Midmarket leaders are the new targets in tech services battle for growth

As it approaches its 25th anniversary, Avanade is deepening its commitment to the midmarket—targeting firms with annual revenues between $500 million and $5 billion that are primed for digital transformation. It is far from alone in recognizing the emerging opportunity, but it does have a head start over many of its larger competitors, having developed a wealth of Microsoft-specific solutions tailored to the needs of midmarket firms over the past two decades.

Avanade already serves the segment with pre-configured, industry-aligned tools that address the challenges of agility, scalability, and limited in-house IT resources. Two-thirds of its direct customers are midmarket.

The firm is a JV between Accenture and Microsoft; so with Microsoft’s Azure showing 25–30% midmarket growth, Avanade is betting that its expertise will enable it to capture a large share of this growing market. And it’s a big bet. Avanade aims to onboard 1,000 new clients annually with its Microsoft-backed tech suite. Its ambition is to democratize access to enterprise-grade technology by streamlining the adoption of solutions such as Dynamics, Azure, and AI-based services.

Access to powerful Microsoft tools comes with the threat of lock-in

Avanade’s model aims to deploy industry-aligned services and As-a-service solutions that enable firms to adopt digital capabilities quickly without extensive in-house IT demands. The approach can be valuable for midmarket clients that lack the scale to build such capabilities independently yet require enterprise-grade tools to compete. The model also enables firms to continue to lean on Avanade to help manage and evolve those solutions.

However, this tight integration also creates a dependency on Microsoft technology. Midmarket firms entering this ecosystem must weigh the benefits of seamless integration against the strategic risks of vendor lock-in, which could limit their flexibility as they grow or pivot.

Industry-aligned services focus on simplicity and speed to market

Avanade will still be biased toward providing bespoke offerings when working with large enterprises, typically with Accenture. However, in the midmarket, their bias is toward replicable, vertical-specific solutions that reduce time-to-value. From ERP-as-a-service to AI-driven CRM, Avanade’s model aims to deploy industry-aligned managed services that enable firms to adopt digital capabilities quickly without extensive in-house IT demands. The approach can potentially be valuable for midmarket clients that lack the scale to build such capabilities independently yet require enterprise-grade tools to compete.

This templated model may not fit all needs. Midmarket companies with highly specialized processes or complex requirements may find the limitations of standardized solutions a drawback. For them, the bespoke route remains open. Avanade’s advantage here is its industry knowledge, which enables it to deliver solutions with a depth of experience that newer entrants to the midmarket will lack. This differentiator could help Avanade bridge the gap between scalability and customization, provided it continues to adapt to unique client requirements.

Big guns are also trained on the midmarket

As Avanade seeks to dominate the midmarket, it faces new competition. Companies such as Wipro and NTT DATA are adapting their enterprise solutions for the midmarket, attracted by the segment’s agility and demand for scalable, flexible services. Wipro, for instance, is targeting mid-tier insurers with Duck Creek solutions that promise rapid deployment, similar to Avanade’s managed services model. NTT DATA’s Business Solutions division delivers SAP solutions tailored to midmarket enterprises. The firm acquired Sapphire, a UK-based provider of digital operations software and services to midmarket customers in the UK and US, in November 2023.

Microsoft’s growing interest in the midmarket, including its current “Majors” strategy, underscores the segment’s appeal and suggests increased competition to come.

Avanade targets 1,000 new midmarket customers every year for the next five years

Avanade’s goal to secure 1,000 new midmarket clients annually is ambitious and will test its ability to scale rapidly without compromising service quality. Avanade believes the demand for a more templated and replicable approach is there—evidenced by midmarket firms regularly spending more time and money than they need to on bespoke solutions.

The firm has a proven track record in the segment, backed by its deep history of developing Microsoft solutions tailored to firms in this revenue range. However, as competition intensifies, Avanade must ensure its operational model can handle rapid client growth without diluting quality and responsiveness.

If Avanade can deliver on its promise of industrializing replicable innovation through simplification and standardization—while maintaining flexible support—it stands a good chance of differentiating itself. For midmarket firms, Avanade’s experience offers both stability and efficiency, but they will need assurance that the firm’s aggressive growth targets won’t hinder service standards or limit the adaptability that midmarket clients demand.

The Bottom Line: Midmarket leaders must weigh the short-term innovation benefits of Avanade’s solutions against the long-term risk of lock-in.

Avanade provides a clear path forward for midmarket enterprises ready to scale with the support of enterprise-grade Microsoft solutions. Its longstanding experience in this segment, coupled with Microsoft’s backing, gives it a unique position as a credible partner. Enterprise leaders should evaluate Avanade’s solutions with an eye on the benefits—and potential constraints—of committing to Microsoft’s ecosystem.