September 2025

Amdocs Is Well Positioned to Continue Absorbing Market Share in the Telecom Industry; AI Is a Key Growth Vector

09.24.25/by Chris Antlitz, Principal Analyst

2025 Amdocs Analyst Summit, Kent, U.K., Sept. 16-18, 2025 — A select group of industry analysts gathered at Port Lympne in Kent, U.K., to hear from executives and business unit leaders on the company’s strategy, portfolio and go-to-market approach, as well as other aspects of its business. Amdocs’ chief marketing officer, chief strategy officer & chief technology officer, along with leaders from the company’s key business units, presented updates on their individual areas of focus. This year’s theme, “Into the Wild,” conveyed that AI will significantly change the telecom industry, and a major portion of the event was dedicated to discussions on AI and how Amdocs is evolving its business with AI.

TBR perspective

AI will forever change the telecom industry, and Amdocs aims to be at the intersection of that change, helping its customers (primarily communication service providers [CSPs]) lean into and reap the benefits of this new technology paradigm. CSPs are still trying to figure out what they want to be in the digital economy — a feat made more difficult by the advent of AI. Some telcos aim to remain utilities, providing connectivity services, while others seek to become techcos; additionally, some aim to be a hybrid of the two. Amdocs offers solutions that can help CSPs in whichever path they choose.

Due to forays into new areas, such as personality agent engineering for brand evolution, customer experience design and agentic AI transformation, Amdocs estimates its Serviceable Available Market (SAM) is $57 billion in 2025, up from $36 billion in 2021.

TBR sees multiple tailwinds blowing in Amdocs’ favor and the company is likely to continue gaining market share in traditional and newer market areas it is targeting. AI will juice this growth as Amdocs seems to be more sophisticated with its AI strategy and offerings compared to its primary competitors (especially as it pertains to the telecom industry). Though Amdocs is making a strong push toward AI transformation, most CSPs will delay adoption due to technical debt and data usability problems, as well as a focus on pending M&A. (Amdocs tends to consolidate and grow market share in CSP M&A events, while weaker, unfocused vendors tend to lose share as synergies are realized.)

This situation may limit the traction Amdocs’ AI initiatives obtain in the short term but will keep the company busy with plenty of business opportunities on the latter issues (i.e., addressing technical debt and data usability challenges) in the meantime. CSPs are investing in AI, but the nature of those investments is more about implementing targeted, quick-hit use cases than large-scale transformation initiatives.

Watch on demand: Telcos Risk Losing the AI Race Without Strategic Shift; $170B at Stake by 2030

Amdocs aims to be a brand consultant and technology enabler for the agentic AI era

AI will have a significant impact on CSPs’ brands. A reassessment and reassertion of brands will be necessary as agentic AI takes hold, and CSPs will need to determine what the agentic version (including the look, feel and personality) of their AI interfaces (e.g., brand avatars) will be. Amdocs has conducted extensive research into this emerging area, dubbed personality agent engineering, and aims to take a consultative approach toward helping CSPs position their brands in the AI era, including planning, design and development of AI avatars as well as aligning their brand messaging with their brand strategy.

Although TBR believes it is very early days for agentic AI branding, Amdocs’ early foray into this emerging area and thought leadership underscore how the company is seeking to move into new and adjacent areas as it expands its offerings, especially around consulting, design and transformation enablement.

Technical debt and data usability impediments continue to bog down CSPs, which will keep Amdocs busy

AI adoption is accelerating rapidly but most CSPs are not prepared to implement it at scale within their organizations. Two key reasons for this are the persistent challenge of dealing with technical debt and the data usability problem. In terms of technical debt, despite having begun cloud migrations more than 15 years ago, the telecom industry is only an estimated 30% complete with this transition, with nearly all of that 30% being in the IT domain.

CSPs have barely made any progress in migrating network domain workloads to the cloud. Lacking the full potential that cloud offers in flexibility and agility hinders CSPs in adopting new architectures and platforms, such as open vRAN and cloud-native networks. Further, most CSPs are still running legacy technologies at large scale that are at least 20 years old, such as xDSL, MPLS, 2G and 3G. If CSPs move this slowly, how will they ever obtain the flexibility and agility that AI requires?

Additionally, CSPs face a universal data usability problem, one that could derail or significantly delay the timeline of their AI transformations. AI is only as good as the data it is trained on, and data is the foundation on which AI is built. The reality is that most enterprises, especially CSPs, lack a unified data lake, limiting their ability to effectively train AI models. Rather, most organizations have data silos and data islands, all with varying levels of governance and oversight.

CSPs especially have a data problem because most are amalgamations of M&A over decades, and with each M&A event, new data layers are added to the fold, but they usually remain largely separate. A nascent crop of data management platform companies, such as Databricks and Snowflake, aim to tackle this issue head-on for enterprises, but TBR’s analysis suggests CSPs continue to underestimate the time and cost of data management transformation.

Amdocs plays a unique role in the ecosystem as the company is a change agent for consolidation and digital transformation on the software systems side (particularly for OSS and BSS). This uniquely positions the company to help CSPs consolidate and build aspects of this data management framework via Amdocs’ AI and Data Platform. So, even though CSPs may be delayed in adopting AI at scale, Amdocs will still be extremely busy helping them become AI-ready.

Business outcomes are the future, but the path there is uncertain

Amdocs executives and the analyst community represented at the event broadly agreed that business outcomes will become the primary monetization model in the AI economy. However, there was also broad agreement that what this looks like from a commercial model structure perspective remains a big unknown. Labor-related tasks have historically been monetized on a time-and-materials or cost-plus basis, and software has transitioned to a subscription-based, consumption-based or “as a Service” model. Selling outcomes will be very different (e.g., how to price, how to measure value, how to assess and manage risk, how to structure terms and conditions of a contract), and this model will likely significantly impact labor-oriented businesses, such as global systems integrators. The selling of business outcomes also requires changes to procurement and sales organizations.

TBR expects commercial models to evolve first to a hybrid of outcomes and more traditional models, with traditional companies primarily taking this more risk-mitigated approach. Meanwhile, TBR expects a new crop of disruptive companies that are more heavily geared toward outcome-centric models to enter the picture. This type of market disruption was witnessed with the SaaS trend, and the march toward selling outcomes will likely follow a similar trend.

Product (technology)-led services go-to-market approach is more conducive to outcome-based commercial reality

Amdocs firmly believes its product-led services approach is unique and better suited to aligning with market changes being brought about by AI and the shift toward outcome-based commercial models. Specifically, leading with products embedded with AI capabilities eases the impact of disruption on the labor side of the business model. This contrasts with C&SI firms, which are services-led and services-centric in their go-to-market and pricing models. Services-led companies likely face a much greater impact from disruption than companies that lead with products but also provide services related to those products.

Like all companies, Amdocs will still face fundamental changes to its organizational structure, workforce and delivery models from these market trends (i.e., AI and commercial model evolution), but TBR believes the magnitude and associated risks of that impact will be relatively less for Amdocs compared to traditional C&SI services firms.

Accountability-based model will become more desirable as the telecom industry navigates deeper into uncharted waters

Amdocs prides itself on its “never give up” mindset and approach to work. This accountability-based model is culturally embedded within the organization and is a key differentiator and selling point for the company when positioning itself for new business. Additionally, Amdocs’ expertise in dealing with mission-critical systems (e.g., carrier-grade networks and supporting operational and business systems) makes it an ideal partner at a time when companies are facing monumental disruption and persistent change. TBR expects Amdocs will increase its share in the telecom market and find new opportunities in other verticals, especially those that are also in mission-critical sectors, such as financial services.

TBR notes that Amdocs’ positioning differs from that of most other vendors and C&SI firms, which may have a lower tolerance for risk and risk sharing and are more apt to disengage or deleverage situations when significant problems arise. History is full of examples where services providers missed the mark with customer transformations and had to pivot midproject, and customers are cognizant of the risk of these types of situations potentially occurring.

Conclusion

Amdocs may be getting too far ahead of its customers in terms of AI, as CSPs are not ready to embrace and adopt the AI world Amdocs envisions. However, a plethora of CSP needs in the areas of system consolidation from M&A, as well as technical debt and data usability, will keep Amdocs busy with a steady flow of business opportunities for years to come. Amdocs is well positioned at the intersection of the three aforementioned trends in the telecom industry.

Additionally, thanks to its unique product-led services business model, the company is also well placed to thrive amid the impending disruption that will result from a shift to outcome-based commercial models and the impact of agentic AI on the professional services industry.

TBR Launches Cloud Go-to-market Benchmark

09.19.25/by TBR

Technology Business Research, Inc., is pleased to announce the launch of our Cloud Go-to-market Benchmark. Go-to-market strategies are constantly evolving, and as cloud vendors adapt to shifting buyer behavior, expanding ecosystems, and the demands of emerging technologies like AI, they are also updating their sales motions and spending. TBR’s new Cloud Go-to-market Benchmark quantifies these shifts at the financial level, tracking how vendors allocate sales and marketing (S&M) spending across direct and indirect channels.

As numbers alone do not tell the full story, this report layers in strategic context, examining how partner investments align with each vendor’s priorities and how these priorities are changing in the AI era. Whether it is the balance of internal versus partner-led sales or the evolving structures of ecosystem support, the Cloud Go-to-market Benchmark offers data-backed insight into where the cloud leaders are going and what that means for the broader competitive landscape.

Clients gain access to sales expense data split by direct and indirect sales motions, workforce headcount split by direct and indirect sales teams, and year-to-year growth comparisons for seven of the biggest cloud leaders covered by TBR. Additionally, you’ll find the qualitative backdrop behind these numbers, offering the necessary context for external stakeholders to navigate the changing landscape.

Cloud Go-to-market Benchmark is now available on TBR Insight Center™. Click here to preview the first publication.

Cloud Go-to-market Benchmark Excerpt

Cloud leaders seeking to expand reach and limit internal resource investments prefer indirect sales channels

Across nearly all covered vendors, indirect revenue as a percentage of total revenue is growing faster than any other go-to-market metric. Vendors like Microsoft and Google Cloud even have public targets for 100% partner attach on every cloud transaction, turning the ecosystem into the primary growth engine, rather than a complementary route. At the same time, Amazon Web Services (AWS), Salesforce and ServiceNow let field sellers meet their quotas with partner-sourced or partner-transacted deals, a change that removes the historical tension between direct and channel teams. These developments underscore a consensus among cloud leaders that scale, reach and solution depth increasingly reside outside the walls of the vendor’s own organization.

Graph: Total Cloud Revenue Growth vs Cloud S&M Expense Growth, 1Q25 (Source: TBR)

Several forces explain the shift. First, customers prefer bundled outcomes over raw technology, especially as generative AI (GenAI) and industry-specific regulations complicate deployments. Partners supply integration skills, compliance assurances and managed services that vendors cannot replicate economically with their own staff. Second, marketplace private offers and cloud credits have shortened buying cycles, decreased legal overhead and preserved list-price integrity, making indirect transactions faster and less price-erosive than many direct pursuits. Third, partner economics are attractive to finance chiefs. Paying a rebate equivalent to 3% to 5% of incremental consumption costs far less than hiring, onboarding and retaining another account executive whose compensation may run well above $250,000 annually.

Cloud leaders overwhelmingly shift their go-to-market efforts toward partner-led engagements, investing in rebates and milestone-based incentives to ensure alignment

Cloud vendors now place global and regional IT services firms at the beginning of the deal cycle. These partners work with the customer and vendor account executive early to custom-build solution architectures, rather than waiting for the contract to close. Most programs use tier-based rebates that increase as the partner’s booked revenue crosses fixed thresholds. Cash arrives only after the workload reaches production, shifting delivery risk to the services team while allowing the vendor to keep its own headcount focused on product engineering and cost discipline. The result is shorter sales cycles and larger contract values because implementation details are ironed out early and customer confidence rises.

Each vendor fine-tunes the model differently. Microsoft and ServiceNow both offer joint credit in their field compensation plans, giving partners a transparent path to quota completion and naturally channeling complex transformations toward their clouds. AWS, Oracle and Salesforce take a margin-based route. They use escalating rebates and fee concessions that convert a slice of gross margin into customer-acquisition funding without changing payroll. Google Cloud and SAP occupy the middle ground. Both grant joint credit only after partners pass rigorous capability tests that cover industry focus, workload expertise, and verified proficiency in GenAI delivery. The tighter filter aims to make sure incentives land on engagements that reduce ramp time rather than pad service hours.

The efficiency upside is real, yet it comes with downside risks. Overly strict entry criteria limit geographic reach. Loose standards inflate payouts faster than revenue. To take a balanced approach, most vendors feed live consumption data and customer satisfaction scores into quarterly scorecards that can raise or lower joint credit automatically. A partner that speeds adoption keeps 100% credit toward their quota on future deals. A partner that misses milestones reverts to standard terms until performance improves. Vendors that refine these feedback loops and respond quickly to the data are likely to preserve a cost advantage as AI workloads expand. Maintaining that edge will depend on constant calibration of incentives, clear communication with partners, and disciplined use of real-time data.

Cloud Go-to-market Benchmark Excerpt (Source: TBR)

Vendor spotlights in the initial edition of this report include hyperscalers Amazon Web Services, Google Cloud, Microsoft and Oracle and SaaS providers Salesforce, SAP and ServiceNow

Cloud Go-to-market Benchmark Vendor Spotlight: Microsoft

Cloud Go-to-market Benchmark Vendor Spotlight Excerpt (Source: TBR)

Ericsson’s Biggest Customers and Partners (Operators) Are Holding it Back

09.18.25/by Chris Antlitz, Principal Analyst

2025 Ericsson Industry Analyst Event, Boston, Sept. 11, 2025 — A select group of industry analysts gathered at Convene in Boston to hear from Ericsson leaders, partners and customers about the company’s Enterprise business unit’s strategies, capabilities and opportunities in domains such as private cellular networks (PCNs) and network APIs, with AI and 5G monetization serving as themes that ran across the various executive presentations.

TBR perspective

Ericsson struck a cautiously optimistic tone at its annual industry analyst event, which focused on the Enterprise segment. The company acknowledged struggles and highlighted learnings and adaptations, especially pertaining to Vonage and the new Aduna joint venture for network APIs, which will set the stage for better outcomes moving forward. Ericsson is uniquely positioned to capitalize on the still-nascent PCN opportunity that is developing globally, but the vendor’s go-to-market encumbrances continue to constrain its growth prospects.

Specifically, the range and nature of Ericsson’s partnerships with the broader PCN ecosystem remain relatively limited compared to other players in the domain, especially frontrunner Nokia. Ericsson’s go-to-market channel beyond CSPs for enterprise growth areas remains limited relative to competitors such as Nokia, particularly in PCN. Nokia decided several years ago to reduce its reliance on CSPs and made a concerted effort to sell its PCN solutions directly to enterprises and through a robust roster of channel partners, including global systems integrators (GSIs), niche systems integrators (SIs), VARs and communication service providers (CSPs).

Ericsson has little control over one of its biggest challenges: CSPs are difficult to deal with, hesitant to work together for competitive reasons, and move slowly. Compounding this, CSPs are Ericsson’s largest customer cohort and partner channel, and TBR estimates more than 97% of Ericsson’s total company revenue through direct and indirect means stemmed from CSPs in 2024. These are key reasons why TBR expects Ericsson’s enterprise revenue will lag its potential in areas such as PCN, network APIs and communication applications.

Impact and Opportunities

FWA has significantly more room to run

Ericsson estimates that approximately 25% of all mobile broadband traffic globally is fixed wireless access (FWA) now and that 18% of premises globally will utilize FWA within five years, representing unprecedented growth considering FWA only began to take off in 2020. These statistics align with what TBR has been saying for several years: The market opportunity for FWA is much larger and more vibrant than the industry originally thought.

For example, TBR estimates FWA is technologically and economically feasible to support up to 50% of residential premises in the U.S. This opportunity is helped by the rapid time to deployment and strong value proposition the technology provides end users, especially when compared to other broadband access mediums like fiber-to-the-premises (FTTP), which is laborious and expensive to build out and has higher service costs for the end user. Business premises can also be strong candidates for adopting FWA. Ericsson is arguably the largest beneficiary of the FWA movement on a global basis in terms of revenue generated by selling FWA enablement products and services to CSPs (infrastructure only, not including customer premises equipment [CPE]).

Awareness gap in market slows adoption

On several occasions at the event, Ericsson leaders mentioned that there is an “awareness gap” in terms of the efficacy and outcomes that 5G-enabled technologies are achieving, especially as it pertains to PCN for businesses and the public sector. For example, Newmont, a Tier 1 mining company that adopted a private 5G network from Ericsson to remotely control its dump trucks at the mine, has realized a tenfold increase in coverage and a significant corresponding boost in productivity.

Such outcomes are compelling to enterprises looking to transform their operations to drive more revenue growth and or reduce costs. Though word is gradually getting out that early adopter enterprises are achieving strong results from new technology solutions, more needs to be done. Greater emphasis on partnerships with companies that have the ears of senior management at enterprises, most notably global systems integrators (GSIs), are a key way for Ericsson to promote the benefits of these solutions.

Differentiation, both in technology and marketing, needs to be addressed

Ericsson needs to do more to differentiate its technology solutions, and this includes ensuring that differentiation is well messaged to the market. Though some consolidation has occurred in the PCN, network API and communications applications domains, there remains significant competition and fragmentation, with many vendors playing in the market that are not well differentiated. This lack of differentiation is likely another reason Ericsson is struggling to achieve outsized growth in these nascent market areas. TBR did not hear a compelling narrative as to how Ericsson is differentiating itself in terms of technology and partnerships in these key, high-growth market areas. It remains to be seen if Ericsson’s NetCloud AI-powered cloud management and orchestration solution for PCN becomes a key differentiator once it is scaled up to large deployments of the Ericsson Private 5G solution.

Private cellular networks channel remains underdeveloped

Ericsson’s PCN revenue is growing at a relatively strong double-digit rate, but the size of the business is less than 60% the size of frontrunner (outside of China) Nokia’s PCN revenue, according to TBR’s Private Cellular Networks Vendor Benchmark. This differential in revenues is primarily due to Ericsson’s underdeveloped go-to-market approach and channel relative to Nokia. This is an issue TBR has identified and written about for the past few years, but Ericsson seems to have made minimal progress.

Ericsson is partnering extensively on PCN, but according to TBR’s research, most of that activity is driven by CSPs — even though enterprises and the public sector primarily work with GSIs, niche SIs, VARs and government contractors on digital transformation-related initiatives. Ericsson is also partnering with non-CSPs, including a new agreement with NTT DATA that reflects the kind of deeper, broader partnerships TBR believes Ericsson should pursue. Surface-level partnerships are essentially reseller arrangements, whereas some vendors have robust engagements with key GSIs and other types of partners. Nokia’s relationship with EY and Kyndryl are two such examples.

Connected laptops is a niche market, not a mass market opportunity

Ericsson has jumped on the bandwagon of 5G-connected PCs, and representatives from T-Mobile and HP Inc. spoke at the event about why this is a unique market opportunity. Though 5G-connected PCs sounds like a great feature that end users will utilize, TBR believes the additional cost required to embed the 5G modem into the PC, plus the subscription fees that would need to be paid to the service provider, broadly limits the scope of who would actually find enough value in the product and corresponding service to actually pay for it, especially when most people have smartphones and those smartphones have mobile hotspot tethering, which essentially makes the computer a cellular-connected device at no additional cost.

To be sure, 5G-connected PCs offer a unique capability that the mass market would value, but once extra cost is involved, only a small fraction of that market is likely to pay for the experience. Some enterprises and select types of SMBs (e.g., construction firms) and small office/home office (SOHO) workers (e.g., real estate agents and other road warrior workers) would be unique candidates for 5G-connected PCs, but this would be more of a niche market than a mass market opportunity. As such, TBR suggests network and PC vendors reassess their addressable market projections to be more aligned with observed user behavior and price-for-value considerations.

Conclusion

Ericsson has competitive technology, but its overreliance on CSPs to purchase that technology and/or scale it into end markets remains a weakness that will continue to hamper the company’s ability to participate more significantly in key growth domains, such as PCN. On the network API and communications application side, progress is being made and some scale is occurring, but Ericsson and its CSP partners are up against relatively fast-moving, well-resourced and more specialized entities, most notably hyperscalers and other digital-native players. Addressing the telecom industry’s weaknesses and shortcomings in these market areas will require more investment in channel development and more robust strategic partnerships with entities such as government contractors, GSIs and niche, domain-specific SIs.

Ericsson’s dependence on slow-moving CSPs is a risky proposition, especially when it comes to driving growth in key areas, including PCN, network APIs and communication applications. Ericsson should take a page out of Nokia’s playbook for aligning its opportunity areas with non-CSP players to accelerate growth. Specifically, Ericsson should take a closer look at how Nokia structured its PCN business, especially its channel ecosystem, to reduce its reliance on CSPs. This has proved to be the most optimal way to participate in opportunities arising in the enterprise end markets Ericsson is targeting.

HCLTech’s Expanding KYC Journey: From Technology Provider to Trusted Compliance Partner

09.11.25/by Patrick Heffernan, Practice Manager and Principal Analyst

HCLTech’s expanded capabilities, new geographies and deeper client impact prove that a successful use case can be just the beginning

Use cases in the IT services space can bring technology to life. Everyone loves a good story. And following up on a successful use case to see what happened two years on doesn’t happen often enough. In fall 2023, TBR discussed with HCLTech the details of a know-your-customer (KYC) solution HCLTech developed for a European bank, and TBR highlighted the possibilities this solution unlocked. Almost two years later, TBR heard “the rest of the story” and gained additional insights into HCLTech’s growing portfolio of KYC solutions.

In a meeting with TBR, Subrahmanyam Umashankar (Uma) and Gourav Dilip Sontakke from HCLTech’s Financial Crimes Prevention practice discussed the recent updates on the engagement with the European bank to implement the KYC solution, which we originally discussed in 2023. The solution has been used in more than 40 countries and has evolved from accelerating and strengthening periodic reviews to powering autonomous KYC journeys, such as onboarding and event-driven reviews.

As anticipated, success in the KYC program with the European bank springboarded HCLTech into KYC opportunities with multiple other European banks, as well as an Australian bank. Uma and Gourav noted that HCLTech shifted from squad-based pricing to outcome-based service models and developed deeper engagement with client teams to better understand their specific processes and pain points. Leveraging the power of their AI-intrinsic design, HCLTech implemented a centralized digital KYC policy, purpose-built KYC workflows and customer-tailored notifications, with additional capabilities such as digital verification, intelligent document processing and a customer self-service portal on the road map. In short, success.

By evolving its KYC offerings across platforms and clients, HCLTech shifted from tech implementer to outcomes-driven partner

As HCLTech extended the KYC offering with additional banks, the company adjusted to different core platforms (such as Pega and Fenego) and shifted from traditional resource-based pricing to outcome-based service models, showcasing its confidence in delivering tangible results. HCLTech’s approach emphasized not only technological implementation but also a holistic reimagining of KYC processes, avoiding simply “lifting and shifting” existing inefficient systems. True to HCLTech’s DNA, Gourav noted that HCLTech brought core engineering capabilities to bear, allowing the company to be both flexible and innovative with clients, particularly when addressing average handling time, the most common metric (and pain point) in KYC.

A few additional points, from TBR’s perspective:

Uma commented that implementing multiple KYC solutions on different platforms has accelerated HCLTech’s skills on those platforms and extended the company’s domain expertise: “It has helped us strengthen our practice team in financial crime compliance.” Having clients essentially fund HCLTech’s training and delivery experience benefits HCLTech in multiple ways.
TBR previously noted that HCLTech worked alongside Big Four firms as they advised banks on financial crimes and other risk issues, with HCLTech profitably (and smartly) staying in its own swim lane, a strategy not every IT services company executes successfully. Uma confirmed that as HCLTech brought the KYC solution to additional clients, the company continued to work alongside Big Four firms, although with an important shift over the last couple of years. Banking clients, recognizing the success of the KYC solution with the European bank, now seek HCLTech’s “outside-in” view of broader KYC, financial crimes and compliance, offered in tandem with a Big Four firm’s perspective.
Multiple times during the discussion, Uma and Gourav delved into the intricacies of measuring success around KYC, from the perspective of the bank and its clients. In contrast, two years ago, HCLTech’s story mostly centered on the technology and how the company could quickly, securely and effectively implement a technology solution. Success, in part, has shifted the goals for HCLTech from delivering technology to delivering outcomes.

If HCLTech continues successfully expanding its KYC clients and extends further into consulting around financial crimes and compliance, the company will likely begin attracting more attention from both technology product companies looking for aggressive and growing alliance partners and India-centric peers already well-established in the financial services space. In TBR’s estimations*, HCLTech’s financial services revenue represents about 20% of the company’s overall IT services revenue, a share that has remained relatively constant over the last three years.

Peers such as Infosys (28%), Tata Consultancy Services (31%) and Wipro (32%) earn a considerably larger share of their revenues in that industry, arguably exposing them to greater risks if and when financial services revenue growth slows. Competitive threats aside, TBR believes HCLTech’s investment and subsequent success in the KYC space, as well as partnering — or at least collaborating — with Big Four firms, bode well for the company’s overall performance. As financial crime evolves, HCLTech’s AI-intrinsic design and autonomous KYC capabilities position it to lead in a space where banks and regulators are never going away. It is just a question of who stops them, serves them and answers to them.

*TBR uses its own taxonomy to estimate revenues of 17 IT services companies across seven industries. Start your TBR Insight Center™ free trial today to access this client-only proprietary data.

Devices Benchmark

09.09.25/by TBR

TBR Spotlight Reports represent an excerpt of TBR’s full subscription research. Full reports and the complete data sets that underpin benchmarks, market forecasts and ecosystem reports are available as part of TBR’s subscription service. Click here to receive all new Spotlight Reports in your inbox.

Vendors will continue to leverage their global manufacturing footprints and supply chain agility as they navigate tariffs

Key 1Q25 Devices Benchmark takeaways

AI PCs will remain a focus of vendors’ investment and product strategies over the next several quarters

OEMs are focused on developing PCs that incorporate neural processing units (NPU), which enable PCs to handle AI workloads locally. Over the next several quarters, the three major Windows PC OEMs — Dell Technologies (Dell), Lenovo and HP Inc. — will continue to develop and promote these AI PCs, releasing them in waves as the technology matures. As 2025 progresses, vendors will continue to invest in methods to differentiate their AI PC lineups from the competition, looking to gain share in the burgeoning subsegment to drive long-term revenue and margin growth within their devices businesses. Commercial devices will remain a particular focus for vendors as they build out their AI-enabled PC portfolios, due to stronger demand and those devices tending to carry higher average revenue per unit (ARPU) and stronger attach rates for services and peripherals.

Vendors outline plans to navigate the current tariff environment

During several devices vendors’ recent earnings calls, leaders were asked how they intended to navigate the current volatile tariff environment. A common thread across the responses was the confidence in each company’s ability to leverage its current business model and diversified supply chain to handle the impacts of tariffs. Dell and HP Inc. cited wide geographic reach as beneficial for navigating a challenging tariff environment, with the latter outlining plans to ensure by June that almost none of its devices sold in North America are manufactured in China. Dell and Lenovo both downplayed the effects of tariffs on their 1Q25 results, with Lenovo executives noting that the company is less concerned with the tariffs themselves than with their rapid onset. Moving forward, Lenovo will continue to leverage the in-house design and manufacturing capabilities underpinning its ODM+ model, as well as its wide global footprint.

Vendors expect the commercial PC refresh cycle to gain momentum in 2H25

For several quarters, cautious spending among both enterprises and SMBs has resulted in soft demand in the commercial PC market. During this period PC vendors have remained confident that the next major commercial PC refresh cycle, induced by factors including an aging install base and the upcoming end of Windows 10 support, will drive a rebound in the market. In 4Q24 Dell reported strong results among small and midsize businesses, something the company claimed has historically been an early indicator of a rebound in the overall commercial market. During its 1Q25 earnings call, Dell cited growing demand among both SMBs and enterprises, reporting that the refresh cycle is ramping up, although it is still “behind prior cycles.” Given these factors, TBR expects the PC segment will continue to build momentum throughout 2025, with the strongest growth coming in the second half of the year.

If you believe you have access to the full research via your employer’s enterprise license or would like to learn how to access the full research, click the Access Research button.

Access Research

Google reported the strongest year-to-year devices revenue growth during 1Q25, while Apple continued to lead in terms of total revenue and gross margin

Graph: Devices Revenue Growth vs Devices Gross Margin (Source: TBR)

TBR expects PC services revenue to return to year-to-year growth during 2Q25, gaining additional momentum in 2H25 as PC unit shipments continue to climb

1Q25 conclusions on the PC Services segment

The majority of PC services revenue continues to stem from premium support, warranty, asset recovery, security and other close-to-the-box attached services.
PC services revenue is closely correlated with PC hardware revenue, but revenue recognition is often deferred. As a result, the trends in the overall devices market are slower to materialize in the PC services segment. For several quarters, segment revenue has declined as PC unit sales contracted sharply across the industry. During 1Q25, the segment declined slightly due largely to contracting revenue on the part of industry leader Dell.
Growth on the commercial side of the market will be vital to performance in this segment going forward, as those PCs carry higher attach rates for services than their consumer counterparts. As the PC market gradually recovers throughout 2025, TBR believes the PC services segment will return to year-to-year growth.
Vendors are currently focused on promoting PC services offerings designed to stimulate PC hardware refresh such as AI PC assessment services, Windows migration services and asset recycling services.

Google led benchmarked devices vendors in terms of growth during 1Q25, while Apple remained the largest vendor by total revenue

Graph: Smart Device Revenue Growth vs Smart Device Gross Margin (Source: TBR)

U.S. Federal Cloud Ecosystem Report

09.09.25/by TBR

Key IT Services Takeaways

Federal systems integrators (FSIs) are under mounting pressure to bring to market a broad portfolio of cloud offerings underpinned by a robust network of commercially centric cloud partners

TBR estimates the total available market in federal cloud was roughly $17 billion in FFY24, and we believe this figure is set to rise to between $20 billion and $21 billion in FFY25. We anticipate total federal cloud spending will expand by between $13 billion and $15 billion to surpass $30 billion by FFY28. Modernizing legacy IT infrastructures remains a paramount, strategic objective for civilian, defense and intelligence agencies that are actively migrating IT systems to the cloud and/or replacing outdated and monolithic IT networks with cloud-native technologies. The advent of AI, generative AI (GenAI) and agentic AI, and the mandatory adoption of zero-trust security infrastructures are also accelerating cloud adoption. The Pentagon maintains a robust pace of cloud implementation, and the next iteration of the $9 billion Joint Warfighting Cloud Capability (JWCC) is in development. DOGE’s actions will upend civilian IT spending patterns through the remainder of FFY25, with disruption likely extending into the first half of FFY26. Federal IT vendors have struggled with budget cuts, headcount reductions, and delayed procurement and project delivery cycles at many civilian agencies since DOGE began reviewing budgets in January 2025. In the long run, TBR believes DOGE will prompt a resurgence in demand for cloud-based solutions as civil agencies and departments are vigorously pushed to outsource increasingly larger shares of IT functions (particularly tasks once provided by now dismissed government employees), migrate to multicloud and hybrid cloud environments, secure their IT networks with zero-trust architectures, and digitally enable mission-critical systems.

Key Cloud Takeaways

Leading vendors look for ways to extend commercial products and go-to-market motions to the U.S. federal space as cloud opportunities increase

The JWCC contract continues to represent the single biggest opportunity for the cloud market’s leading players within the U.S. federal government: Amazon Web Services (AWS), Microsoft, Google Cloud and Oracle. As of 1Q25, roughly $2 billion in task orders have been allocated to these four vendors, with Oracle securing the biggest award to date, after the U.S. Army — with support from Accenture Federal Services (AFS) — migrated its legacy PeopleSoft deployment to Oracle’s Government Cloud. This win highlights the advantages of being rooted in legacy software and partnering with commercial SIs like Accenture that have experience modernizing business applications. JWCC is still in its early days — and an extended contract dubbed JWCC Next is under development — but Google’s recent IL6 (Impact Level) accreditation for Google Distributed Cloud (GDC), available as an air-gapped solution, should be a big step forward for not only Google but also JWCC, as all participating vendors can now deliver at the highest accreditation levels. That said, as the Department of Defense (DOD) starts to more actively leverage infrastructure from distinct cloud providers, it raises the question of interoperability; buying cloud services from multiple providers and leveraging multicloud environments are two different things. It will be interesting to see how agencies work to overcome integration challenges, which could include enlisting more PaaS vendors as part of JWCC Next, and if the four hyperscalers can deliver joint solutions that work with each other. Civilian spend remains strong, with the impacts of DOGE seemingly starting to fade, though defense spending will outpace civilian in the near term. AI opportunities within the sector are also increasing, namely for agencies that already have their infrastructure and applications in the cloud and are best positioned to take advantage of AI.

If you believe you have access to the full research via your employer’s enterprise license or would like to learn how to access the full research, click the Access Research button.

Access Research

Cloud technologies are the foundation for digital transformation across the federal market; overall demand and opportunities for IT modernization remain prevalent

How do IT services vendors view the cloud opportunity?

Despite the growth in cloud spending outlined earlier in this report, large swaths of the federal government’s IT infrastructure remain in dire need of updating to cloud to accommodate the implementation of various AI technologies, advanced zero-trust security solutions, and other emerging technologies (e.g., quantum computing). DOGE disrupted federal IT spending in 1H25, but federal IT vendors remain undeterred in their pursuit of cloud-based digital modernization opportunities. Vendors and their federal customers are collaborating closely to map out future cloud migration and consolidation programs that will increasingly leverage commercially sourced cloud technologies, such as shifting federal data centers to cloud-based architectures to enhance data accessibility.

What do vendors need to develop or deploy to tackle the cloud opportunity?

The Trump administration is prioritizing enhancing data security, availability and cost-effectiveness via cloud technologies as a cornerstone of its federal IT strategy, and vendors are pivoting to align with the administration’s IT vision. FSIs must showcase their successful deployments of mission-enhancing cloud infrastructures that improve agencies’ operating efficiencies while crafting strategies for agencies to reinvest savings from DOGE-driven budget cuts and for the eventual implementation of next-generation technologies to support future missions. FSIs are adjusting marketing messaging to emphasize their ability to deliver innovation at speed within outcome-based cloud deployment engagements. Possessing the scale to deploy cloud infrastructures across agencies is still important for vendors. Equally critical are offering customers the broadest possible suite of partner-enhanced cloud solutions and having a vendor-agnostic approach to migrating federal IT workloads to cloud environments. Agency IT decision makers prefer not to be restricted to using products or services from a single vendor or a small cadre of IT providers. FSIs believe federal agencies will continue leveraging the cloud as the principal destination for legacy systems and for modernizing those systems and fully expect to accelerate adoption of SaaS and PaaS solutions, as reflected by federal IT contractors’ M&A, alliance and joint venture-related activities in 2024 and 2025.

Microsoft’s and Oracle’s hold on the U.S. government is unwavering, but AWS’ early IaaS lead and defense ties are elevating its standing in JWCC and the broader market

Unsurprisingly, Microsoft and Oracle are driving the bulk of prime awards, with the overwhelming majority stemming from traditional license and support contracts. Prime award value for Microsoft dipped in 2024, as large support renewals from the Department of Justice (DOJ) and Department of State that occurred in 2023 and have since expired. Meanwhile, Oracle’s jump in 2024 almost entirely reflects Cerner-related services for the Department of Veterans Affairs (VA). Though AWS does not have the legacy software ties that Microsoft and Oracle do, the company is very competitive in the market. In 2024 AWS saw a big jump in defense-related wins, including those associated with the Defense Information Systems Agency (DISA) and the JWCC contract. Other notable prime awards for AWS during this time include the National Nuclear Security Administration, within the Department of Energy, which is leveraging S3 and other IaaS services.

Graph: Hyperscaler Share of Prime Awards Won for FFY23 to FFY25 (Source: TBR)

Graph: Current Prime Award Value by Vendor (Source: TBR)

Channel Partner Market Landscape

09.09.25/by TBR

Channel partners continue to invest in the expansion of services capabilities to bolster margins and win AI deals

Portfolio key trends

Channel partners across the industry continue investing in the expansion of their services capabilities and cloud marketplace platforms to increase their hardware-adjacent revenue streams. While this initiative is driven in part by recent softness in the hardware market, software and services margins also tend to skew higher than hardware margins, and by taking a solutions-led approach, channel partners can drive deeper customer engagements and a higher level of differentiation in the market.
TBR expects channel partners will increase go-to-market messaging around AI in 2025 as more industry-specific use cases develop, including by emphasizing that AI is built into their own service delivery platforms and by becoming certified to deploy and manage partners’ AI-based solutions.

Operations key trends

As channel partners remain focused on growing their services revenue mix, they will continue to strategically rebalance headcount in roles such as sales and services delivery to expand their capabilities while maintaining profitability.
Streamlining operations through digital transformation remains a key priority as channel partners seek to build a more agile business and buying experience while reducing costs. Examples include the proliferation of e-commerce portals, cloud marketplaces and analytics-based solution configuration. In growth areas, including cloud and services, digital transformation helps solution providers manage complex, multicloud environments and easily aggregate multivendor solutions.

Financial key trends

Despite pockets of demand strength, such as in AI infrastructure, the overall channel partner hardware market has faced challenges over the past two years tied to cautious commercial spending and increasing competition for deals from both OEM partners as well as global systems integrators (GSIs) that are becoming increasingly interested in the resale of hardware to support the delivery of full-stack AI solutions.
Multiple trends will likely help improve customer spending in 2025 including PC refresh in the commercial space and improving enterprise server demand.

M&A key trends

Acquisitions continued to be driven by channel partners’ desires to expand skill sets in cloud, cybersecurity and advisory services. TBR believes industry consolidation remains a pervasive trend among channel partners and will help companies acquire niche services capabilities. Additionally, channel partners will continue to target strategic acquisitions to expand their geographic footprints.

If you believe you have access to the full research via your employer’s enterprise license or would like to learn how to access the full research, click the Access Research button.

Access Research

Services revenue is expected to see the most robust growth among all segments of the channel partner market

Segment trends

Relatively soft hardware demand acted as a headwind for most channel partners in 2024. However, looking ahead to 2025, TBR sees the continued ramp of the next major commercial PC refresh cycle synergizing with rebounding enterprise infrastructure spend, leading to forecasted aggregate growth of 4.1% among covered channel partners.

Demand for AI solutions remains elevated, and VARs are competing with both OEMs and GSIs to develop and deliver end-to-end AI solutions to customers. However, TBR believes VARs’ recent services and portfolio investments, coupled with the sheer scale of the AI opportunity, will allow all parties to benefit from the industry trend in 2025.

As VARs continue to invest in the expansion of their services capabilities to drive solutions-led engagements and as distributors further develop their cloud marketplace platforms, TBR believes channel partners’ margins will gradually expand over the next few years.

Generally speaking, channel partners with greater services emphasis fared best in 2024 amid softness in the hardware market

2024 corporate trends

Estimated aggregate corporate revenue among covered channel partners remained flat on a year-to-year basis in 2024 as soft commercial hardware demand offset growing software and services segment revenues. However, the industry’s performance represented an improvement over the group’s results in 2023, when estimated aggregate corporate revenue contracted approximately 4.6% year-to-year.

Among all covered companies, Arrow Electronics’ ECS segment delivered the strongest growth in 2024 due to the rising success of its ArrowSphere platform, which drove industry-leading software segment revenue growth during the period.

Behind Arrow Electronics’ ECS business, TBR believes WWT delivered the second-strongest revenue growth rate in 2024 due to the company’s ability to leverage its labs and integration centers to help customers develop and validate their own AI solutions. Looking ahead, TBR expects WWT’s labs and integration centers to act as a significant tailwind to the company as an increasing number of enterprise customers adopt AI solutions.

Graph: Revenue Growth versus Operating Margin

Enterprise Systems Integrators Market Landscape

09.09.25/by TBR

Attributes related to vendors’ ability to execute on DT promises reflect changing buyer priorities from a year ago and send a strong message that vendors should not take relationships for granted

Main criteria for selecting digital transformation (DT) services vendors

Working knowledge of buyers’ IT infrastructure, digital-related security and privacy issues, and specific line of business or domain ranked as the top three attributes for vendor selection. The ranking was a major reshuffling from 2023, when industry knowledge, value-to-price, and complete line of professional services ranked as the top attributes. The change highlights buyers’ evolving priorities. While a year ago the attributes were oriented toward convincing stakeholders to spend on DT programs, this year it appears as though buyers are looking for vendors that can execute on the programs, aligning with the increase in overall DT spend. Existing vendor relationship remained the least critical attribute for vendor selection, underscoring that no single vendor’s position is guaranteed and that vendors must account for evolving stakeholder expectations.

If you believe you have access to the full research via your employer’s enterprise license or would like to learn how to access the full research, click the Access Research button.

Access Research

Addressing common gaps such as technical expertise could help vendors build a foundation around scale and quality as GenAI adds another layer of complexity that has to be tied to business outcomes

Customer recommendations for DT services vendors by region

Improving technical expertise remained among the top recommendations across regions for vendors to consider, which reflects the IT fluency of DT buyers and illustrates portfolio and skills gaps vendors struggle with despite ongoing investments. Other common recommendations, such as GenAI knowledge tied to business operations, also underscore the need for vendors to find a way to balance their technology-led discussions with business process knowledge, especially as the majority of buyers’ budgets are shifting back to business and tech advisory services. Supporting and taking responsibility for enterprises’ IT environments cannot be done in a vacuum, and vendors need to account for the impact of broader stakeholder ecosystems, especially as the adoption of emerging technologies increases the level of complexity. This is particularly the case among EMEA buyers, who ranked vendors’ expertise in ecosystem management within the top five recommended improvements, highlighting the importance of collaborating with regional vendors as a critical link in otherwise fragmented European-sourced opportunities. In comparison, APAC and North American buyers see a gap in vendors’ ability help them understand the impact of AI on the business, creating an opportunity for providers with strong consulting skills that can also demonstrate business outcomes through proven use cases.

ESIs and acquisitions — strategies that work

Successful M&A strategies follow one of two cadences in TBR’s research: constant or infrequent. In-between approaches or inconsistent cadences fail to deliver expected returns on investment and do not support sustained revenue growth.
Most ESIs that have doubled their revenues post-pandemic have acquired at an Accenture-like pace, adding complementary capabilities and/or expanding into new geographies (e.g., Persistent and Stefanini). In contrast, some ESIs have maintained high revenue-per-employee results in part by eschewing frequent acquisitions in favor of more organic growth (e.g., Ensono and Protiviti).

Why are these two opposite approaches successful? Evaluating, financing, acquiring, absorbing and bringing to market new assets requires experience that builds muscle memory. Do it often and get good at it or do it rarely so you are not wasting time and money. Inconsistency leads to uncertainty and inefficiencies.

Increasingly, according to TBR’s research, an approach favored by some global systems integrators (GSIs) and consultancies appears appealing to ESIs: invest, do not buy. Most ESIs cannot match GSIs’ dollars invested in corporate venture capital funds or startup incubators, but ESIs can emulate the business model. Investing in niche technology or complementary services providers demonstrates differentiation in a crowded field and potentially provides additional revenue streams.

Increasingly, ESIs will invest in startups and boutiques, expanding their portfolios without the costs of acquisitions and realizing new revenue streams.

ESIs and technology partners — ESI perspective

In TBR’s research, successful SI partnerships with technology vendors require the SI to understand and align with the technology vendor’s sales team. Clear incentive and compensation structures lead to smoothly functioning go-to-market initiatives.

ESIs, by their nature, can be more flexible than GSIs and can benefit from being named the best SI partner in their particular country or for their particular skills. GSIs can compete for global accolades while ESIs show their technology partners the benefits of more local recognition.

Of cloud and software respondents, 33% said, “We use niche providers for small and midsize clients as they offer better pricing flexibility and domain expertise.”
“I want to work with all the major technology companies, but I work with smaller niche companies too. So, when we were rationalizing who to work with and who not to work with, ultimately, it comes down to the TAM [total addressable market]. I want some revenue potential behind any new partners, and any new go-to-market offerings. So that’s what kind of the think tank is deciding behind the scenes.” — Senior Manager of Global Channels and Alliances, Cloud—TBR’s Summer 2025 Voice of the Partner Ecosystem Report

ESIs face core challenges similar to GSI, namely how to differentiate and get technology partners to recommend and even sell an ESI’s services. Without expecting technology partners’ sales teams to be fluent in an ESI’s offerings and value propositions, ESIs can sell themselves in three ways:

Offer flexible and responsive commercial models that play to tech partners’ metrics and compensation models
Provide access to personas and buyers that tech partners cannot reach, such as enterprise business line leaders or wholly new logos
Augment with highly specialized and responsive talent when tech partners’ own professional services teams are stretched too thin