IT services and consulting firm Trace3 has new ownership and a new CEO.
With Apollo Funds acquiring a majority stake in the company from American Securities, Joe Quaglia has succeeded Rich Fennessy as CEO. Quaglia had been Trace3’s president since 2022. He is a 39-year veteran of the IT industry, including 14 years at Tech Data and 10 years at CA.
Fennessy, who helped Trace3 grow to $3 billion in 2025 revenue, will become the company’s executive chairman.
I spoke with Quaglia about his plans for continuing to grow Trace3, organically by cashing in on the AI market opportunity and inorganically through acquisitions.
Here are highlights of that interview:
Where do you see Trace3 now and what will this change mean for the company?
Quaglia: I get to lead Trace3 in a time when the company's performing really well. We've got an amazing culture and talented teammates, and then you look at the tailwinds that perhaps AI is going to provide this industry—we feel perfectly positioned to take advantage of these tailwinds. So ultimately, the timing is great and we're super thrilled.
What is Trace3's AI strategy, and what are you offering in the AI space?
Quaglia: It starts with our differentiation, which separates us uniquely in the marketplace. There are four areas of differentiation.
First, we take a very services-first approach to our client conversations. In today's world of AI and the complexities that AI provides, having good advisory, consultative, and thought leadership to our clients around that topic is really important.
The second differentiation is our elite engineering. We have 1,500 teammates in the company, and half of those teammates are engineers, consultants, and architects. AI presents even potentially more complexity and we think we're perfectly positioned to support our clients from an engineering perspective.
Joe Quaglia
The third differentiator is around our emerging tech and innovation practice. We think we're one of the few, if not only IT solution and service providers in the market that have two decades of relationships with VCs globally, giving us first mover access to all of the emerging tech that's coming out of venture capital.
And then the last piece that's a differentiator is we've been on this convergence of technology opportunity now for three or four years. We’re seeing the convergence of data, the convergence of cloud, and the convergence of security coming together. You can't really adopt an AI strategy if you don't have a quality data platform, and if you have a quality data platform, you have to secure that platform. Then the question is, will it be on-prem or in the cloud or multi-clouds? That conversation is all coming together, and Trace3 is in a great position to help CIOs, CTOs, and CISOs make better informed decisions about how to adopt AI, how to deploy AI, and how to deal with the convergence of those technology stacks.
Are there also headwinds impacting AI adoption? There’s been layoffs at IT companies. Are you getting any pushback from customers who fear AI could cost them their jobs?
Quaglia: No, we haven't run into that yet. We're not seeing massive layoffs because people are adopting AI. In fact, we've got three or four internal AI use cases being adopted at Trace3, and none of them are intended to reduce the employee base. It's really to improve speed in the business, improve productivity that allows us to scale, or deliver a better outcome to our clients because we're smarter, we're faster, and we can deliver more accurate quality content back to our clients.
The world would make you think that we're just going to have plumbers and electricians left, but we don't really see it that way. I've been doing this now for 39 years, and I've been through all the major transformations—back in client-server days, internet days, cloud days, mobile days, and now in AI days. Every era or evolution creates more IT workers and creates more knowledge workers.
Trace3 is a $3 billion revenue company. How do you plan on continuing to grow?
Quaglia: We'll do that through significant organic growth, and we'll do it through M&A. We've acquired seven companies. M&A will continue to be a strategic lever for us. We look for opportunities where we can add capabilities that maybe we don't have today. We also look to add geographical presence where we might not be as strong or have as big of a presence as well. And obviously, we always look to acquire net new clients, acquire net new talent, especially in areas where AI becomes a big topic.
What areas are you looking to strengthen through M&A?
Quaglia: We're interested in bolstering our consulting practice. One of the biggest opportunities that we've seen so far is our clients engaging us on the front end of their AI strategies. Trace3 is a services-first company, but we’re going to be looking at the consulting piece pretty deeply as the world becomes more complex, and our clients deal with more complex IT challenges and business challenges.