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M&A Outlook 2025: What Big Banks Are Predicting
Global M&A activity is poised for a resurgence in 2025. With easing interest rates, ample dry powder, and rising corporate confidence, leading investment banks anticipate a significant uptick in dealmaking across sectors and regions. J.P. Morgan: Cross-Border Transactions and Strategic Acquisitions to Drive M&A J.P. Morgan expects strong M&A growth in 2025, building on 2024’s $3.5 trillion global deal volume. A more business-friendly US administration is expected to ease M&A regulations, shorten approval timelines, and create a smoother path for dealmaking. Meanwhile, activist investors will remain active, continuing to push for corporate breakups and restructuring to unlock shareholder value. At the same time, the US remains the most attractive destination for M&A, while the United Kingdom and Japan are key outbound players. Additionally, private equity (PE) firms, armed with high dry powder, will increase exits to return capital to investors. Meanwhile, the technology, healthcare, and infrastructure sectors will see the most deal flow. While geopolitical risks and inflation concerns persist, a more predictable regulatory landscape, strong financing markets, and corporate restructuring trends will support robust M&A activity in 2025. Barclays: Corporate Divestitures and Sponsor Activity to Propel M&A Barclays predicts a 15% increase in M&A deal volumes in 2025. The momentum began in 2024, as corporate divestitures gained traction, driven by activist investors demanding sharper operational efficiency. This wave is set to continue, with companies opting for M&A over buybacks as falling interest rates and excess cash reserves create a prime environment for dealmaking. Armed with significant dry powder, PE firms will play a key role. While sell-side activity is expected to rise as firms look to monetize assets, sponsor-led acquisitions will remain robust, sustaining deal momentum. Moreover, the Trump administration's policies on antitrust, tariffs, and foreign trade are expected to impact inbound M&A. However, uncertainties surrounding US trade and antitrust policies will likely introduce some friction. Meanwhile, APAC outbound M&A is expected to remain subdued, with Japan standing out as an exception, poised for more deal activity. Read more: Key Trends Reshaping the US Retail Industry Morgan Stanley: Easing Regulations and Uncommitted Capital to Boost Deals Morgan Stanley anticipates a stronger M&A rebound in 2025, driven by a more favorable regulatory environment, financial sponsor exits, and increasing cross-border transactions. With nearly $3 trillion in uncommitted capital, PE firms will accelerate the monetization of the aging portfolios. Meanwhile, they will remain active on the buy-side through take-private deals. Corporations are also expected to pursue strategic acquisitions as regulatory scrutiny eases, enabling mega-deals that were previously delayed. Shareholder activism will remain strong, pushing for corporate separations to unlock value. Cross-border M&A will grow as US companies seek European assets at lower valuations while European firms target US expansion. While uncertainties remain regarding US trade policies, the overall outlook is positive, with deregulation supporting dealmaking momentum. UBS: Macroeconomic Stability and PE Revival to Accelerate Deals UBS anticipates a surge in deal activity driven by macroeconomic stability, renewed corporate confidence, and a revival in PE transactions. A business-friendly US policy environment, declining interest rates, and improving stock market conditions are creating the perfect backdrop for companies to pursue strategic acquisitions. Corporate boards are keen to optimize their portfolios through divestitures, while financial sponsors, under growing pressure to return capital, are set to accelerate exits. Technology remains the top sector for M&A, with strong demand for AI, cybersecurity, fintech, and digital infrastructure. Stock markets near record highs will allow for increased use of equity in acquisitions. Also, investment-grade debt markets remain open, supporting both corporate and sponsor-led M&A. While policy uncertainties remain, UBS anticipates a strong dealmaking environment as companies and investors deploy more capital in 2025. Read more: Why CVCs Struggle to Turn Investments into Acquisitions Goldman Sachs: Improved Macro Clarity to Drive Corporate M&A Growth Goldman Sachs expects global M&A activity to accelerate in 2025 due to macroeconomic and regulatory clarity. Corporate buyers are shifting their focus from stability to strategic growth amid a push from activist investors for portfolio simplifications. Thus, capability-enhancing acquisitions, particularly in technology, are on the rise, with non-tech firms acquiring tech assets. At the same time, financial sponsors face mounting pressure to deploy capital and generate exits, fueling a rise in sponsor-to-sponsor deals and liquidity events. AI-driven M&A is also gaining momentum, with most activity concentrated in the infrastructure and platform layers, as companies seek to secure competitive advantages in a rapidly evolving market. Cross-regional M&A rebounded in 2024, particularly between the US and Europe, and is expected to keep expanding in 2025. Meanwhile, APAC accounted for 30% of global M&A volumes, with Japan and India leading the activity, fueled by corporate governance reforms and regulatory-friendly policies. With improving economic fundamentals, easing regulations, and strong corporate confidence, 2025 is shaping up to be a promising year for M&A. As liquidity returns and dealmaking momentum builds, companies and investors alike will be well-positioned to capitalize on emerging opportunities. Partner of choice for lower middle market-focused investment banks and private equity firms, SG Analytics, provides offshore analysts with support across the deal life cycle. Our complimentary access to a full back-office research ecosystem (database access, graphics team, sector & and domain experts, and technology-driven automation of tactical processes) positions our clients to win more deal mandates and execute these deals most efficiently. About SG Analytics SG Analytics (SGA) is an industry-leading global data solutions firm providing data-centric research and contextual analytics services to its clients, including Fortune 500 companies, across BFSI, Technology, Media & Entertainment, and Healthcare sectors. Established in 2007, SG Analytics is a Great Place to Work® (GPTW) certified company with a team of over 1200 employees and a presence across the U.S.A., the UK, Switzerland, Poland, and India. Apart from being recognized by reputed firms such as Gartner, Everest Group, and ISG, SGA has been featured in the elite Deloitte Technology Fast 50 India 2023 and APAC 2024 High Growth Companies by the Financial Times & Statista.
Key Trends Reshaping the US Retail Industry
The US retail industry is undergoing significant shifts in 2025, with evolving consumer behavior, technological advancements, and macroeconomic changes redefining the landscape. From AI-driven automation to omnichannel expansion, retailers adapt to new challenges while seizing growth opportunities. Here are five major trends that will shape the industry this year. AI and Automation Are Transforming Retail Operations AI will revolutionize the retail industry in 2025, moving beyond experimentation to become an essential tool for optimizing operations. The AI in the retail industry is expected to grow from $13.07 billion in 2025 to $53.74 billion by 2030, at a CAGR of 32.68%, as per Mordor Intelligence. Retailers use AI-driven demand forecasting, inventory management, and automated customer service tools to reduce inefficiencies and boost sales. Additionally, AI-powered chatbots deployed during the 2024 holiday shopping season helped increase conversion rates by 15%. Figure 1: AI in the Retail Industry Source: Mordor Intelligence Automation also improves efficiency in supply chain and store operations. AI-powered checkout systems and RFID-enabled inventory tracking are streamlining logistics. Retailers like H&M leverage AI to optimize store layouts and track product movement. In warehouses, robotics and AI are reducing fulfillment times and labor costs, setting new standards for efficiency in retail logistics. Read more: DeepSeek Takes on the Silicon Valley Consumers Demand More Value Amid Economic Uncertainty American consumers are expected to remain highly price-sensitive in 2025. According to Deloitte's baseline forecast, while the US economy is likely to expand at a moderate pace of 2.4%, household budgets are still strained by rising grocery prices. Shoppers are prioritizing value, shifting to private-label brands, discount retailers, and bulk purchases. Moreover, promotional shopping is becoming more common, with events including Black Friday and Cyber Monday driving record participation. Two-thirds of retail executives expect price-conscious consumers to shop more frequently but with smaller basket sizes, as per the 2024 Deloitte US Retail Buyer survey. Retailers are revamping loyalty programs and leveraging AI-driven analytics to optimize pricing and offer targeted deals to retain such cost-conscious customers. The challenge for retailers is balancing affordability with profitability while ensuring they do not compromise customer experience. The Rise of RMNs and Alternative Revenue Streams Big retailers like Amazon, Walmart, and Instacart are expanding their ad platforms and increasingly turning to advertising as a key revenue source through retail media networks (RMNs). In 3Q24, Amazon generated $14.3 billion in revenue from its advertising business with 18.8% y-o-y growth. Its move to provide ad tools as a service has increased competition for smaller players such as Criteo. Moreover, Walmart’s acquisition of Vizio highlights how retailers invest in digital advertising infrastructure to drive growth. With traditional retail margins under pressure, retailers are exploring alternative revenue streams, such as subscription models and third-party logistics services. In August 2024, Walmart started offering its logistics to sellers outside their marketplace. Those who successfully integrate retail media and data monetization into their business models will gain a competitive edge in 2025. Read more: Data Center Outlook 2025 Omnichannel Retail has Become the Standard The distinction between online as well as offline shopping is disappearing as omnichannel strategies become the norm. Consumers today demand a seamless shopping experience across physical stores, mobile apps, and e-commerce platforms. Digital-first brands are launching brick-and-mortar locations to build stronger customer engagement, while traditional retailers are integrating advanced technology into stores to improve personalization and convenience. Walmart has integrated technology to connect in-store and online shopping. Geo-fencing detects customers' loyalty accounts when they arrive for online order pickups, and the ‘Scan & Go’ feature allows Walmart+ members to scan items with their phones for faster checkout. Similarly, PetSmart integrated physical stores with its online platform by using brick-and-mortar locations for online order fulfillment. Shrink Reduction and Retail Security Take Center Stage Retail shrink continues to be a major challenge for retailers in 2025. Organized retail crime and self-checkout theft have increased, pushing companies to invest in security measures like AI-powered surveillance, RFID tracking, and dynamic shelf replenishment. The rise of cashless stores and frictionless checkout systems has also led to businesses adopting predictive analytics to detect suspicious activity in real time. Some retailers are using facial recognition and biometric authentication to enhance security. As shrink-related losses eat into profits, retailers that invest in cutting-edge security solutions will protect their bottom line while fostering consumer trust. Read more: Tech Industry Outlook 2025: What’s on the Horizon? Partner of choice for lower middle market-focused investment banks and private equity firms, SG Analytics provides offshore analysts with support across the deal life cycle. Our complimentary access to a full back-office research ecosystem (database access, graphics team, sector & and domain experts, and technology-driven automation of tactical processes) positions our clients to win more deal mandates and execute these deals most efficiently. About SG Analytics SG Analytics (SGA) is an industry-leading global data solutions firm providing data-centric research and contextual analytics services to its clients, including Fortune 500 companies, across BFSI, Technology, Media & Entertainment, and Healthcare sectors. Established in 2007, SG Analytics is a Great Place to Work® (GPTW) certified company with a team of over 1200 employees and a presence across the U.S.A., the UK, Switzerland, Poland, and India. Apart from being recognized by reputed firms such as Gartner, Everest Group, and ISG, SGA has been featured in the elite Deloitte Technology Fast 50 India 2023 and APAC 2024 High Growth Companies by the Financial Times & Statista.
Why CVCs Struggle to Turn Investments into Acquisitions
Corporate Venture Capital (CVC) plays a major role in U.S. venture dealmaking, yet it remains surprisingly ineffective as a pipeline for acquisitions. Between 2014 and 2024, CVCs participated in over 46% of total US VC deal value annually, but their conversion rate into acquisitions has remained stubbornly low—just 2-4% of startups backed by CVCs were later acquired by their corporate investors, according to PitchBook. This disconnect raises critical questions about the role of CVC in corporate strategy and the challenges hindering its conversion into M&A activity. Figure 1: Share of US VC Deals Involving CVC Participation Source: PitchBook, data as of December 31, 2024 The answer lies in a mix of high valuations, late-stage investment focus, strategic misalignment, and shifting corporate priorities. A major reason for the low acquisition rate is CVCs’ preference for late-stage investments. These startups, while more mature and at lower risk, often command sky-high valuations, making them difficult acquisition targets. Many opt for IPOs rather than selling to their CVC backers. In 2024, the median US VC deal size with CVC participation was $13 million, three times higher than deals without CVC involvement, as per PitchBook. This cost escalation makes it financially impractical for CVC-backed corporations to acquire their portfolio companies. Read more: US Venture Capital (VC) Outlook 2025 Although CVCs have increased their presence in early-stage investments, from 5.6% of US VC deals in 2009 to 26.3% in 2024, acquisitions at this level remain rare, as per PitchBook. Early-stage companies will likely be easier acquisition targets due to their smaller size and lower valuations, but they also carry substantial risks. Many fail before reaching a stage where they get effectively integrated into a larger corporation. Additionally, startups at this stage often develop in directions that misalign with the corporate sponsor’s strategic vision, reducing the likelihood of an acquisition. From M&A Pipeline to Market Intelligence As CVCs mature, their strategic focus often shifts away from acquisitions. A 2024 survey by Counterpart Ventures found that 42% of established CVCs now prioritize access to emerging technology and partnerships over direct acquisitions. These CVCs emphasize market intelligence and trend monitoring, using investments to gain insights into emerging technologies rather than directly planning acquisitions. This shift reflects corporate priorities, where internal business units will likely resist acquisitions due to integration challenges and cultural mismatches. Salesforce Ventures, the CVC arm of Salesforce, provides an example of selective but effective acquisitions. Despite deploying over $6 billion across 630 startups, only a fraction of its portfolio companies have been acquired. Notable acquisitions include Vlocity and Quip, which align directly with Salesforce’s core business. However, most of its investments serve as a mechanism to track emerging software trends rather than as a direct acquisition pipeline. This demonstrates that even among active CVC investors, acquisitions are not always the end goal. High Valuations Pricing Out Acquisition Prospects Figure 2: Median US VC Pre-money Valuation by CVC Investment (in Millions) Source: PitchBook, data as of December 31, 2024 A significant obstacle to CVC-backed acquisitions is the steep rise in startup valuations. According to PitchBook, the median pre-money valuation for VC deals with CVC participation reached $65 million in 2024, compared to just $30 million for deals without CVCs. When startups become highly valued, they often seek an IPO or alternative acquirer willing to pay a premium. As a result, CVCs that initially invested for strategic alignment will likely find themselves unable to justify the acquisition price. Read more: Tech Industry Outlook 2025: What’s on the Horizon? Challenges in Acquiring Varies Across Industries CVCs are most active in the technology and life sciences sectors, but these industries present unique acquisition challenges. In tech, rapid innovation cycles mean that by the time a corporation is ready to acquire a startup, its technology will likely already be outdated or non-strategic. For life sciences, high R&D costs and regulatory hurdles delay commercialization, making acquisitions uncertain. Many life science startups prefer IPOs to maintain independence, and biopharma firms often use CVC as a scouting tool rather than a direct pipeline for acquisitions. Looking ahead, the broader M&A landscape is expected to improve in 2025, potentially increasing acquisitions of CVC-backed startups. Lower inflation and stabilized interest rates will encourage corporations to pursue M&A for strategic expansion. Additionally, pressure on venture-backed startups to secure exits will likely make them more receptive to acquisition offers. However, for CVCs to become a more reliable acquisition pipeline, corporations must address internal hurdles, align investment strategies with acquisition goals, and leverage their information advantage more effectively. Partner of choice for lower middle market-focused investment banks and private equity firms, SG Analytics, provides offshore analysts with support across the deal life cycle. Our complimentary access to a full back-office research ecosystem (database access, graphics team, sector & and domain experts, and technology-driven automation of tactical processes) positions our clients to win more deal mandates and execute these deals in the most efficient manner. About SG Analytics SG Analytics (SGA) is an industry-leading global data solutions firm providing data-centric research and contextual analytics services to its clients, including Fortune 500 companies, across BFSI, Technology, Media & Entertainment, and Healthcare sectors. Established in 2007, SG Analytics is a Great Place to Work® (GPTW) certified company with a team of over 1200 employees and a presence across the U.S.A., the UK, Switzerland, Poland, and India. Apart from being recognized by reputed firms such as Gartner, Everest Group, and ISG, SGA has been featured in the elite Deloitte Technology Fast 50 India 2023 and APAC 2024 High Growth Companies by the Financial Times & Statista.
Top 10 Most Sustainable Companies for 2025
With the world becoming more environmentally conscious, eco-friendly companies are experiencing increased success. As per the latest trends, customers are making purchases that prioritize environmental impact. Their decision to work with companies that share a commitment to environmental protection comes at a time when the option is becoming increasingly obvious. It can be difficult to distinguish between companies that are legitimately eco-friendly and the ones that are simply hopping on the environmental bandwagon and gradually labeling themselves ‘eco-friendly.’ Given the gravity of the current climate crisis, it is critical for businesses to maintain high environmental expectations, and businesses that continue to prioritize and work at the forefront of environmental innovation should be applauded. We all know that ‘eco-friendly’ means a lot more than simply not harming the climate. Environmental consciousness is woven into every part of the company’s brand for genuinely eco-friendly businesses. Read more: ESG Data Sources What Makes a Company Sustainable? The level of an organization's sustainability is achieved by including environmental, social, and governance (ESG) metrics. These three factors are the pillars of sustainability and help guide corporate governance efforts. Three Pillars of Business Sustainability The three pillars of sustainability are environment, social responsibility, and economic impact. They are also known as people, planet, purpose, and profits. People refer to employees, customers, and community members. The planet is the physical environment as well as its natural resources. Purpose highlights the reasons an organization functions as it does. Profit highlights more than making money. It encircles a business's effects on the environment and society. Environmentally friendly companies produce sustainable and ethically sourced products and follow environmentally friendly manufacturing and production methods. Environmentally friendly companies are also working to change the landscape of businesses’ involvement and responsibility in environmental protection fully. In their battle against climate change, eco-friendly organizations go beyond their products. In addition to engraining sustainability within their core business functions, they also work to protect the environment by advocating for sustainable policies, raising environmental consciousness, encouraging local involvement in conservation efforts, collaborating with other campaigns and groups, and more. To identify the best of these companies, we have factored in parameters on how innovative their technology is or how sustainable their operational practices are. Most Sustainable Companies Schneider Electric Ørsted Nvidia Cisco Systems Inc Keysight Technologies KEYS Neste Stantec McCormick & Company Kering Metso Outotec American Water Works Company Schneider Electric Recognized as the leader in the digital transformation of energy management and automation, Schneider Electric is one of the world's most eco-friendly companies. This French energy-solutions powerhouse, Schneider Electric, is the world's most sustainable company of 2025. The organization bagged the top spot in this year's Corporate Knights Global 100 ranking, moving up from seventh place last year because of its high level of sustainable investment and revenue-leading performance on gender diversity and the low carbon intensity of its production. Schneider Electric is contributing to lowering CO2 emissions and reducing the rise of the temperature of the Earth by emphasizing innovative and renewable disruptors. Their initiatives are helping to prevent overheating of the Earth's atmosphere and producing environmentally friendly goods that enable better access to energy. Schneider Electric Chair and CEO Jean-Pascal Tricoire stated that the foundation of their strategy is to establish a business and organization that is sustainable. Schneider has always been committed to ESG concerns, and they continue to set higher standards for themselves, as well as their customers and partners. Ørsted As one of the most sustainable companies, Ørsted has pledged to battle climate change with renewable energy. Ørsted offers energy products to its customers and is the only energy enterprise globally with a net-zero emissions target. The company, also known as one of the largest renewable energy developers, has transitioned from using fossil fuels to renewable energy for its operations and has set its target to achieve carbon neutrality by 2025. Ørsted aims to provide a net-positive biodiversity impact from all new renewable energy projects it will commission from 2030. The company has consistently ranked high on the Global 100 list. The brand's vision reflects both its dedication to driving a profitable and sustainable business and its resolution to create a world that runs entirely on green energy. They are catalysts for green energy transformation and instrumental in the battle against climate change. Read more: “Net-Zero by 2070”: #COP26 Climate Deal, Here Are the 5 Biggest Talking Points Nvidia Nvidia is one of the world’s largest manufacturers of semiconductor chips. It is one of the world’s leading designers of graphics processing units (GPUs) and system-on-chip units (SOCs) for the gaming, mobile, and automotive industries. As a manufacturer of chips, and at that scale, Nvidia has a massive carbon footprint. It mines materials, and its factories and labs are power-hungry and consume a lot of water. However, Nvidia is renowned for its sustainability practices, operating at power efficiencies as high as 35%. By 2025, it has pledged to increase its renewable energy usage to 65%. The manufacturer is also 100% Responsible Minerals Assurance Process-compliant. Besides environmental stewardship, it is also renowned for its generous medical plan and paid parental leave policy. Cisco Systems Inc Leading developers and manufacturers of networking hardware, software, and telecommunication equipment, Cisco ranks in the list of the world's most eco-friendly companies. It is remarkably energy-efficient across its supply chain, from sourcing materials, designing products, and consuming electricity to promoting fair hiring and securing data. Cisco claims that 80% of its electricity (operations only) is clean. It has also reduced its Scope 1 and Scope 2 emissions by nearly 50%. (Scope 1 refers to emissions generated by direct, owned sources like company vehicles. Scope 2 refers to indirect sources like cooling or heating systems. Scope 3 emissions are caused by the remaining aspects in the value chain, like employee commute and waste management.) Keysight Technologies KEYS A leader in communications testing and measurement solutions, Keysight Technologies contains the strongest and broadest communications testing capabilities across hardware, software, and services. Due to Keysight's strong ESG reporting and oversight of ESG issues, the company is implementing a strong whistleblower program that incorporates adequate governing policies for environmental issues and strong social supply chain standards. Neste Neste is a global leader in sustainability, renowned for its renewable diesel, sustainable aviation fuel, chemical recycling to reduce plastic waste, and innovation in refining raw materials into renewable fuels. The Finnish company went from third to fourth place in a year, but it is still on the Corporate Knights Global 100 Index for the 15th year in a row, which is far longer than any other global energy company. Read more: Top AI Trends to Watch Out According to Peter Vanacker, Neste President and CEO, the company’s goal of making the world a better place for our children motivates them to strive for greater heights every day. Numerous businesses are constantly upgrading their sustainability initiatives, making it increasingly challenging to make a list each year. It’s encouraging to see more businesses actively incorporating sustainability into their operations. Stantec Stantec is not just one of the world’s most environmentally friendly companies, but it also leads the way in North America. Half of the company’s overall score came from clean earnings and clean investment, which are commodities and services that have a proven environmental and social impact. Stantec President and CEO Gord Johnston stated that the company's outstanding track record on sustainability is the product of their people’s profound commitment and excellent leadership across their worldwide operations. Their teams are working to improve sustainability in their own operations, as well as assisting clients in setting and achieving their sustainability objectives. McCormick & Company McCormick & Company may be regarded as the world’s sixth most sustainable company, but it is also the food industry’s leader. The packaged and processed foods industry in the United States has risen 16 spots to its highest place since the index’s inception five years ago. Read more: Lab-Grown Meat Is the “Clean” Food the World Needs. So, What’s the Beef? According to Lawrence E Kurzius, McCormick & Company Chairman and President, it has never been more crucial to join hands towards the future of flavor and to reduce its influence on the planet. The company is committed to generating clean revenue, delivering renewable energy projects, and transitioning to 100% circular packaging. Kering The only luxury corporation to make it to the top ten sustainable companies list is Gucci, Saint Laurent, Bottega Veneta, Ulysse Nardin, and Pomellato’s parent company. Kering maintained its strong position when evaluated against 24 quantitative KPIs, including resource management, people management, financial management, clean revenue and investment, and supplier performance. Sustainability is advocated at every governance level, from the Board of Directors to the House managers, in order to shape the future of luxury. According to Conservation International CEO Dr. M Sanjayan, Kering’s pledge to safeguard the environment on which it relies is a huge leap for the fashion industry, and it represents a massive gateway for the luxury sector to influence the masses and help reimagine fashion and luxury goods. Kering's 2025 sustainability strategy aims to create value for its customers and society as a whole. Metso Outotec Metso Outotec, a global leader in sustainable technology and services catering to recycling industries, aggregates, and mineral processing industries, is ranked 8th on the Global 100 Index. The Finland-based corporation has set a variety of ambitious targets, including limiting global warming to 1.5 degrees Celsius, in order to make a positive impact on the earth as a sustainable leader. Read more: The 7 Biggest Technology Trends In 2022 Metso Outotec’s Senior Vice President of Business Development, Piia Karhu, stated that for their aggregates, metals, and minerals industry customers, their focus is on producing sustainable goods and services. They accelerate sustainable innovation together by collaborating with their customers, partners, and communities. American Water Works Company American Water is one of the world’s most eco-friendly companies because of its leadership and transparency. The US company, which was founded in 1886 and employs over 6,800 employees, is the largest publicly traded water and wastewater utility company in the world. Despite serving 15 million people in 46 states, the corporation saves 12.5 billion liters of water every year, thanks to its efficiency techniques. It has also committed to a 40% reduction in greenhouse gas emissions by 2025. According to Walter Lynch, President and CEO of American Water, providing a consistent supply of safe, clean, and affordable water to their customers, as well as treating their wastewater, is just one part of their commitment to constantly improve their business’s sustainability and create a greater societal impact. Read more: Top ESG Investing Trends to Watch Out for in 2022 How Can Companies Improve Their Sustainability Strategies? The starting point of accelerating an organization's sustainability strategy must always begin with its mission. This constitutes a starting point for analyzing the firm and its operations. The focus should be on why they exist, how they operate, and their goals. They must be aware of and contribute positively to the sustainability challenges faced globally. When an organization decides on its sustainability strategy, it must also decide its main goal. By operating with Environmental, Social, and Governance (ESG), they can examine its sustainability performance across a number of factors. Environmental criteria identify how an organization performs in terms of its responsibilities to nature. Similarly, social factors refer to relationships with employees, customers, and communities. Governance deals with principles related to rights, responsibilities, and expectations between stakeholders in managing corporations. Improving the company’s sustainability can help mitigate the risks for investors. This includes external examination to determine what to produce or what gap in the market to work with. However, executing a sustainable strategy can be a challenging process. Creating a Strong Sustainability Strategy Recognizing the importance of sustainability for business operations is not enough. They also need to incorporate and align sustainability into their actions and measurements in a coherent strategy. However, only this way may have a demonstrative effect. Developing a strong sustainability strategy provides an opportunity to view progress. Moreover, it provides the framework to successfully review, develop, and change activities for your business. The best way to track the company’s sustainability progress is to establish Sustainability Key Performance Indicators (KPIs). Measuring the sustainability process is critical to ensure the organization is moving forward and reaching its sustainability goals. In other words, they assist in keeping up their measurements of sustainability progress. Additionally, it offers a better idea of where they can achieve this improvement in the future while also tracking their sustainability progress. Establishing Sustainability KPIs How should organizations go about establishing their own sustainability KPIs? One of the major issues they face when trying to enforce sustainability KPIs is the number of potential KPIs. Corporate sustainability reports have considerable variation in the use of performance indicators, which indicates a trend that could likely hinder benchmarking efforts, making it difficult to track progress. There can be different opinions on how best to adjudicate the performance of involved indicators. It can be caused by a number of factors, including the differing interpretations of sustainability or lack of mandatory ESG standards for reporting. To develop a strong sustainability strategy in a company, it is important to focus on bridging the gap between the interpretations of sustainability and developing workers’ buy-in. In order to achieve consistent success, an organization needs to ensure strong fundamental factors like aligning sustainability understanding. Onboarding staff with the KPIs and Sustainability The successful integration of a strong sustainability strategy depends on the alignment between the workforce as well as the company's goals. This can align perfectly when the entire team is on board with the company’s objective of fostering sustainability. The most effective way is by involving employees and key decision-makers in the process. An important part of developing a strong sustainability mission includes bridging the gap between the sustainability strategy of the organization and employees’ sustainability thinking. The gamified process helps unleash creativity in the workforce values and anchor the company strategy. Accelerating the company’s sustainability strategy is fostered by the buy-in that the workers develop with the sustainability processes. To accelerate sustainability strategy, businesses need to upskill their workforce and onboard the whole team, especially those who can assist in further driving the process forward. Key Highlights: Top Sustainable Companies Consumer purchase decisions have changed dramatically in recent years. They are willing to spend more on eco-friendly products and solutions that are marketed as sustainable. Sustainable companies are witnessing stronger growth and more loyal customers, as today, sustainability matters more than ever. The rise in support of eco-friendly companies makes sustainability a vital aspect of customer experience and critical for the environment. Conclusion - Most Sustainable Companies An organization's approach to sustainability illustrates how it anticipates as well as addresses the associated long-term risks. Companies that mishandle ESG issues are likely to incur high economic costs, thus jeopardizing their ability to earn long-term, sustainable profits. The above-mentioned major green tech companies are expected to perform well in the future. With the ever-growing demand for eco-friendly and green technology products and solutions, these corporations will likely become increasingly popular in years to come to foster strong ESG management practices for a long-term advantage. Now is the time for organizations to accelerate the pace of change! A leader in ESG Services, SG Analytics offers bespoke sustainability consulting services and research support for informed decision-making. Contact us today if you are searching for an efficient ESG (Environmental, Social, and Governance) integration and management solution provider to boost your sustainable performance. About SG Analytics SG Analytics (SGA) is an industry-leading global data solutions firm providing data-centric research and contextual analytics services to its clients, including Fortune 500 companies, across BFSI, Technology, Media & Entertainment, and Healthcare sectors. Established in 2007, SG Analytics is a Great Place to Work® (GPTW) certified company with a team of over 1200 employees and a presence across the U.S.A., the UK, Switzerland, Poland, and India. Apart from being recognized by reputed firms such as Gartner, Everest Group, and ISG, SGA has been featured in the elite Deloitte Technology Fast 50 India 2023 and APAC 2024 High Growth Companies by the Financial Times & Statista. FAQs - Most Sustainable Companies What is the most sustainable company in the world? This French energy-solutions powerhouse, Schneider Electric, is the world's most sustainable company of 2025. The organization bagged the top spot in this year's Corporate Knights Global 100 ranking, moving up from seventh place last year because of its high level of sustainable investment and revenue-leading performance on gender diversity and the low carbon intensity of its production. How are companies ranked for sustainability? An organization's sustainability can be measured by examining its environmental, social, and governance (ESG) performances. This can also be accomplished through reporting, assessments, and indices. They are ranked for their sustainability measures depending on their comprehensive evaluation of their ESG approaches, integrating a combination of data from reports, external audits, and stakeholder surveys to generate a final sustainability score and ranking. What are the benefits of being a sustainable company? A sustainable organization can benefit significantly from reduced costs through the efficient use of resources, enhanced brand reputation, improved customer loyalty and employee retention, attracting new investors, fostering innovation, and gaining a competitive edge by aligning with growing consumer demands. Incorporating these responsible practices will essentially help contribute to long-term business viability as well as minimize environmental impact. How can small businesses adopt sustainable practices? In today’s ever-evolving landscape, debating whether to integrate sustainability into your business strategy is no longer an option. Considering a values-driven approach when designing business strategies is vital to long-term success. Small businesses can adopt sustainable practices in order to conserve energy, reduce waste, and use renewable energy. Set up recycling bins and composting, support local recycling initiatives, avoid single-use plastics, use reusable products, and repurpose used materials. Small businesses can further contribute to sustainability by integrating green technologies and implementing energy-efficient practices. Additionally, utilizing energy-efficient equipment can further enhance sustainability efforts. These measures will help decrease the environmental footprint and result in long-term cost savings. By incorporating these methods, small businesses can play their part in fostering a sustainable future. What are the biggest challenges in corporate sustainability today? Some of the biggest challenges in corporate sustainability are - managing complex supply chains in order to ensure ethical sourcing, accurately estimating and reporting sustainability impacts, integrating sustainability into core practices, addressing potential greenwashing concerns, navigating diverse customer as well as stakeholder expectations, and adapting to evolving regulations while asli balancing short-term profits with long-term sustainability goals.
In 2025, data centers will face rising rental rates and mounting energy challenges, forcing operators to seek alternative power sources. While hyperscale growth continues, efficiency breakthroughs like DeepSeek are optimizing data center performance and reshaping infrastructure needs. Rising Rental Rates Push Data Center Growth into Secondary Markets Rental rates for data centers are expected to climb in 2025 as demand continues to exceed supply. Developers are passing rising construction and operational costs onto tenants, driving lease prices higher. CBRE projects preleasing rates will surpass 90%, meaning most new capacity will be committed before construction is complete. Much of this new space is already preleased to cloud giants like Microsoft, Google, AWS, Meta, and Oracle, limiting availability for smaller tenants. With vacancy rates at a record low of 2.8% and power constraints affecting key markets, securing affordable space is becoming more difficult, prompting businesses to rethink expansion plans and location strategies. As costs rise in primary markets, operators are turning to secondary regions for expansion. These markets offer lower land costs, better power availability, and regulatory benefits, making them attractive for large-scale projects. Hyperscale providers are also shifting toward these markets, with Meta planning a $10 billion data center campus in Richland Parish, Louisiana, signaling a growing trend of investments outside major hubs. Meanwhile, developers are increasing colocation capacity to serve small and mid-sized tenants, who typically pay higher rates per kilowatt. Moody’s expects a temporary rise in vacancy rates as new colocation space enters the market, but overall supply constraints will keep rental prices high. Read more: The Rise of AI Agents in Enterprise SaaS Developers Turn to Alternative Energy Sources as Data Center Demand Surges As global data center energy consumption is expected to double over the next five years, the industry is facing growing challenges in securing reliable power while meeting sustainability targets. Renewable energy remains the long-term goal, but grid limitations and rising AI-driven workloads are pushing developers to explore alternative solutions. Nuclear energy is increasingly viewed as a viable option, yet its large-scale adoption remains distant. JLL projects that commercial deployment in the US will not happen until 2030, leaving operators searching for immediate alternatives. In the meantime, the industry must weigh the trade-offs between energy reliability, cost, and environmental impact while navigating growing regulatory and public scrutiny. Natural gas is emerging as a critical bridge fuel for data centers. In January 2025, Chevron announced a partnership with Engine No. 1 to develop up to 4GW of natural gas power capacity for US data centers. In the same month, Constellation agreed to acquire Calpine to expand its gas power portfolio. ExxonMobil is also advancing in this space, having announced plans in December 2024 for a 1.5GW gas-fired power plant dedicated to data centers. S&P Global estimates that the demand for natural gas in the data center is set to grow to 3 billion cubic feet per day by the year 2030, possibly doubling under certain scenarios. While these investments secure reliable power, they risk prolonging the industry’s reliance on fossil fuels, making it harder to fully transition to renewable energy. Liquid Cooling to Gain Momentum in 2025 The increasing reliance on AI and high-performance computing (HPC) is transforming data center cooling strategies. As power densities rise, traditional air cooling is becoming less effective, making liquid cooling a necessity. According to the report by MarketandMarkets, the global liquid cooling market is expected to grow from $4.9 billion in 2024 to $21.3 billion by 2030, with a CAGR of 27.6%. In the US, it is expected to grow at 17.1% CAGR by 2033, as per IMARC Group. Direct-to-chip liquid cooling (DLC) is widely adopted, while immersion cooling is gaining attention for its efficiency in managing AI-driven workloads. Read more: DeepSeek Takes on the Silicon Valley Figure 1: Data Center Liquid Cooling Market Trend Source: MarketandMarkets While immersion cooling offers significant advantages, including improved thermal management and sustainability benefits, its widespread adoption still faces some challenges, like regulatory concerns, high initial investment costs, and structural adjustments for heavier cooling systems. However, it is expected to reduce energy consumption by up to 30%, making it an attractive solution for data centers to manage increasing electricity demands. As AI workloads grow, immersion cooling will likely become a mainstream solution, integrating into infrastructure to support higher power densities and long-term energy savings. Hyperscale Growth Accelerates with Utility Partnerships Figure 2: Growing Demand for Advanced AI Capacity Source: McKinsey Hyperscale data center expansion is set to intensify in 2025 as AI and cloud computing drive major infrastructure investments. According to McKinsey, AI workloads are projected to account for 70% of total data center demand by 2030, with AI-ready capacity expected to grow at an annual rate of 33%. Operators are racing to secure power and scale capacity, pushing hyperscale developments into multi-gigawatt territory. Lancium is scaling its Texas campuses to 6 GW, while Panattoni plans to add 1 GW of data center capacity in five years. Moreover, private capital is fueling this expansion, as seen in KKR and ECP’s $50 billion partnership in October 2024 to develop power infrastructure for hyperscalers. However, as energy demand surges, hyperscalers that secure long-term utility partnerships will have an advantage, while others will struggle to access enough power to sustain their rapid growth. Read more: Tech Industry Outlook 2025: What’s on the Horizon? AI Efficiency Gains Reshape Data Center Growth Trajectory in 2025 The rise of more efficient AI models like DeepSeek is set to reshape the data center landscape in 2025. While advancements in AI processing reduce energy requirements per task, they do not diminish overall data center demand. Instead, lower costs and increased accessibility will likely accelerate AI adoption, fueling both hyperscale expansion and distributed edge infrastructure. According to Sean Farney, Vice President of Data Center Strategy at JLL, AI GPU-focused data centers are growing at a 39% CAGR, nearly double the sector’s average growth rate of 20%. As AI inferencing becomes more widespread, demand for strategically placed edge data centers will rise alongside centralized facilities, reinforcing the industry’s long-term expansion trajectory. Partner of choice for lower middle market-focused investment banks and private equity firms, SG Analytics, provides offshore analysts with support across the deal life cycle. Our complimentary access to a full back-office research ecosystem (database access, graphics team, sector & and domain experts, and technology-driven automation of tactical processes) positions our clients to win more deal mandates and execute these deals in the most efficient manner. About SG Analytics SG Analytics (SGA) is an industry-leading global data solutions firm providing data-centric research and contextual analytics services to its clients, including Fortune 500 companies, across BFSI, Technology, Media & Entertainment, and Healthcare sectors. Established in 2007, SG Analytics is a Great Place to Work® (GPTW) certified company with a team of over 1200 employees and a presence across the U.S.A., the UK, Switzerland, Poland, and India. Apart from being recognized by reputed firms such as Gartner, Everest Group, and ISG, SGA has been featured in the elite Deloitte Technology Fast 50 India 2023 and APAC 2024 High Growth Companies by the Financial Times & Statista.
Corporate Social Responsibility (CSR) Trends to Watch In 2025
Combating climate change has become a central concern for all economic players, driving businesses to rethink their practices to reduce greenhouse gas emissions. Beyond being an environmental necessity, this transition symbolizes a major economic opportunity - enabling innovation, enhancing competitiveness, and meeting the growing demands of consumers and investors. The ecological transition is constantly accelerating, and 2025 is set to shape up to be a decisive turning point for companies committed to decarbonization and the carbon market. Let's explore the key trends that can guide companies looking to prepare effectively for these changes. CSR Trends: What Questions Can Help CSR Leaders in 2025? Organizations wishing to remain leaders in Corporate Social Responsibility (CSR) in 2025 must foresee ongoing regulatory and societal changes. To effectively prepare for these emerging challenges, it is equally critical to ask a series of strategic and methodological questions to align sustainability practices with the imperatives of environmental performance. These queries will help structure a proactive approach to the ecological transition. Read more: The Quantum Leap of Marketing: Navigating the AI Revolution Today, a socially responsible company should be employee-centric, community-driven, ethical, eco-conscious, and globalized. Employee-first To develop a successful CSR strategy, organizations need to build a people-first culture and empower their workforce. The logic behind it is this: Every team within the organization is a micro-community contributing to overall societal growth. When an organization cares about its employee's well-being and invests in team building, these efforts become contagious. This further helps in setting a positive tone for society. Community-driven Today, it is crucial for employees to work for employers who volunteer and give back through philanthropy. Another important element of corporate social responsibility is connecting with the neighborhood and helping it develop and prosper. Organizations must volunteer in the community and allocate a percentage of their revenue to charitable funds. Environmentally Conscious With CRS trending for business agendas, modern organizations are acting as eco-guardians to protect the environment. They are integrating measures to promote ecological awareness among employees and adhere to the 6 R's of sustainability: Reduce Reuse Recycle Refuse Rethink Repair 2025 is set to bring with it a variety of challenges for companies and countries. Recent government elections and conservative movements promise to upend some behaviors and positions many business leaders have embraced for years. Many companies are staying the course and continuing DEI, ESG, HR, and CSR efforts that represent decades-long commitments. Others are exploring new approaches and language to deal with political realities and government leaders. While the outcomes of this corporate retrenchment are unknown, the trends are clear, and the paths forward are scattered with mind fields for the unwary or unprepared business leader. Read more: The Future of Marketing: How Gen Alpha is Changing the Landscape Key CSR Trends in 2025 Identifying the Main Emission Sources and Risks Before determining how to reduce emissions, a thorough analysis of the organization's major emission sources is important. This involves mapping and quantifying direct and indirect sources of CO₂ along with other greenhouse gas emissions across the entire value chain. As per the Greenhouse Gas (GHG) Protocol, this assessment should include: Scope 1 (direct) emissions, Scope 2 (indirect emissions from purchased energy), Scope 3 (indirect emissions from supply chain activities). Once these sources are identified, it is important to integrate climate risks into strategic thinking. These risks can significantly affect the organization's long-term resilience and performance. Mapping climate risks can further help make informed decisions concerning adaptation and mitigation strategies. Access to the Data Required for Calculating the Carbon Footprint Another fundamental element lies in access to the data necessary to assess the company’s carbon footprint. Determining where the data is available and how it can be collected and analyzed is essential. This step is imperative to ensure compliance with new transparency and reporting requirements outlined by the Corporate Sustainability Reporting Directive (CSRD). According to the CSRD, organizations must report their environmental impacts according to the ESRS (European Sustainability Reporting Standards), which demand a high level of detail in tracking carbon emissions. Thus, enforcing a robust environmental data management system that tracks and verifies emissions at every stage of the product lifecycle becomes imperative. Reducing Emissions and Investing in Credible Carbon Projects Once all the fundamental questions are addressed, evaluating the most appropriate strategy for reducing emissions at the source is important. This includes adopting fewer polluting technologies, enhancing energy efficiency across industrial processes, and transforming supply chains to make them more sustainable. Organizations must consider ways to invest in credible and certified carbon projects. The certification of carbon credits and their traceability are crucial to avoid greenwashing and guarantee that the investments result in real emissions reductions. Read more: Diversity, Equity, and Inclusion (DEI) Trends in 2025 Avoid Greenwashing and Guarantee Transparency In the face of rising societal and regulatory expectations, enterprises need to ensure they avoid greenwashing, which indicates misleading communication about their climate actions. The carbon trend towards transparency and authenticity in climate actions is essential to maintaining the brand's credibility. Adhering to international reporting standards and performing external audits will further help ensure the accuracy of commitments and reassure stakeholders about the brand's genuine contribution to combating climate change. Autonomy and Equality at Workplace Inclusive employee benefits are one of the most significant CSR trends that will redefine the workplace in 2025 and the near future. Corporate social responsibility cannot exist without total workplace inclusion. Generally, companies show their readiness for CSR with inclusive employee benefits like these: Age-inclusive: A range of retirement plans or employee wellness programs. Religion-inclusive: Paid days off on religious holidays. Gender-inclusive: Parental leaves, medical plan coverage for gender transition. An employee benefits package is just the right litmus test to check whether the organization is CSR-ready with inclusive perks at work. Further, organizations should encourage and nurture employee-led initiatives in every possible way. Responsible Use of AI Technology When trying to push the digital boundaries of creativity and innovation, business leaders are also considering ethical tech or AI ethics more enthusiastically than ever. Businesses can foresee a future of CSR where AI works alongside us and not against us and where businesses roll out their ethical AI playbooks. A strategic blend of charity and team building will help win corporate social responsibility. Integration of CSR into Global Strategy An essential consideration revolves around the level of internal skills concerning CSR issues. The rapid evolution of regulatory expectations demands teams with specialized expertise in sustainability, climate risk management, and reporting. Therefore, enterprises must assess whether their internal skills are sufficient to navigate this transition successfully. Hiring or training specialists in CSR, along with strengthening collaboration with external experts, can be crucial. Additionally, it is essential to consider CSR's place in a company's overall strategy. CSR should not be seen as a simple regulatory obligation but as a driver of transformation, contributing to long-term value creation. This strategic integration will equip businesses to align their environmental objectives with their economic ambitions, thus ensuring consistency across all organizational decisions. Read more: Gen Z and ESG: Two Forces Shaping the Future Workforce Final Thoughts 2025 is set to witness a pivotal moment in the fight against climate change. Organizations that anticipate these developments, adapt to new regulations, and invest in innovation will be crucial in building a sustainable future. In conclusion, to stay ahead of the CSR trend, businesses must ask the right questions today, strategically and methodologically, to prepare for the climate and compliance challenges that lie ahead. The integration of materiality, the precise identification of emissions and climate risks, and the incorporation of CSR skills into the overall strategy will be a critical factor for sustainable transition. As a leading market research firm, SG Analytics empowers businesses with comprehensive insights into demographic variables, branding risks, concept testing, and growth opportunities. Contact us today if you want to prepare for tomorrow’s workplace challenges, compliance dynamics, and competitive threats with the power of analytics. About SG Analytics SG Analytics (SGA) is an industry-leading global data solutions firm providing data-centric research and contextual analytics services to its clients, including Fortune 500 companies, across BFSI, Technology, Media & Entertainment, and Healthcare sectors. Established in 2007, SG Analytics is a Great Place to Work® (GPTW) certified company with a team of over 1200 employees and a presence across the U.S.A., the UK, Switzerland, Poland, and India. Apart from being recognized by reputed firms such as Gartner, Everest Group, and ISG, SGA has been featured in the elite Deloitte Technology Fast 50 India 2023 and APAC 2024 High Growth Companies by the Financial Times & Statista.
DeepSeek Takes on the Silicon Valley
A new AI disruptor has arrived, shaking up Silicon Valley’s dominance. DeepSeek’s low-budget, high-performance model not only challenges ChatGPT but also forces investors to question the billions poured into AI’s future. A Cost-Effective Alternative to ChatGPT On January 20, 2025, Chinese AI startup DeepSeek released its open-source reasoning model, DeepSeek-R1. This model, comprising 671 billion parameters, was trained using approximately 2,048 Nvidia H800 GPUs for $5.6 million and offered performance comparable to leading models like OpenAI's o1. Unlike ChatGPT, it is open source, allowing developers worldwide to access, modify, and build upon its models. It offers an API at significantly lower rates—$0.14 per million tokens compared to OpenAI's $7.5 per million. Following its release, DeepSeek-R1's chatbot application quickly became the most downloaded free app on the US iOS App Store, surpassing OpenAI's ChatGPT, thereby challenging OpenAI's market dominance. If enterprises and developers begin favoring DeepSeek for its affordability and flexibility, OpenAI will need to adjust its pricing strategy or develop more advanced models to stay competitive and justify its pricing. Additionally, DeepSeek's open-source approach will likely pressure OpenAI to reconsider its proprietary model, potentially leading to greater accessibility and openness in its AI offerings. DeepSeek used a more efficient architecture to come up with this model, which does not deploy full computing power at all times but instead activates only the portion relevant to the task at hand. A model like OpenAI’s has 1.8 trillion parameters, which are active simultaneously, whereas DeepSeek has 671 billion parameters, with only 37 billion active at any given time. This allowed them to train their model using significantly fewer GPUs. Also, GPT-4 generates text by predicting one token at a time, where each token depends on the previously generated ones. DeepSeek’s Multi-Token Prediction (MTP), however, predicts multiple tokens simultaneously, enabling faster and more efficient text generation. Read more: Tech Industry Outlook 2025: What’s on the Horizon? Initially, the reduced need for GPUs seems like a challenge for AI giant Nvidia, but it will ultimately benefit the company. If more companies adopt efficient AI training methods like DeepSeek, it will trigger a Jevons’ Paradox effect, democratizing AI. Models that once required billions of dollars to build can now be developed at a much lower cost. As AI becomes more affordable, small businesses that previously couldn't afford it will adopt it. This increased adoption will drive demand for more computing power, ultimately leading to greater demand for chips. Investor Concerns Over AI Companies Funding and Valuations The cost of $5.6 million, which is only a fraction of billions of dollars spent by leading US AI companies like OpenAI and Anthropic, raises doubt among investors about the enormous amounts being spent on computing power in the AI arms race. The launch sent ripples through the US market, with big tech stocks like Nvidia down nearly 17% on January 27, 2025, wiping off $600 billion in market capitalization. Venture capitalists should be alarmed by the rapid advancements made by DeepSeek at a fraction of the cost incurred by its competitors. This raises significant concerns about the sustainability of the massive valuations and capital requirements that AI startups have commanded. In 2024, foundational model startups raised a staggering $40 billion, double the previous year. Investors who have funneled billions into LLM companies should question whether these bets will pay off, especially as lower-cost alternatives emerge, challenging the assumption that scale and spending alone drive AI dominance. Alleged Use of OpenAI Data Sparks IP Concerns OpenAI has raised concerns that DeepSeek has likely used its proprietary models to train its own open-source competitor through a technique called distillation. This process involves using outputs from advanced models, like GPT-4, to enhance the performance of smaller models at a much lower cost. While distillation is a widely accepted industry practice, the main concern is that it has been used in a way that violates its terms of service, which explicitly prohibits copying services or using OpenAI's outputs to create competing models. Read more: AI in National Security: Protector or Threat? US technical experts are investigating whether OpenAI's data was improperly accessed by individuals allegedly linked to DeepSeek. Microsoft's security researchers detected unauthorized data transfers involving individuals believed to be associated with DeepSeek. The researchers noted that a significant amount of data was extracted in the last quarter of 2024 through OpenAI's API, the primary method for software developers and businesses to access its services, raising concerns about potential breaches and intellectual property violations. DeepSeek's rise signals a shift in the AI landscape, proving that innovation isn’t just about deep pockets but also efficiency and execution. But if the allegations against DeepSeek hold, it will likely spark legal battles and stricter regulations around AI training data. Regardless of the outcome, the case highlights the growing tensions in the global AI race, where intellectual property and competitive edge are increasingly under scrutiny. Partner of choice for lower middle market-focused investment banks and private equity firms, SG Analytics, provides offshore analysts with support across the deal life cycle. Our complimentary access to a full back-office research ecosystem (database access, graphics team, sector & and domain experts, and technology-driven automation of tactical processes) positions our clients to win more deal mandates and execute these deals in the most efficient manner. About SG Analytics SG Analytics (SGA) is an industry-leading global data solutions firm providing data-centric research and contextual analytics services to its clients, including Fortune 500 companies, across BFSI, Technology, Media & Entertainment, and Healthcare sectors. Established in 2007, SG Analytics is a Great Place to Work® (GPTW) certified company with a team of over 1200 employees and a presence across the U.S.A., the UK, Switzerland, Poland, and India. Apart from being recognized by reputed firms such as Gartner, Everest Group, and ISG, SGA has been featured in the elite Deloitte Technology Fast 50 India 2023 and APAC 2024 High Growth Companies by the Financial Times & Statista.
The Rise of AI Agents in Enterprise SaaS
AI agents are poised to transform enterprise SaaS by streamlining tasks, improving customer engagement, and increasing efficiency. With rapid adoption across industries, they are set to redefine business operations and decision-making. These advanced systems leverage technologies like predictive analytics, natural language processing (NLP), and deep learning to streamline workflows and improve decision-making across sectors. SaaS platforms integrating AI agents are increasingly tailored to specific industries like finance, healthcare, and operations, addressing nuanced demands. Companies like Cognigy, aiXplain, and Salesforce are leading this evolution, enabling businesses to reduce operational costs and improve efficiency through intelligent automation. Market Growth and VC Confidence Fueling Innovation According to a report by MarketsAndMarkets, the AI agents market is projected to grow from $5.1 billion in 2024 to $47.1 billion by 2030 at a CAGR of 44.8%. As NLP technologies continue to advance, AI agents are set to become more intuitive and capable of understanding complex interactions. This will drive their adoption across various industries, especially in customer-facing roles. The demand for hyper-personalized digital experiences will further accelerate this shift as businesses will increasingly rely on AI agents to deliver tailored interactions and automate responses. Furthermore, according to Capgemini's 2024 report, 82% of organizations aim to adopt AI agents within the next three years, focusing on tasks like email generation, coding, and data analysis. Meanwhile, the venture capital (VC) community is actively discussing the disruptive potential of AI agents. Nvidia CEO Jensen Huang, in his keynote speech at CES 2025, emphasized the importance of agentic AI and its potential to transform the workforce and drive significant growth for companies heavily invested in its research and development. Figure 1: VC Funding Trend for Autonomous Agents & Digital Coworkers Source: CB Insights Read more: US Venture Capital (VC) Outlook 2025 VC funding for autonomous agents and digital coworkers has surged in recent years, reflecting growing investor confidence in AI-driven workplace automation. In 2022, the sector attracted $132.5 million in funding, which jumped 4.4x to $582.5 million in 2023, according to CB Insights. This momentum continued into 2024, with investment surpassing $1.1 billion, nearly doubling from the previous year. Leading startups in the space include Magic, valued at $465.3 million; Adept, at $415 million; and Moveworks, at $305 million. This rapid increase in funding and rising valuations highlight the growing demand for AI-powered assistants capable of automating complex workflows and enhancing productivity across industries. Enterprise Software Makers Double Down on AI Agents Enterprise software manufacturers are also heavily investing in AI agents. Salesforce’s Agentforce has already become a financial success, with CEO Marc Benioff calling it the company’s fastest-growing product and predicting thousands of Agentforce deals in 4Q24. Meanwhile, Cognigy, a startup that raised $100 million in Series C funding in June 2024, launched its Agentic AI offering in November to enhance enterprise call centers. Also, on January 29, 2025, ServiceNow introduced its AI Agent Orchestrator to improve the coordination of AI agents across various business tasks, systems, and departments. Oracle and NVIDIA are driving innovation in AI agents. On January 21, 2025, Oracle introduced AI capabilities in Oracle Fusion Cloud Sales, simplifying sales processes by automating tasks like record-keeping, email generation, and delivering personalized insights using connected data. In the same month, NVIDIA launched AI Blueprints that enable developers to build customizable AI agents capable of reasoning, planning, and extracting insights from video, PDFs, and more. These agents integrate with platforms like CrewAI and LangChain, revolutionizing industries with tools for video summarization, digital twins, and enterprise-wide AI adoption. Read more: Why Willow is the Next Big Thing in Tech? AI Agents Use Cases across Business Functions AI agents are revolutionizing customer support in enterprise SaaS by automating routine inquiries and providing instant resolutions. For example, Zendesk uses AI to route tickets to the right teams, analyze customer sentiment, and suggest responses to agents, reducing resolution times. In e-commerce, platforms like Shopify integrate AI agents to provide 24/7 customer support, assist with product recommendations, and handle returns. These AI-powered tools not only enhance customer satisfaction but also enable businesses to scale support without significantly increasing headcount. Finance teams are becoming more efficient with the adoption of AI agents. Tools such as SAP’s invoice processing agent and Microsoft’s account reconciliation agent streamline operations by automating tasks like matching transactions and addressing errors. Similarly, Salesforce’s banking agent manages customer service inquiries, transaction disputes, and provisional credits seamlessly. As organizations transition from experimenting with AI to implementing concrete strategies, these tools are empowering finance teams to enhance efficiency while maintaining accountability in critical processes. AI agent tools are also optimizing business operations across industries by automating repetitive tasks and improving workflow efficiency. In human resources, tools like Workday employ AI agents for recruitment, onboarding, and employee engagement analysis. Similarly, in finance, AI-driven SaaS solutions like Expensify automate expense management by categorizing receipts and generating reports. These capabilities free up employees to focus on higher-value tasks while reducing errors and operational costs, making business processes faster and more reliable. Overall, as AI agents reshape enterprise SaaS, their successful adoption will hinge on balancing innovation with robust safeguards, ensuring these transformative tools drive value and efficiency. Partner of choice for lower middle market-focused investment banks and private equity firms, SG Analytics, provides offshore analysts with support across the deal life cycle. Our complimentary access to a full back-office research ecosystem (database access, graphics team, sector & and domain experts, and technology-driven automation of tactical processes) positions our clients to win more deal mandates and execute these deals in the most efficient manner. About SG Analytics SG Analytics (SGA) is an industry-leading global data solutions firm providing data-centric research and contextual analytics services to its clients, including Fortune 500 companies, across BFSI, Technology, Media & Entertainment, and Healthcare sectors. Established in 2007, SG Analytics is a Great Place to Work® (GPTW) certified company with a team of over 1200 employees and a presence across the U.S.A., the UK, Switzerland, Poland, and India. Apart from being recognized by reputed firms such as Gartner, Everest Group, and ISG, SGA has been featured in the elite Deloitte Technology Fast 50 India 2023 and APAC 2024 High Growth Companies by the Financial Times & Statista.
Tech Industry Outlook 2025: What’s on the Horizon?
From the revival of cryptocurrency markets to increased adoption of robotics, 2025 is set to redefine technology. These trends will transform industries, drive innovation, and pave the way for a more connected future. Resurgence in Crypto VC Investments The cryptocurrency market is set for a resurgence in 2025, with venture capital (VC) investments projected to exceed $18 billion annually, as per PitchBook. Quarterly funding levels are expected to surpass $5 billion, doubling the average in the last two years. This uptick comes after a prolonged slowdown, during which annual funding stagnated between $9 billion and $10 billion, as per PitchBook. This is due to regulatory challenges, macroeconomic uncertainty, and notable collapses like FTX. In 2025, the involvement of established financial institutions like BlackRock and Goldman Sachs is expected to restore investor confidence, drive mainstream adoption, encourage other institutional players to invest in crypto startups, and position crypto as a key layer for digital transformation. Figure 1: Crypto VC Deal Activity by Quarter Source: PitchBook, as of September 30, 2024 Read more: AI in National Security: Protector or Threat? Traditional VCs, which largely retreated during the bear market, are anticipated to return, focusing on startups that offer measurable traction and clear profitability pathways. The stabilization of markets, the approval of regulated products like Bitcoin ETFs, and emerging use cases in decentralized finance and Web3 are expected to fuel this shift. Late-stage deals will likely dominate, with increased competition driving larger funding rounds and valuations. Coupled with macroeconomic tailwinds like declining interest rates and improved liquidity, the alignment between public token prices and venture funding is expected to create a virtuous growth cycle, propelling the crypto ecosystem into a new era of innovation. Rise in M&A Activity Expected in RegTech According to Pitchbook, regulation technology (regtech) is the least-funded segment of enterprise fintech, securing just $325.9 million in VC funding in the trailing 12 months as of Q324, only 1.9% of the $16.9 billion allocated to the sector. Despite rising compliance and risk management needs, fueled by banking-as-a-service (BaaS) failures and AI integration, regtech’s limited market size and constrained profit pools continue to deter investors. However, regtech is poised for increased M&A activity in 2025. This will be mainly driven by corporates and bank tech firms seeking to enhance capabilities in areas like fraud prevention and accelerate AI-driven compliance solutions. Companies such as Visa, Mastercard, and Plaid are likely acquirers, following recent deals like Visa’s $925 million purchase of Featurespace and Mastercard’s $2.7 billion acquisition of Recorded Future in December. According to Pitchbook, in the first three quarters of 2024, regtech accounted for 13.6% of enterprise fintech VC exits by count, with disclosed values totaling $2 billion. This signals a growing appetite for regtech M&A, which will further accelerate as fintech dealmaking recovers. Adoption of Sustainable Packaging to Drive Growth in Foodtech The food tech outlook for 2025 highlights a significant shift toward sustainable food packaging, driven by corporate commitments and technological advancements. Major food companies are pledging to make packaging recyclable, compostable, or reusable by 2025, fueling innovation in materials science and packaging technologies. Biodegradable polymers and compostable materials are becoming more prominent as companies like NatureWorks develop cost-effective, eco-friendly alternatives. Smart packaging solutions that enhance food freshness monitoring and reduce waste are also gaining traction, addressing both environmental and functional needs. Figure 2: Sustainable packing VC deal activity Source: PitchBook, as of September 30, 2024 Read more: Charting New Horizons in Private Credit Precedence Research projects the global eco-friendly food packaging market to grow at a 7.6% compound annual growth rate (CAGR), reaching $505.4 billion by 2034. This growth reflects increasing investments in sustainable materials and packaging designs, fueled by the rise in e-commerce and food delivery demand. VC Mega-Exits to Drive Growth in Application Security and Security Operations The information security sector is poised for a major shift in 2025, with application security and security operations expected to generate high-profile mega-exits exceeding $1 billion, as per PitchBook. Historically, these segments have lagged behind others, such as endpoint security and identity management, which saw significant exits in past years. Companies like Arctic Wolf, Armis, and Sayk are strong IPO candidates, with Arctic Wolf leading in revenue scale and Armis making strides with an expanded product suite. These developments are likely to attract robust VC interest and drive IPO activity. Acquisitions remain a key trend, with legacy vendors and private equity (PE) firms continuing to eye promising startups. However, challenges like slowing revenue growth, failed exits, and integration issues, as seen with Lacework, will likely temper enthusiasm. Despite these risks, a more business-friendly regulatory environment and broader investor confidence will likely create opportunities for transformative exits across application and security operations in 2025. Increased Warehouse Robotics Adoption to Drive Industry Growth According to PitchBook, warehouse robotics witnessed significant VC inflows in late 2024. Notable investments included Pickle Robot's $50 million Series B of November, fueling the deployment of over 30 robotic unloading systems in 2025. Additionally, Dexory raised $80 million in October 2024 for its AMRs (autonomous mobile robots) for automated data collection and inventory tracking. Companies are increasingly adopting robotics to address labor shortages and accommodate rising order volumes. The sector shows strong promise for startups specializing in collaborative robotics and AI-powered solutions. Furthermore, collaborations between startups and established companies are becoming more prevalent, facilitating the integration of robotics into existing operations. Read more: Trump’s Tariff Threat: Will it Strengthen the US or Strain the World Open-Source Models to Lead the Commoditization of LLMs The commoditization of large language models (LLMs) is poised to gain momentum in 2025, fueled by the growing popularity of open-source models like Meta’s Llama 3.1, which matches the performance of closed models such as OpenAI’s GPT-4. Open-source models empower enterprises with greater control, enabling on-site deployment and customization. This shift is expected to reduce reliance on costly closed-source models and drive significant price drops. As enterprises increasingly adopt open-source solutions, cloud providers will face mounting pressure to lower inference costs, making AI development more accessible and cost-efficient for businesses worldwide. Trade Barriers to Boost Supply Chain Tech Solutions The decline of the free-trade regime shapes the outlook for supply chain technology in 2025, with rising trade barriers and tariff threats driving significant shifts. The US has increasingly turned to tariffs and trade restrictions as policy tools, impacting global trade flows and supply chain stability. Companies reliant on global supply chains will face growing uncertainty and need enhanced visibility and tracking solutions to adapt. Tools to trace product provenance, optimize sourcing, and manage alternative partners from companies such as project44 and Fourkites will see heightened demand in 2025 amid these challenges. Partner of choice for lower middle market-focused investment banks and private equity firms, SG Analytics provides offshore analysts with support across the deal life cycle. Our complimentary access to a full back-office research ecosystem (database access, graphics team, sector & and domain experts, and technology-driven automation of tactical processes) positions our clients to win more deal mandates and execute these deals in the most efficient manner. About SG Analytics SG Analytics (SGA) is an industry-leading global data solutions firm providing data-centric research and contextual analytics services to its clients, including Fortune 500 companies, across BFSI, Technology, Media & Entertainment, and Healthcare sectors. Established in 2007, SG Analytics is a Great Place to Work® (GPTW) certified company with a team of over 1200 employees and a presence across the U.S.A., the UK, Switzerland, Poland, and India. Apart from being recognized by reputed firms such as Gartner, Everest Group, and ISG, SGA has been featured in the elite Deloitte Technology Fast 50 India 2023 and APAC 2024 High Growth Companies by the Financial Times & Statista.
