As the true extent of the U.S. tariff plan becomes clear, a wave of uncertainty is sweeping across global economies. The United States, as the world’s largest consumer economy, plays a pivotal role in global trade dynamics. Any disruption in its import/export flows has cascading effects across industries, supply chains, and financial systems.
In this climate, US Manufacturers and Retailers that import products, supplies and components will all face significant cost escalation and supply chain risks. Other sectors such as Healthcare, Transportation, and Pharma will also be negatively impacted. While this will cause inflationary pressures and potentially trigger a recession, businesses across every industry will have to postpone or reduce capital investments. This economic turbulence and supply chain disruption will reverberate across the ecosystem and is going to impact Technology and Services firms due to ensuing cost pressures, demand reduction and political sensitivities. So, what lies ahead for the service providers whose fortunes are intertwined with these enterprises?
Impact on IT/BPM Deals
- Renewed Emphasis on Cost Optimization and Vendor Consolidation
Tariffs create a margin squeeze for enterprises—especially those in manufacturing, retail, and consumer goods sectors that rely heavily on imported raw materials and finished goods. The immediate corporate response will likely be a renewed focus on cost containment. This typically translates into reassessing IT and BPM spends.
Service providers should expect an uptick in RFPs centered around cost optimization, with enterprises looking to consolidate vendors. This creates both a risk and an opportunity. Incumbent vendors who have been complacent may find themselves displaced, while aggressive challengers with leaner models and compelling value propositions could capture market share.
- Temporary Pause in New Digital Spending
While digital transformation remains a long-term priority for enterprises, in the near term, discretionary spend on new digital initiatives may slow down or pause for one to two quarters.
However, this is a pause—not a pivot. Enterprises understand that digital transformation is key to long-term resilience and competitiveness. Service providers that stay engaged, co-create proofs of concept, and invest in joint innovation during this lull will be well-positioned when funding returns.
- Reconfiguration of global supply chains can drive new opportunities
Industries that rely on international sourcing will be forced to reassess and restructure their supply chains. This recalibration will require companies to navigate an increasingly fragmented global landscape, balancing cost optimization with resilience. The demand for sophisticated supply chain management and risk analytics will surge as organizations seek to mitigate risks, ensure compliance, and streamline operations in response to the tariffs.
Service providers can proactively offer tailored solutions to help enterprises navigate this disruption. By identifying potential supply chain vulnerabilities early on—whether related to logistics, compliance, or cost optimization—service providers can position themselves as strategic partners. Those who act ahead of the curve and offer innovative IT and BPM solutions to enhance transparency, optimize procurement processes, and improve risk management will be able to capture new opportunities.
- Reshoring of Manufacturing leading to a need for localized services
While the effectiveness of tariffs to bring back manufacturing to the US might be debatable, we expect that some enterprises may indeed respond by reshoring parts of their manufacturing operations. This shift could create new demand for local services—from setting up ERP systems to supporting new facilities with infrastructure, cybersecurity, and operational services.
Service providers with strong US-based delivery capabilities or those that can quickly mobilize talent nearshore or onshore will be best positioned to capitalize on these reshoring trends.
- Greater Emphasis on Global Capability Centers (GCCs) due to the rise of nationalism
The rise in nationalism will lead to an increase in an anti-offshoring sentiment as enterprises will try to avoid repercussions from the public and political establishment. To insulate themselves from political scrutiny and reduce overdependence on traditional outsourcing hubs, enterprises may start leveraging their Global Capability Centers (GCCs) more strategically.
Service providers that have strong partnerships with GCCs—or can offer solutions that help enterprises manage and scale these centers effectively—will more traction.
What Service Providers Can Do: Four Strategic Recommendations
- Treat Every Renewal Like a Competitive Bid
In today’s climate, incumbency is not a guarantee. In fact, it might be a liability if providers assume they have “safe” accounts (incumbititus!). Every renewal, every contract extension should be approached with the same vigor as a net-new opportunity.
Providers need to:
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- Bring their A-team to the table during negotiations.
- Offer commercial flexibility, including innovative pricing models like outcome-based pricing or gain-sharing arrangements.
- Clearly articulate their value delivered to date and deep understanding of the client’s business and industry.
- Identify and pitch additional areas for efficiency and improvement, even before the client asks.
Clients are under pressure from their boards and shareholders to reduce costs. Service providers must show that they’re not just vendors—but strategic partners who understand the challenges faced by enterprises and can help clients weather the storm.
- Revamp Commercial Constructs to Front-Load Savings
Enterprises are seeking immediate cost relief. Service providers can stand out by designing commercial models that front-load savings in the first few quarters. These could include:
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- Deferred payment structures where clients pay more in later stages of the contract.
- Volume discounts and rebates tied to consolidation or increased scope.
Providers that proactively offer financial relief, without being asked, signal empathy and commitment. This builds long-term goodwill, even if short-term margins are squeezed.
- Keep a Sharp Eye Out for Emerging Opportunities
Any disruption brings with it multiple opportunities. Some of the opportunities for service providers that are expected to emerge include:
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- Enterprises will focus even more on automation and AI as cost-effective ways to offset rising labor costs, particularly in the US
- Direct localized services required for manufacturing plants being reshored to the US.
- As global raw material and distribution logistics get reconfigured, supply chain management and analytics, built upon industry 4.0 integration will lead to services opportunities
Service providers must equip their sales teams to look for pain points created by the tariffs—and position their solutions as part of the answer. Crises often accelerate adoption of newer technologies, and being present at the right time with the right offering can create unexpected wins.
- Deepen Engagement with Enterprise GCCs
GCCs will play an outsized role during this period. Often, they act as innovation hubs and centers of excellence—but their full potential is not always realized. Service providers can offer:
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- Scaling and transformation services for GCCs
- Help implement digitalization and automation tools to enhance productivity across GCC functions.
- Pursue Inorganic Growth to Drive Expansion as Organic Growth Slows
With organic revenue growth expected to be subdued—at least in the short term—due to the slowdown in discretionary spending, service providers must look beyond traditional growth channels to maintain momentum. In this environment, inorganic growth strategies, such as acquisitions, strategic partnerships, and carve-out deals, offer a compelling avenue for expansion.
One area of particular interest is the acquisition or carve-out of portions of an enterprise’s Global Capability Centers (GCCs). Many large enterprises with established GCCs are looking for ways to streamline operations and monetize these valuable assets, especially in the face of a challenging economic landscape. For service providers, acquiring or partnering with these GCCs can provide access to confirmed revenue, critical resources, talent pools, and operational infrastructure.
Moreover, acquisitions can be used to access newer skillsets and capabilities around upcoming technologies that are likely to pick up again after the pause in discretionary spend ends. Strategically timed acquisitions can also bolster a provider’s value proposition, particularly if they bring new capabilities that help enterprises cope with tariff-driven disruptions, such as risk management, supply chain optimization, or localized service offerings.
Inorganic growth not only accelerates expansion but also sends a strong signal to the market and clients about the provider’s commitment to long-term resilience and adaptability.
Looking Ahead: Agility Will Define Winners and Losers
The tariff-driven disruption is not the first economic headwind service providers have faced, nor will it be the last. What distinguishes the winners from the rest is not necessarily scale—but agility, foresight, and execution discipline.
Tariffs, in a way, are a litmus test. They challenge service providers to be more proactive, more client-centric, and more financially innovative. They push providers to double down on relationships, rather than merely chasing logos.
And while the immediate future may see some softness in demand, the underlying transformation agenda remains intact. Enterprises still need to become digital-first, data-driven, and cloud-native. That journey might slow momentarily—but it won’t stop.
