Neither business model is automatically more resilient. Subscription revenue can make a software product company’s income more predictable from quarter to quarter, while project-based IT services may feel client budget cuts sooner. But subscriptions can shrink or fail to renew, and services can be durable when they support essential operations. To judge a company, look past the label and compare its revenue mix, renewals, bookings, backlog, client concentration and how easily customers can defer its work.
Why weak client spending affects the models differently
The key difference is often timing. A client may delay signing a new implementation project or cut discretionary consulting before it can readily stop paying for software it relies on every day. That can give a subscription business more near-term revenue visibility than a services firm that must keep winning new work.
Visibility is not immunity. A customer can reduce subscription scope, decline an expansion or cancel at renewal. Services work can also be recurring or essential, such as ongoing managed services, support or implementation tied to critical systems. The specific contract and customer need matter more than the broad category.
Project-led services can be exposed to deferrals
In its September 5, 2024 IT services outlook, Gartner said it had revised services market growth down by 150 basis points amid cautious spending, higher capital costs and slower-than-anticipated generative AI spending. It described delays in large deals and reductions in expenditures, particularly discretionary spending. This illustrates how client caution can push project revenue into a later period; it is a 2024 market outlook, not a statement of current conditions or realized results.
Outdated Drivers Are Slowing You Down
One free scan finds every outdated or missing driver and matches the right update for your exact hardware.Free scan · exact hardware matchPC Slower Than It Used to Be?
A free scan shows the junk files, broken settings and background clutter dragging Windows down - then fixes them in one click.Free scan · Windows 10 & 11#1 Best Overall
Gartner’s earlier March 22, 2024 forecast projected 9.7% growth in the worldwide IT services market in U.S. dollars for 2024, while noting that enterprises were expected to remain cautious about new project signings in the first half of that year. A growing market can still include hesitant buyers, and a forecast should not be mistaken for the eventual result.
Services are not all equally cyclical
Contract size and duration help explain variation within services. Accenture’s FY2025 annual report says the company continued to see demand for its services but experienced a slower pace and level of client spending, particularly for smaller, shorter-duration contracts. That company-specific disclosure supports looking at the kind of work a provider sells rather than assuming every services business responds alike.
Subscriptions can smooth revenue timing, but renewals still matter
A recurring subscription base can reduce dependence on landing an entirely new project in a given quarter. Revenue visibility depends on customers continuing their contracts, though: renewals, scope reductions, churn and customer expansion all affect results. Product companies may also earn revenue from perpetual licenses, hardware, consulting or implementation, so “product company” does not necessarily mean “mostly recurring software.”
Company filings show different outcomes, not a universal rule
Teradata’s 2025 Form 10-K reports total revenue of $1.663 billion, down 5% from 2024; recurring revenue of $1.445 billion, down 2%; and consulting services revenue of $201 million, down 19%. The filing says consulting revenue declined as expected following lower order booking activity in the second half of 2024 and into 2025. The figures show both that recurring revenue can fall and that a company associated with products can have a meaningful services component.
What’s actually slowing this PC down?
Pick the symptom - the matching free tool is one click away.
By contrast, Vertex’s 2025 Form 10-K says the vast majority of its revenue comes from recurring software subscriptions. Vertex reported year-end 2025 ARR of $671.0 million, up 11.3% year over year, and describes ARR as an indicator of future subscription revenue. That is a growing result for one company in that period, not proof that software companies as a group outperform services firms when spending weakens.
How to compare two companies fairly
Use the same reporting period and geography, and separate revenue streams where the company provides a breakdown. A practical comparison includes:
Rank #4
- Revenue durability: Compare recurring subscriptions, maintenance and managed services with project work, one-time implementation, hardware and perpetual licenses.
- Renewals and expansion: Review retention, renewal rates, churn and net expansion. Recurring contracts remain exposed to customer decisions at renewal and during the contract.
- Near-term demand: Check bookings, backlog, pipeline conversion and the duration of signed work. Backlog signals contracted work but is not the same as revenue already recognized.
- Deferrability and criticality: Ask whether clients can postpone the offering without risking operations, security, compliance or revenue. Essential work may hold up better than discretionary projects, whatever the business model.
- Concentration and end markets: A company dependent on a few clients, one industry or one geography may be more exposed to a downturn in that segment than its business-model label suggests.
- Price and scope: Look for discounting, renegotiations and reduced scope, alongside delivery costs. Headline revenue alone may not show pressure on contract value or profitability.
What the evidence can—and cannot—establish
The Gartner outlook describes market conditions in 2024, while the company figures above come from individual FY2025 filings. They are not a controlled, matched historical comparison of services and product companies, and they do not establish that one category always performs better. Treat forecasts as forecasts, company examples as company-specific, and comparisons as meaningful only when their periods, geographies and revenue definitions are clear.
Quick Recap
Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
