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Investing.com -- Berenberg said a reset is under way in the IT services sector, with artificial intelligence reshaping demand and favouring large, embedded vendors that can move up the value chain, as it initiated coverage onCognizantandAccenturewith Buy ratings andCapgeminiwith a Hold.
The broker said sector growth is likely to remain moderate after a cyclical trough in FY24, but conditions are improving, citing guidance upgrades at several vendors in the second half of 2025 as a sign of stabilising demand. It expects upside to come from share gains rather than a return to double-digit growth.
Berenberg said AI is creating a medium-term opportunity for vendors that can improve productivity, capture AI-led outsourcing work and defend margins. It added that the largest gains are likely to accrue to scaled players that are deeply embedded in client operations and better positioned to win discretionary spending as it returns.
The note said AI is disrupting the labour-intensive delivery model, making employee productivity a key differentiator. Cognizant was highlighted as leading peers, with 8% year-on-year revenue growth per full-time employee on a trailing 12-month basis, whileAccentureis also showing clear productivity gains.Capgemini, by contrast, was described as lagging, with flat revenue per employee.
Margin outcomes remain uneven, Berenberg said, as pricing pressure and changing pricing models lead to more AI efficiency gains being passed on to clients. It said margin expansion is likely to be selective until AI benefits are better monetised, favouring Accenture and Cognizant over Capgemini.
On valuations, Berenberg said sector multiples have fallen back to around long-term averages, reflecting normalised growth and investor caution.
Cognizant was named the broker’s top pick, with Berenberg expecting revenue growth to accelerate over FY25-27, supported by management changes, restructuring and AI investment, alongside steady margin expansion.
Accenture was described as well positioned to sustain share gains due to its scale and early AI investments, while Capgemini’s near-term outlook was weighed down by weaker discretionary demand, particularly in France and automotive, and slower progress on margins.
