Global Technology Industry Association (GTIA) has released its State of the Channel 2026 report for the UK and Ireland, highlighting current trends, opportunities and challenges facing IT service providers (ITSPs) in the region. The survey among 130 ITSPs finds that the channel is at an AI inflection point: while respondents identified AI services as the top revenue driver for the coming months, only three out of 10 providers have fully embedded AI into their business models.
According to the research, 35% of UK and Ireland ITSPs currently generate between 11% and 25% of their revenue from AI-related services, with many selling a mix of existing and newly developed AI products and services. This contrasts with those who are heavily focused on AI: 7% said that over half of their revenue now stems from AI-related products and services.
Carolyn April, Vice President of Research and Market Intelligence at GTIA, said: “AI hype is fast turning into AI reality, making this a crucial time for providers who must make important decisions about their business strategy. We are well past the experimentation phase. The key differentiator now is how strategically and operationally mature a provider’s AI usage is. Those who can successfully adopt and monetise AI will be best placed to navigate this sea change.”
Growth expectations concentrated in higher-value offerings
While the sentiment among more cautious providers is that the channel remains relevant and stable – with over two-thirds on target to meet business goals in 2026 – those who are embracing AI by actively evolving offerings and investing in new skills and vendor relationships reported the strongest growth expectations. Nearly a third (31%) expect that AI revenue will see significant growth over the next 24 months.
“Most ITSPs continue to prioritise classic infrastructure-centric services, but growth expectations are increasingly concentrated in newer, higher-value offerings,” said April. “The gap between what ITSPs sell now and where they expect growth highlights the opportunity – but also the need for new skills, pricing and delivery models as AI shifts to business imperative.”
Other key findings include:
• Forty-nine percent of ITSPs in the UK and Ireland say technology’s growing complexity is driving demand for IT expertise, boosting channel health.
• Forty-two percent expect AI services to be the top revenue growth category for the next two years, followed by cybersecurity services (37%).
• Thirty percent already identify as ‘AI-driven’ companies that are generating AI revenue, have formal AI leadership and operational strategies in place, while 43% describe themselves as ‘AI invested’ with the transformation still underway.
• Thirty-seven percent see workforce skills and talent shortages as the biggest inhibitors to channel success. Thirty-four percent cited external factors, while 16% are worried about the availability and adoption of AI solutions, making AI both a growth catalyst and an emerging disruption risk.
Hybrid business models still dominate
According to the report, hybrid business models still dominate the ITSP landscape even as growth shifts toward AI and security. Most providers continue to blend managed services, products and project work, relying on diversification to manage risk in an environment defined by rapid change, technology complexity and geopolitical challenges.
The full State of the Channel 2026 report UK and Ireland is available exclusively to GTIA members.
