The technology and digital services update for Q1 2023 shows deal volume within the IT Services sector improved in Q1, with a total of 392 deals; this is up 9.8% from the 357 deals closed in Q4 of 2022. This increase demonstrates the resilience of the IT Services industry despite headwinds in the lending environment. Deal-making in Q1 was focused on the technology and support services vertical, with other select verticals remaining relatively constant compared to the past quarter.Despite economic volatility, companies are increasingly investing in IT services in hopes of finding and using new optimization tactics as a profit source and differentiator. The sector has been favored for investments as increasing interest rates decrease the overall appetite for capital expenditures. These factors, coupled with the emerging pain points in the global economy, such as supply chain volatility and talent shortages, continue to draw attention from senior leadership. Owners are continually looking for ways to streamline the customer experience and are increasingly seeing IT as a way to do that; this highlights IT services as a feasible growth opportunity for many companies with the industry standing to benefit significantly from the overall ramp-up in resources allocated to these divisions. This will continue to attract private equity groups, and strategic acquirers looking to expand their product and service portfolio through acquisitions. Due to the current lending environment and residual uncertainty, this consolidation will likely consist of smaller players within the space instead of larger mergers with more prominent players.