Software Supply Chain Risk: UK Supplier Insolvency Index 2026

The Headline Findings | Overview 

The Figures Behind Software Supply Chain Insolvency in the UK

Modern enterprise operations rely heavily on complex software supply chains, including third-party SaaS vendors, bespoke development partners, and cloud hosting infrastructure. The financial stability of these technology providers represents a critical risk to operational continuity, but too often this risk is overlooked by the people and teams who are tasked with mitigating against it.

Analysis of official UK government insolvency statistics by Escode has revealed a clear pattern: Insolvency volumes across software developers, SaaS publishers and cloud infrastructure providers are growing significantly faster than general UK commercial insolvencies since 2019. In recent years, the rate of insolvency has accelerated.

Key Index Highlights:

• 67.4% rise in core software supplier insolvencies: Business failures across core software engineering, SaaS publishing and cloud hosting providers rose from 589 in 2019 to 986 in 2025.

• 1.71x faster than general UK commercial insolvencies: Software supply chain insolvencies increased by 67.4% between 2019 and 2025, compared with a 39.4% increase in general UK commercial insolvencies.

• 9% increase in the baseline company failure rate: The rolling 12-month company insolvency rate stands at 50.5 per 10,000 active companies, compared with 46.4 in 2019.

• Software Publishing & Hosting failures more than doubled: Insolvencies across Software Publishing rose 118.8%, while Data Hosting & Cloud Infrastructure insolvencies increased 121.7% since 2019.

Key Finding | 01

Core Software and SaaS Supplier Failures Have Risen by 67.4%

The volume of business failures across core software engineering, SaaS publishing, and cloud hosting providers has scaled dramatically over recent years.

Graph 1

The Data Breakdown

• 986 core software suppliers failed in 2025, up significantly from 589 in 2019.
• This represents a 67.4% net increase in core software supplier insolvencies over the pre-pandemic baseline.
• The rolling corporate failure rate across the general economy remains elevated compared to pre-pandemic levels at 50.5 per 10,000 active businesses, highlighting the challenging wider environment facing technology suppliers. 

"The rise in insolvencies among software and IT suppliers should be a warning sign for organisations that are increasingly dependent on third-party software and SaaS applications to run day-to-day operations. Many organisations still underestimate how exposed they are to software supplier instability until a failure occurs. When a critical software supplier becomes insolvent, the impact can be immediate, including the loss of access to essential systems and the data they rely on."

Luke Kelly, Operations Director at Escode

Key Finding | 02

+122% Surge in Data Hosting and Cloud Infrastructure Provider Insolvencies

The increase in failures is most pronounced across software publishing and cloud infrastructure providers, two segments that underpin many modern digital operations.

Graph 2

The Data Breakdown

• Insolvencies across Software Publishing have surged by 118.8% since pre-pandemic baselines.
• Closures within Data Hosting & Cloud Infrastructure have spiked by 121.7% over the same period.
• This sector-specific volatility comes even as headline monthly business insolvencies across all sectors fell by 10% year-on-year (to 1,845 cases), showing a sharp disconnect between tech vendor health and the wider economy.

Insights

Many organisations depend on SaaS applications and cloud infrastructure to support critical operations. The increase in failures across these sectors highlights the importance of understanding supplier dependencies and ensuring appropriate continuity measures are in place.

"Supplier risk does not stop with the organisations you contract with directly. Critical applications often rely on a wider ecosystem of cloud providers, hosting services and outsourced dependencies. Understanding these relationships can help organisations identify concentration risk and gain greater visibility of the software supply chain."

Wayne Scott, GRC Solutions Lead at Escode

Key Finding | 03

Software Supply Chain Failures Are Growing 1.71x Faster Than General UK Commercial Insolvencies

The pace of growth in tech supplier insolvency volumes is significantly outstripping the wider commercial landscape. 

The Data Breakdown

• Software supply chain insolvencies increased by 67.4% between 2019 and 2025 compared with a 39.4% increase in general UK commercial insolvencies. 
• For software buyers managing large and complex vendor ecosystems, this faster growth in supplier insolvency volumes increases the importance of identifying critical dependencies and planning for potential disruption. 

Insights

If your organisation relies on hundreds of SaaS applications, integrations and software suppliers, insolvency volumes growing 1.71x faster than general UK commercial insolvencies have significant implications. As software ecosystems become more complex, supplier disruption becomes an increasingly important operational risk to manage.

"Many organisations have visibility of their software suppliers, but fewer have assessed them based on business criticality. By identifying Tier 1 applications and understanding the dependencies behind them, businesses can take a more targeted approach to resilience planning and supplier risk management."

Andrew Beaumont, Product Manager at Escode

Key Finding | 04

Corporate Insolvencies Have Settled at an Elevated Baseline

Headline business failures have flattened month-on-month, but the modern tech supply chain operates in an elevated risk environment.

The Data Breakdown

• 1,845 companies entered insolvency in England and Wales in June 2026.
• This remains flat compared to May 2026 (1,849 cases) and is 10% lower than June 2025 (2,048 cases).
• While short-term numbers have cooled, overall business failures remain significantly higher than pre-pandemic averages.

Insights

Although insolvency volumes have stabilised compared with recent levels, the rolling company insolvency rate remains above its 2019 level. For enterprise software buyers, this reinforces the need for ongoing supplier risk management and resilience planning, particularly for business-critical applications and services.

Key Finding | 05

1 in 198 Companies Entered Insolvency Over a 12-Month Period

The rolling rate provides a clear indication of the level of company failure across England and Wales.

The Data Breakdown

• The corporate failure rate stands at 50.5 per 10,000 active companies. 
• This means 1 in 198 companies in England and Wales entered formal insolvency over the 12-month period.
• The rolling insolvency rate is now approximately 9% higher than its 2019 level. 

Insights

If your organisation relies on a modern technology stack comprising hundreds of SaaS applications, integrations and software suppliers, a failure rate of 1 in 198 active businesses should not be overlooked.

While not every supplier presents the same level of risk, larger and more interconnected software ecosystems are naturally more exposed to supplier disruption. This reinforces the importance of identifying critical dependencies and ensuring appropriate continuity measures are in place.

Insights | Insolvency Drivers

UK Corporate Insolvency Landscape

What is Driving Software Supplier Insolvency?

While macro pressures continue to affect businesses across all sectors, their impact has been amplified by several software-specific market dynamics. Together, these factors may have contributed to the faster growth in insolvency volumes seen across technology suppliers in recent years. 

• Reduced access to investment: Higher interest rates and lower levels of venture capital funding have created a more challenging operating environment for software firms that previously relied on external investment to support growth.
• Rising engineering costs: Competition for technical talent has increased software development costs across the UK. For many suppliers, these staffing costs represent a significant proportion of overall expenditure.
• Software estate rationalisation: Enterprise IT and procurement teams are reviewing software estates, consolidating platforms and removing redundant tools, increasing competitive pressure across the software market.
• Longer B2B sales cycles: Increased governance, procurement scrutiny and security reviews can extend purchasing timelines, creating additional cash-flow pressures for smaller software vendors.

Guidance | Managing Software Supply Chain Risk

How to build technology resilience across your software supply chain

Uncontrolled vendor insolvency does not just mean losing a supplier, it can mean losing access to the critical applications, services and data that keep your business running. As organisations become increasingly dependent on third-party software, SaaS platforms and cloud services, traditional contingency plans and standard backups may no longer provide sufficient protection against supplier disruption.

Building technology resilience requires a proactive approach to software supply chain risk. By implementing the right resilience controls, organisations can reduce supplier dependency, strengthen continuity planning and improve their ability to respond when disruption occurs. Here are three key areas to consider when building resilience across your software supply chain.

01 | Strengthen Software Resilience with Software Escrow

If a critical software supplier can no longer support your application due to insolvency, acquisition or another disruptive event, your organisation needs a clear path to continuity.

• Best practice recommendation: Implement a software escrow agreement that establishes clear release conditions and supports continuity planning should a supplier fail to meet its obligations.
• How Escode helps: Escode's Software Escrow solutions help organisations establish the legal right to access critical software materials when predefined release conditions are met, reducing supplier dependency and strengthening technology resilience.

02 | Implement SaaS & Cloud Resilience

As organisations become increasingly reliant on cloud-hosted and SaaS applications, continuity planning must extend beyond source code to include data, documentation and the wider application environment.

• Best practice recommendation: Assess critical SaaS applications and identify what would be required to restore services if access to the supplier's environment was disrupted.
• How Escode helps: Escode's SaaS Escrow solutions help secure the source code, data, documentation and supporting materials required to support continuity planning for cloud-based applications.

03 | Mandate Verification and Technical Validation

An escrow agreement is only as valuable as the materials it contains. If deposited source code is incomplete or cannot be rebuilt, continuity arrangements may not provide the assurance your organisation expects.

• Best practice recommendation: Regularly validate escrow deposits and recovery processes to ensure critical software assets remain complete, current and capable of supporting continuity requirements.
• How Escode helps: Through Independent Build Verification, Escode independently rebuilds applications using the materials held in escrow, providing assurance that deposited source code, documentation and dependencies are complete and capable of supporting continuity requirements.

Escode’s Software Supply Chain Insolvency Index is updated quarterly. 

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