an opportunity and a threat. We believe the threat is exaggerated in this sector to some extent. Productization has become central to strategies.
• Outlook for 2026: a transition year in the context of the sector. We forecast a 4% decline in organic revenue and expect the median profitability to remain at 3.5%, the same level as in the comparison period.
• Preliminary division into winners and losers based on current trends: Digia, Digital Workforce, Gofore, Reaktor, and Witted are the winners, while Siili, Solteq, and Vincit are the losers. Although Netum remains a question mark due to the expiration of three major contracts, we do not believe that there is a major need for a strategic change.

Source: Companies and Inderes

Source: Inderes

Viewed through the "Rule of 20," Q2 remained weak in the sector and the divide is evident

The IT services market situation remained weak in Q2, and the sector's median Rule of 20 figure was 4 (Q1’26: 1), which, in our view, is still a very weak level. However, two of the listed IT service sector companies (Digital Workforce and Reaktor) exceeded the good level (threshold 15), reaching 18. Three companies (Gofore, Witted, and Digia) were below the satisfactory level (threshold 10) but had positive readings. The remaining companies were then at a clearly very weak level of -4 to -32 (Solteq, Siili, Vincit, and Netum).  

We launched our "Rule of 20" metric a couple of years ago for the IT services sector, and we believe it is the best single tool for assessing the sector's and particularly the companies' operational performance over the cycle. The current market situation over the last three years is more challenging than in the previous 10 years, and achieving an excellent level in the Rule of 20 is more difficult, whereas in the past, more companies achieved excellent performance.

Source: Inderes, Rule of 20 = Organic growth-% + EBITA-% EBITA-%

Duality is evident in revenue trends, and the expected upturn did not materialize in the larger context

Overall, the revenues of the Finnish IT service sector developed more weakly than we had expected, with a median organic decline of 3% (excluding Reaktor, the median decline would have been 6%). At the end of last year, revenue briefly saw slight growth for the first time in a long time. However, a very weak start to the year for four companies has pushed the entire sector back into a clear decline. Conversely, some companies have improved their performance as the year progressed, reflecting a clear dichotomy in performance. Reaktor and Digital Workforce achieved the best growth in the sector, with organic growth of 11%. In this review, we have included Reaktor, which was listed in the early summer. Witted (+2%) and Gofore (+2%) have also started on a path to growth. Revenue continued to decline significantly organically at Solteq (10%), Siili (12%), Vincit (16%), and Netum (26%). Of these companies, the strategic transformation is still clearly ongoing at Solteq, Siili, and Vincit. Netum's performance is weighed down by the completion of 3 major projects at the end of last year, and thus, in our view, there is no need for a major strategic change. In our opinion, Netum was too late in investing more heavily in sales, which has yielded results starting from Q4’25 but not yet enough to be clearly reflected in the figures. The public sector market, which is important for Netum, is also under intense price pressure, making success challenging. Additionally, we are somewhat concerned by Digia's organic revenue dropping to a 3% decline, given that the company has otherwise coped well with the sector's challenges in recent years, even excelling above others. The number of working days in Finland was the same as in the comparison period, so this had no impact on revenue development.

In our view, the challenging market conditions seen in recent years and the market disruption created by AI will more clearly separate the winners from the losers in the sector. This is also reflected in the polarization seen in the sector. In our view, this allows companies to be preliminarily started to be categorized as winners or losers.

Source: Inderes

Several companies remain cautious in their market commentary, and profit warnings were issued by Netum and Siili in Q2, driven by customer budget cuts and delayed investment decisions. This continues to reflect the fragile market situation and the fact that a better market situation remains relatively narrow. However, even in a weak market, there are companies that can still achieve good growth, such as Reaktor and Digital Workforce. In addition, Gofore and Witted will also grow slightly. The sales successes of these companies and their market commentary provide confidence in the continuation of the turnaround. Netcompany, a long-term star in the sector, has also continued its strong performance in Europe. Despite its large size of nearly 10,000 employees, it managed to grow organically by a strong 13%. For comparison, Gofore's headcount is just under 2,000, which is one-fifth of Netcompany's personnel.

Overall, revenues were weaker than expected in Q2, with 0 companies above, 3 in line with and 5 below our forecast. The fact that six out of eight companies have restructured their business operations in the first half of the year to adjust their personnel structure largely reflects the continued weak and uncertain market situation. Additionally, two companies have issued negative profit warnings, and we estimate that two more will do so.

Source: Inderes

Source: Inderes and the companies

In addition to organic growth, it can be said that acquisitions have once again begun supporting growth more strongly in the past year. Over half of the companies we follow have made one or more acquisitions, which supports this year's growth.

Source: Inderes

In terms of sectors, the public sector’s market situation remains difficult as a whole because of the need for savings, though the sector’s top performers are still able to operate there. The private sector appears to have partially recovered, which depends on the demand situation within each customer vertical. However, we note that the effects of the war in Iran could still worsen the situation. If the war were to continue for an extended period or spread, it would naturally have an indirect negative impact also on the willingness of customers of Finnish IT service companies to invest. For example, a rapid rise in interest rates is also a sign of heightened inflation expectations, which we believe would be detrimental to the Finnish economy in the current improving economic climate.

In general, we expect companies with clear competitive advantages and/or extensive service offerings to stand out more prominently in the future. The losers will be companies that lack critical (e.g., data, AI) or differentiating capabilities, deep customer relationships (management consulting, integration and continuity services contribute), or a deep understanding of the customer's business through industry focus.

AI has been a hot topic for quite some time now. It is an opportunity, but, on the other hand, we also consider the disruptive threat it brings to be a significant risk, especially in software development. In our view, the AI transformation will further separate the winners from the losers, and AI expertise will be a mandatory area of expertise in the future. Companies with strong existing customer relationships will continue to succeed in the market, even if they are not at the forefront of AI expertise. These companies already know their customers well and understand better how to utilize AI in those particular customer relationships. We estimate that new sales and thus "infiltrating" customer relationships will continue to be challenging in the future, unless you have a broad service offering or cutting-edge AI expertise. Once again, we also emphasize the adaptability of companies as a key source of competitive advantage, which we believe is particularly important in the age of AI as customer needs that companies aim to meet are likely to vary significantly in the coming years.

We predict that companies without existing strong customer relationships or with average-to-weak AI skills are the ones that won't make it. At the beginning of the year, several sectors, including the IT services sector, have been weighed down by the threat of AI disruption, which investors fear. However, this threat has been operationally known in the IT services sector for a couple of years already. Thus, we believe this disruption threat is partly exaggerated in the IT services sector. However, technological development is now faster than before, thus keeping uncertainty elevated. The share price decline has stabilized, but no significant recovery has yet been seen.

Recently, productization has also emerged as a stronger strategic trend. Good examples of this are the Danish company Netcompany, which is strongly striving to transform into a platform company, and Tieto, which continues to focus on the software business. Productization has been on the agenda for many companies before, but now we believe productization has been put higher on the strategic priority list, and companies seem to be driving a larger part of the business in this direction. In a sense, Gofore and Reaktor are also moving more in this direction. One could partly say that even those specializing in customer verticals are, in a sense, trying to "productize" their offerings according to customer verticals. Productization has historically been difficult for companies in the sector, and there has not been a particularly strong need for it due to customer purchasing behavior and strong demand. However, we now estimate that due to rapid AI development and decreased demand for tailored software development, success in productization is more critical than before.

Price competition due to overcapacity remains fierce, especially in the public sector. In the private sector, price pressure no longer appears to be tightening significantly, but drawing more precise conclusions is very difficult. The most important driver for price development would naturally be a pick-up in demand, which we believe requires a stronger economic environment to increase customer companies' willingness to invest. Meanwhile, IT suppliers have also been reducing their workforce (supply) for several years, which should, in theory, reduce price competition. However, this naturally depends on the balance between supply and demand, and as demand has fallen, we do not yet see these two factors (supply and demand) as aligned.  

Profitability remains under pressure while company-specific differences are apparent

The sector's average adjusted EBIT margin was 3.2% in Q2, which was lower than the comparison period (Q2: 3.8%) and the same as Q1'26 (3.4%). Profitability was weighed down, in particular, by Netum's weak profitability (-7%). Median profitability was 6%, exceeding the level of 4% in the comparison period (excluding Reaktor, median profitability would have been 4.8%). In summary, it can be said that profitability remained under pressure, and the expected continuation of the slight upturn seen in Q1 has yet to materialize. This is because several companies' revenues fell short of forecasts, resulting in weak billing rates and also a heavy cost structure. Managing profitability is easier for those whose revenue levels have stabilized. This offers good opportunities for a positive profitability trend, as there is room for improvement in utilization rates and fixed cost structures are partially scalable. Managing profitability is still very challenging for those whose revenues are falling across the board and for whom efficiency measures are inevitably "always" lagging behind. Five of the eight companies streamlined their operations in Q1, and new efficiency measures were launched at the beginning of Q3 as well, the effects of which are expected in the coming quarters. In our view, naturally depending on the company's profile, EBITA levels below 5% should raise questions about possible adjustment measures. Five companies are below the 5% level.

At the company level, Digital Workforce, Gofore, and Reaktor reached the historical average for the sector (7–8%). Additionally, Digia and Solteq achieved a 6% profitability level. However, the profitability of Digia and Gofore is a slight disappointment to us, and they should have the means for better profitability. Digital Workforce's profitability was good, but there should be opportunities for even better profitability as growth scales. We believe that the underperforming companies in the sector have definite potential to improve their profitability once the revenue decline is overcome. Overall, in the context of the sector, improving profitability figures can be expected in the coming quarters, as revenues have stabilized (and are even growing) for some companies, and recent efficiency measures are supporting profitability improvements for several others. Conversely, several companies are still experiencing declining revenues, and a quick turnaround is not anticipated, making managing profitability very challenging, and history has shown that new efficiency measures are almost always implemented too late. Thus, for a few companies (Netum, Siili, Solteq, and Vincit), the cycle of cost-cutting measures threatens to continue.

Source: Inderes

Relative to our forecasts, profitability levels were even clearer below our expectations, with 2 companies above, 2 in line (within 1 percentage point), and 4 below our forecasts. Together, the net effect of the differences in profitability expectations widened significantly again, reaching -21 percentage points (Q1'26: -10%), driven by Netum's very weak profitability and the weak profitability of Siili, Vincit, and Digia. If the revenue decline and difficult market situation persist, companies will naturally be under additional pressure to also adjust their more fixed cost items. Now, almost everyone has adjusted their operations to some extent (or more often) in recent years. Thus, change negotiations have become a normal way to adjust to changes in the market situation, and it is not that dramatic anymore. In our view, this also creates an opportunity for more steadily developing companies to profile themselves as secure workplaces and strengthen their employer image.

Source: Inderes

2026 will still be a transition year in the context of the sector – We expect revenue to continue decreasing and profitability to remain flat year-on-year

Regarding the market outlook, some companies are still showing positive momentum, but at the sector level, several challenges and weak performances continue to weigh down the overall picture. In 2026, we expect organic revenue to decline by 4% (2025: -3%). We expect profitability to match the level of the comparison period at 3.5% (median) in 2026. Similar to revenue, a clear dichotomy can be seen in profitability. For a few companies, good performance or improvement is driven by efficiency measures and improved billing rates, as several companies' revenues stabilize or show slight growth. For others, though, continuous revenue decline limits the benefits of efficiency measures, threatening to keep profitability weak. However, strengthening economic growth in Finland during the summer offers hope for improvement, even for companies that have fared worst, as the demand situation improves. Additionally, another challenge for the worst-performing companies with a strong software development background has been customers' cautious attitude toward AI-focused projects. However, while some positive comments regarding an increase in demand for these AI projects were received in connection with Q2 results, in our assessment, a clearer, more substantial increase in demand is required before it can begin to support the operations of the companies in question more strongly.

In the big picture, we have been saying for some time that the current market situation and the market disruption created by artificial intelligence will more clearly separate the winners and losers in the sector. Now that the market disruption has continued for about three years, and companies have had time to adapt to the new situation, we believe we can begin to categorize the current (preliminary) market winners and losers. In terms of operational figures from recent years, we believe that Digia, Digital Workforce, Gofore, Reaktor, and Witted have either continued to perform well relative to the sector and/or succeeded strategically in their transformation. From the perspective of operational figures and strategic effectiveness, we consider the current losers in the sector to be Siili, Solteq, and Vincit. Netum's categorization is still partly a question mark, as three major contracts have ended and are slowing down development. Strategically, we do not believe the company requires significant change or proof of its value but rather continued sales acceleration now that the targeted margin levels are, as we understand it, more realistic.

Source: Inderes

Company-specific Q2 comments and forecasts:

Digia

Digital Workforce

Gofore (in Finnish)

Netum (in Finnish)

Siili (in Finnish)

Solteq (in Finnish)

Vincit (in Finnish)

Witted (in Finnish)