IT Services Industry Growth 2026: Revenue Up 3%, While Cloud Hosting Grew 20%
IT services industry growth slowed to a modest pace in 2026 while the businesses selling cloud capacity and software pulled away. Census Bureau survey data put revenue for computer systems design and related services, the industry that includes managed service providers, 3.2% above a year earlier in 2Q 2026. Data processing and hosting grew 20.4%.
The growth race across service industries
Year-over-year revenue change in 2Q 2026 for the service sectors in the Quarterly Services Survey and selected information and professional services industries. IT-related industries are in bold. Among the 65 four-digit industries in the survey, IT services ranks 48 by growth, below its own sector, professional, scientific, and technical services (+6.4%).
- Data processing, hosting, and related services
518+20.4%
- Software publishers
5112+15.0%
- Transportation and warehousing
48-49+12.3%
- Other services (except public administration)
81+12.2%
- Information
51+10.0%
- Legal services
5411+8.9%
- Finance and insurance
52+7.6%
- Health care and social assistance
62+7.6%
- Utilities
22+6.8%
- Arts, entertainment, and recreation
71+6.7%
- Real estate and rental and leasing
53+6.6%
- Professional, scientific, and technical services
54+6.4%
- Management, scientific, and technical consulting services
5416+5.2%
- Accounting, tax preparation, bookkeeping, and payroll services
5412+5.2%
- Architectural, engineering, and related services
5413+4.1%
- Computer systems design and related services
5415+3.2%
- Administrative and support and waste management and remediation services
56+2.9%
- Educational services
61+2.6%
- Telecommunications
517-1.8%
Not seasonally adjusted, employer firms, 2Q 2026 compared with 2Q 2025. 2Q 2026 estimates are preliminary.
Quarterly revenue for IT industries
| Industry | 1Q 2025 | 2Q 2025 | 3Q 2025 | 4Q 2025 | 1Q 2026 | 2Q 2026 | Year over year |
|---|---|---|---|---|---|---|---|
5415 Computer systems design and related services |
$180.4B | $189.4B | $191.3B | $193.4B | $192.4B | $195.5B | +3.2% |
518 Data processing, hosting, and related services |
$98.4B | $102.7B | $107.1B | $113.9B | $115.5B | $123.7B | +20.4% |
5112 Software publishers |
$150.1B | $155.1B | $157.2B | $166.2B | $171.0B | $178.4B | +15.0% |
517 Telecommunications |
$164.0B | $165.1B | $163.1B | $170.6B | $164.2B | $162.2B | -1.8% |
Over the four quarters to 2Q 2026, NAICS 5415 firms earned about $773 billion. The hosting industry, at $460 billion, is smaller but growing about 6 times as fast. Telecommunications revenue shrank.
Government is the growing customer
Government customers paid NAICS 5415 firms $62.8 billion in 2Q 2026, 7.5% more than a year earlier. Revenue from all other customers, business and households combined, grew 1.3%. The Census Bureau does not publish the business figure on its own because it does not meet publication standards, so the two are shown together here.
What this means for MSPs
Client budgets are moving toward cloud platforms and software subscriptions faster than toward services. Providers that resell or manage that spend, through cloud cost management, licensing, and platform operations, sit on the faster-growing side of the line. Revenue for IT services firms as a whole grew 3.2% in a year, so growth for a typical provider has to come from taking share or moving up into cloud and security work rather than from a rising market.
Frequently asked questions
How fast is the IT services industry growing?
Revenue for computer systems design and related services (NAICS 5415), the Census industry that includes IT consultancies, integrators, and managed service providers, was $195.5 billion in 2Q 2026, up 3.2% from 2Q 2025, according to the Census Bureau Quarterly Services Survey.
How big is the IT services market in the US?
About $773 billion over the four quarters to 2Q 2026 for NAICS 5415 employer firms, not seasonally adjusted. Data processing and hosting added $460 billion and software publishers $673 billion.
Is cloud growing faster than IT services?
Yes. Data processing, hosting, and related services revenue grew 20.4% year over year in 2Q 2026, and software publishers 15.0%, against 3.2% for computer systems design and related services.
How much IT services revenue comes from government?
Government customers accounted for $62.8 billion, or 32%, of NAICS 5415 revenue in 2Q 2026, and that revenue grew 7.5% from a year earlier. Revenue from all other customers combined grew 1.3%.
Where does this data come from?
The U.S. Census Bureau Quarterly Services Survey, which estimates revenue for employer firms in selected service industries each quarter. The 2Q 2026 figures are preliminary.
Methodology
Source. U.S. Census Bureau, Quarterly Services Survey, release for 2Q 2026 (file qss-all-current.xlsx), tables 1c (revenue, not seasonally adjusted), 13 (revenue by class of customer), and 14 (sampling variability), downloaded October 2026.
Calculations. Year-over-year change compares 2Q 2026 with 2Q 2025, not seasonally adjusted. Four-quarter totals sum 3Q 2025 through 2Q 2026. Non-government revenue equals total minus government revenue for NAICS 5415.
Limitations. Survey estimates carry sampling error: the coefficient of variation for NAICS 5415 revenue in 2Q 2026 is 8.2%. Figures are nominal, not adjusted for inflation. NAICS 5415 covers custom programming, systems design, facilities management, and other computer services, not only MSPs. This release covers six quarters; longer history requires the Census API.
Not advice. This is an analysis of public economic data, not investment advice.
Cite as:The Uptime Report. "IT Services Industry Growth 2026: Revenue Up 3%, While Cloud Hosting Grew 20%." October 2026. https://theuptimereport.com/it-services-industry-growth-2026/
References
- U.S. Census Bureau, Quarterly Services Survey. Accessed October 2026.
- QSS current release tables. Accessed October 2026.
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