Computable100 | Transitional year for the Dutch IT Sector

2023 was a pivotal year for the IT sector, shaped by macroeconomic challenges, rising interest rates, and geopolitical uncertainty. While the sector maintained its position as a growth leader, the pace of expansion slowed. According to CFI’s latest ranking of the top 100 IT companies, average revenue growth declined to 19%, a notable drop from 26% in 2022. This deceleration reflects a broader trend of cautious corporate spending and selective investment strategies.

Market uncertainty and investment hesitation

Randy de Visser, Vice President at CFI, notes that compiling this year’s list was more complex due to limited available data. “Companies exercised greater caution, leading to a slowdown in M&A activity,” he explains. Despite this, IT remained one of the fastest-growing sectors in the Netherlands, far outpacing the broader economy’s modest expansion.

Ramon Schuitevoerder, Partner at CFI, highlights the impact of interest rate hikes. “While necessary to curb inflation, rising rates have also constrained corporate investment appetite and impacted valuations,” he says. This cautious approach among investors and company executives led to longer deal cycles, increased due diligence, and a focus on profitability over sheer revenue growth. However, as inflation comes under control and rates stabilize, he expects renewed M&A momentum, particularly in high-growth sub-sectors such as SaaS, cybersecurity, and fintech.

Buy-and-Build continues to drive growth

M&A remains a crucial lever for expansion. Many top-ranked companies accelerated growth through strategic acquisitions, consolidating market share and enhancing their service offerings. While organic growth remains important, companies executing well-planned buy-and-build strategies continue to lead in scale and profitability. Larger firms leveraged acquisitions to expand into adjacent markets, while smaller players sought partnerships to gain technical expertise and operational efficiencies.

Private equity investors also played a significant role in shaping the M&A landscape. With dry powder at record levels, many funds remained active in IT-related investments, albeit with a sharper focus on resilient, scalable business models.

Key players in 2023

Afas Software retained its #1 ranking, demonstrating the resilience of its standalone strategy. Other high-growth players—such as Ciphix, Zig Websoftware, and BCS—leveraged acquisitions to scale rapidly. Moving Intelligence, a leader in fleet and vehicle management solutions, climbed the rankings, while NetRom Software attracted investor interest with its scalable and capital-efficient business model.

Additionally, companies specialising in cybersecurity, AI-driven automation, and digital transformation services gained traction, as businesses prioritised operational efficiency and data protection in an increasingly complex digital environment.

Emerging trends: AI, ESG, and digital transformation

Several structural trends are reshaping the Dutch IT landscape:

AI and automation: Companies integrating AI-powered solutions are redefining efficiency and competitiveness. According to McKinsey, software-driven M&A accounted for 80% of technology transactions in 2023, underscoring AI’s growing role in shaping future business models.
ESG-driven innovation: Sustainability and compliance software are gaining traction as regulatory requirements tighten. The focus on environmental, social, and governance factors is influencing investment decisions and corporate strategies.
Cloud and legacy modernisation: Organisations investing in scalable, cloud-based solutions are better positioned for long-term success. The shift toward cloud computing continues to be a significant driver in technology investments, with hybrid cloud models emerging as a preferred strategy for large enterprises.

Outlook: a market poised for rebound

While 2023 was a year of recalibration, the long-term fundamentals of the IT sector remain strong. As interest rates stabilize and investor confidence returns, M&A activity is expected to accelerate. Companies that continue to execute strategic acquisitions, embrace AI-driven efficiencies, and align with ESG priorities will be best positioned for the next wave of growth in 2024 and beyond.

Looking ahead, the Dutch IT sector is poised for renewed deal-making activity, particularly in high-value segments such as AI, cybersecurity, and enterprise software. The combination of technological advancements, regulatory shifts, and evolving consumer demands will shape the next chapter of IT sector growth. Investors who identify and capitalise on these trends early will be best positioned to generate long-term value.