IT Pay Report: AI 'Digital Workers' & Private Equity Reshape Profit Playbook

TAMPA, Fla. – March 11, 2026 – Service Leadership Inc., a ConnectWise company, today unveiled its 2026 Annual IT Solution Provider Compensation Report, a benchmark study that reveals a significant shift in the forces shaping the IT services industry. While wage inflation shows signs of cooling after its 2022 peak, the report introduces groundbreaking data on the rise of AI-powered "Digital Workers" and the diverging strategies of private equity-backed firms, signaling a new era of operational strategy and workforce management.

The 13th edition of the report, renowned for uniquely correlating compensation data with provider profitability, offers a detailed playbook for navigating an increasingly complex market. It analyzes compensation for over 60 roles, billable rates, and incentive structures, providing a critical resource for IT solution providers (TSPs) aiming to balance talent retention with sustainable growth.

Beyond the Paycheck: The New Profitability Equation

A key finding from the 2026 report confirms a trend of moderating wage inflation, offering a welcome reprieve for TSPs whose margins have been squeezed by soaring labor costs. The data indicates that the frantic salary escalations that peaked in 2022 have subsided, allowing for more strategic financial planning. However, the report cautions against complacency, revealing a stark contrast in how the most profitable firms manage compensation compared to their lower-performing peers.

Top-performing TSPs, defined as those in the top quartile of profitability, are not simply cutting costs but are becoming far more surgical with their pay increases. According to the report's findings, these best-in-class providers planned for approximately four times fewer employees (6.1%) to receive top-level pay increases (over 6%) in 2026 compared to bottom-quartile providers (24.2%). This continues a trend observed in the previous year, where top performers were already three times more selective with large raises. This suggests that high-profitability firms are shifting focus from blanket salary hikes to performance-based incentives and, crucially, investing in operational efficiency to drive growth.

“This report provides IT Solution Providers with a clear view of the real costs associated with recruiting and retaining talent in today’s market,” said Peter Kujawa, EVP & GM of Service Leadership and IT Nation at ConnectWise. “As labor remains the largest expense for most firms, understanding how top-performing organizations structure compensation and improve operational efficiency is critical to maintaining profitability and long-term growth.”

The Rise of the Digital Workforce

Perhaps the most forward-looking insight from the 2026 report is the introduction of data tracking "Digital Workers"—AI agents and automation bots. This marks the first time a major compensation study in the sector has formally quantified the integration of an automated workforce, highlighting a fundamental transformation in IT service delivery. The inclusion of this metric acknowledges that operational efficiency is no longer solely about optimizing human labor but about creating a hybrid workforce where AI augments human capability.

By measuring the adoption of Digital Workers, the report provides a baseline for understanding how automation is impacting cost structures, productivity, and the very definition of an IT team. Kujawa noted that while easing wage pressure is encouraging, improving operational efficiency remains paramount. This is where automation becomes a strategic lever.

This trend directly aligns with the strategic direction of parent company ConnectWise, which has been championing AI-driven automation across its platform. Kujawa pointed to solutions like zofiQ, built on the ConnectWise platform, which are designed to “automate routine tasks and augment service teams, enabling MSPs to improve productivity while better managing overall labor costs.” The message is clear: the future of profitable IT service delivery involves a symbiotic relationship between human experts and their digital counterparts, freeing up skilled technicians to focus on high-value, complex problem-solving and client strategy.

A Tale of Two Owners: Private Equity vs. Private Firms

Further dissecting the industry's structure, the 2026 report introduces a new analysis comparing privately owned TSPs with those backed by private equity (PE). This distinction is critical in a market that has seen a surge of PE investment, driven by the recurring revenue and growth potential of Managed Service Providers (MSPs).

The research suggests that ownership models profoundly influence operational and compensation strategies. PE-backed firms, often driven by aggressive growth targets and a 3-to-5-year exit strategy, tend to instill a highly metrics-driven culture. Their approach often involves a stronger emphasis on performance-based variable compensation, aggressive M&A roll-up strategies to achieve scale, and a disciplined focus on optimizing labor costs to maximize EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). Their compensation packages for key sales and leadership roles may be lucrative, often including equity to align incentives with rapid value creation.

In contrast, privately owned firms may exhibit more flexibility, potentially prioritizing long-term stability, employee culture, and customer relationships over short-term financial metrics. While also focused on profitability, their compensation strategies might be less rigidly tied to quarterly performance and more focused on sustained, organic growth and employee tenure. The report’s new data provides a concrete framework for understanding how these divergent philosophies translate into tangible differences in pay, consultant costs, and overall business performance.

Navigating the Evolving Talent Landscape

Amid these structural and technological shifts, the report confirms that the hybrid work model remains the dominant paradigm in the IT services industry, cementing the post-pandemic evolution of the workplace. This flexibility has become a key non-monetary benefit in attracting and retaining talent. Simultaneously, the global demand for advanced technical roles continues to outpace supply, forcing providers to remain competitive in their hunt for specialized skills in areas like cybersecurity, cloud architecture, and AI.

For IT solution providers, the 2026 report serves as both a map and a compass. It illustrates a market stabilizing from the wage inflation of recent years but entering a new phase of intense strategic competition. Success is no longer just about paying well; it is about paying smart, investing in automation, and adopting an operational model—whether PE-driven or privately cultivated—that can deliver efficiency and value in a rapidly changing technological landscape. The most successful firms will be those that master this complex interplay of human talent, digital labor, and strategic financial management.