Finnish IT services company Tieto has reported a surge in margins for the second quarter of 2026, even as demand for its consulting division remained subdued. The Helsinki-based firm posted an operating margin of 12.4 per cent for the three months to June, up from 10.8 per cent in the same period last year, driven by stringent cost management and a shift toward higher-margin recurring services.
Consulting revenue, however, fell by 3.2 per cent year-on-year, reflecting a broader slowdown across European technology advisory markets. Businesses have been scaling back discretionary spending amid persistent economic uncertainty, hitting project-based consulting work particularly hard. Tieto's managed services and cloud solutions segments provided a buffer, growing 5.1 per cent combined.
For UK investors, the results underscore a bifurcation in the IT services sector: companies with strong recurring revenue streams are weathering a demand slump better than those reliant on consulting. The FTSE 250-listed peer Computacenter, which has a similar business mix, saw its shares dip 1.8 per cent in early trading on Thursday as traders weighed the implications of Tieto's figures for the broader industry.
Analysts at Berenberg noted that Tieto's margin performance 'demonstrates the value of a disciplined cost base and a pivot to annuity-style contracts,' but cautioned that 'the consulting headwind is unlikely to abate quickly.' The FTSE 100 edged 0.3 per cent higher on the day, with technology services stocks underperforming the broader index.
UK pension funds with exposure to European IT equities may see near-term volatility, though the margin resilience offers some reassurance. Tieto's shares rose 1.2 per cent in Helsinki after the release, suggesting investors are rewarding operational discipline over top-line growth for now.