If the UK tech sector were judged purely on headline figures in 2025, the picture would look reassuring. Valuations remain high, investment continues to flow, and London still dominates the European tech landscape. Yet behind those numbers, a different conversation has taken hold. Boards, legal teams, and procurement leaders are asking harder questions about exposure, continuity, and what happens when a key technology provider fails.
Technology Is Now Embedded Across Everyday UK Operations
Technology now sits at the centre of how UK organisations operate. Across finance, retail, healthcare, entertainment, and the public sector, digital platforms shape service delivery, turning once-supporting systems into essential operational infrastructure. In financial services and retail, cloud-based systems manage payments, fraud checks, inventory, and fulfilment in real time. Short outages can delay transactions, halt sales, or create compliance issues. Similar dependency exists in consumer platforms such as music streaming and live entertainment, where access relies on interconnected cloud infrastructure, delivery networks, and licensing systems working without interruption. And it is not just them. Gambling sites show how quickly technology-led sectors can scale, with new games and interactive formats appearing as systems develop and user demand grows. These services handle large volumes of real-time financial transactions, which means security and system reliability are built into every stage, from account access through to withdrawals. Healthcare, public services, and logistics face comparable exposure. Appointment systems, records management, benefits administration, and supply chain coordination all rely on third-party software. Across these sectors, disruption is immediate and visible, reinforcing why resilience and continuity have become operational priorities rather than theoretical concerns.
The UK Tech Paradox: Record Value, Rising Pressure
By any standard measure, the UK tech ecosystem remains impressive. The Tech Nation 2025 report values the sector at around 1.2 trillion US dollars. London alone accounts for close to 60 percent of that value. These figures reflect genuine strengths. The UK continues to attract global talent, support ambitious founders, and produce companies with international reach. Innovation remains broad, spanning fintech, health tech, AI, and enterprise software. At the same time, scale brings pressure. As the ecosystem grows more interconnected, failures become harder to contain. That tension between growth and fragility defines much of the current landscape.
Investment Still Flows, But Exits Are Harder To Find
On the funding side, the UK continues to lead Europe. According to the State of European Tech analysis, investment into UK startups reached close to 14 billion US dollars in 2025, again topping the European rankings. Other industry reports show UK-based companies attracting more capital than firms in Germany, France, and Switzerland combined. However, the exit environment has changed sharply. Funds raised through IPOs on London markets during the first half of 2025 reached only £160 million, the lowest first-half total in at least three decades. RSM UK notes that London remains the main destination for UK tech IPOs, even as deal flow slows and valuations face downward pressure. For founders and investors, this means longer timelines, tighter scrutiny, and a stronger focus on operational durability rather than rapid expansion alone.
Insolvencies And Funding Risk Change How Customers Think
Corporate failure remains a visible feature of the UK economy. PwC analysis shows startups now represent a smaller share of insolvencies than in previous years, which suggests some progress in early-stage resilience. Yet overall corporate insolvencies remain close to multi-decade highs and could exceed 24,000 cases in 2025 if current trends continue. For customers that depend on third-party software, this matters. Even vendors with strong products and credible funding can face disruption from delayed investment rounds, failed exits, or sudden market shifts. As a result, buyers increasingly think beyond performance and pricing. They want clarity on continuity and credible answers to uncomfortable “what if” scenarios. Regulators Turn Dependency Into A Compliance Issue Regulators across Europe have drawn similar conclusions about dependency risk. Under the Digital Operational Resilience Act, the European Supervisory Authorities designated 19 firms as “critical ICT third-party providers” in November 2025. These providers are now subject to direct oversight, including resilience testing, enhanced incident reporting, and scrutiny of concentration risk. Although DORA applies directly to EU financial institutions, its implications extend further. If banks are required to understand and manage infrastructure risk, similar expectations naturally follow for other critical software suppliers. Critical Suppliers Under The Microscope The UK has introduced a parallel framework. Through the Financial Services and Markets Act 2023, HM Treasury gained powers to designate “critical third parties” to the UK financial system. The Bank of England, PRA, and FCA finalised the rules in late 2024, with the regime taking effect in January 2025. Once designated, providers will face direct regulatory oversight, including scenario testing, resilience assessments, and formal incident reporting. While no firms had been designated by late 2025, government statements indicate that this is expected to change during 2026. For firms selling into financial services, the direction of travel is clear. Dependency, substitution, and recovery are now regulatory concerns, not theoretical risks.
Cyber Resilience Moves From IT Issue To Board Duty
Alongside financial regulation, cyber resilience has moved firmly into the governance space. In November 2025, the UK government introduced the Cyber Security And Resilience (Network And Information Systems) Bill. The legislation expands the existing NIS framework by widening sector coverage, strengthening incident reporting requirements, and enhancing enforcement powers. The government has described the Bill as a “step change” in how cyber threats are managed. The emphasis is on preparation, transparency, and accountability. For boards, the signal is clear. Cyber resilience is no longer just an IT responsibility. It is a business continuity issue with regulatory and reputational consequences.
Continuity Tools Step Out Of The Background
These pressures have reshaped attitudes toward continuity mechanisms. The software escrow market itself has been consolidating. One major provider expanded through acquisitions, including the purchase of Iron Mountain’s software escrow business in 2021 and the transfer of customer portfolios from a failed provider in 2024. In 2025, its parent group announced it was exploring strategic options for the escrow division, including a potential sale. Reports suggest sustained interest from private equity firms. At the same time, analyst forecasts point to steady global growth in software and SaaS escrow. Increased cloud reliance, tighter regulation, and heightened third-party risk continue to drive demand. Escrow is no longer viewed as a niche legal safeguard. It is increasingly seen as part of a broader operational resilience strategy.
AI Expands The Dependency Map
Artificial intelligence has added a new layer of complexity. By 2025, AI adoption has moved beyond experimentation. Research from Barclays shows that almost nine in ten UK businesses are using or exploring AI to address real operational challenges. Average spending on AI and emerging technologies reached around £235,000 over the past year. As AI becomes embedded in SaaS platforms, continuity questions multiply. Core functionality may depend on external models, data pipelines, or inference services that vendors do not fully control. Training data, fine-tuned weights, and prompt libraries can be as critical as source code. Behavioural changes over time also complicate testing and recovery planning. Despite the new terminology, these remain familiar issues. They are still third-party dependencies, simply expressed through more complex technology.
What Legal Teams Are Now Expected To Evidence
For legal teams advising customers, expectations have become more explicit. Regulatory frameworks increasingly demand documented dependency mapping, scenario testing, and evidence of resilience. Contracts now reflect this shift, with clearer provisions around continuity, exit rights, and transition support. Recovery objectives are defined earlier in negotiations. Obligations to assist with handover or replication are no longer unusual. Independent continuity mechanisms are increasingly aligned with regulatory expectations rather than viewed as optional safeguards.
What Customers Look For When Systems Matter
Customers now operate in a market where disruption remains a real possibility. Despite strong ecosystem valuations, insolvencies and funding pressures persist. Regulators concerned about systemic risk also tend to view credible continuity planning positively during audits and supervisory reviews. For organisations running critical operations, reassurance matters. They want confidence that disruption will not bring essential services to a halt.
Why Vendors Are Being Asked Harder Questions
For software vendors, this environment changes the sales conversation. Enterprise and regulated buyers ask more detailed questions about cloud providers, AI components, and subcontractors. Procurement teams expect evidence, not broad assurances. A well-structured software escrow or SaaS escrow arrangement, supported by verified and tested procedures, can reduce friction. It can shorten sales cycles and support procurement approvals where operational resilience is a board-level concern.
What 2026 Is Likely To Demand
As the UK tech sector moves toward 2026, the message is consistent. Growth remains important, but it is no longer enough on its own. Regulators, customers, and boards increasingly expect technology providers to demonstrate resilience, transparency, and preparedness. Continuity has returned to the agenda, not as a defensive afterthought, but as a marker of maturity. UK tech is not losing momentum. It is entering a phase where trust, stability, and resilience will define who succeeds next.
