Private Cellular Networks Market Forecast

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While the 5G PCN ecosystem is maturing, it remains underdeveloped compared to older technologies such as Wi-Fi and LTE, slowing the pace of adoption

Robust Wi-Fi and LTE ecosystems, coupled with an underdeveloped 5G-compatible device ecosystem and relatively higher costs, hinder private 5G adoption

The private 5G network market will see robust growth through this decade as a wide range of industries and governments adopt the technology. However, TBR now projects the market will reach $5.3 billion in 2030, down dramatically from our October 2022 forecast of $15 billion in 2030. TBR still believes the private 5G network market will ultimately be several times larger than the projected peak of the private LTE market, but the market is taking much longer to scale than previously expected.

The private 5G network market is challenged by enterprises viewing Wi-Fi and/or LTE as good enough for most non-mission-critical use cases. 5G (including infrastructure as well as endpoint devices and modules) remains far more expensive than Wi-Fi, and enterprises are more comfortable using Wi-Fi; most enterprises choose Wi-Fi as the primary connectivity medium for their private network, with private cellular typically utilized for internet redundancy, backup and failover. Essentially, enterprises have more clarity around LTE and Wi-Fi and are uncertain about 5G PCN ROI, causing them to lean toward existing options.

The limited selection of 5G-compatible endpoint devices (excluding smartphones) remains one of the greatest impediments to private 5G network adoption among enterprises. Ultimately, the device ecosystem for 5G needs to become broader and more dynamic to more closely resemble the device ecosystems for LTE and Wi-Fi and to provide greater selection and lower costs to adopters.

The slow development of the PCN market is partially due to vendor offerings that are not tailored to the enterprise and require trained resources to manage what are effectively scaled-down versions of communication service provider (CSP) RAN infrastructure. However, firms such as Celona are increasingly coming to market with lightweight, Wi-Fi-like PCN solutions that are built for enterprises and do not require specialized labor resources to roll out and manage. Incumbent telecom vendors are also scaling down their offerings to compete with Celona. These innovations will help alleviate this slow development over the course of the forecast.

U.S. will overtake China as the highest-spending country on 5G PCNs, partially due to maturation of the CBRS ecosystem

China has led the market in 5G PCN spend since the market’s inception, but TBR estimates the U.S. will outspend China in 2026. TBR expects the maturing CBRS ecosystem in the U.S. to contribute to growth. Vendors are increasingly coming to market with CBRS-based solutions to meet demand. In September Ericsson debuted Ericsson Private 5G Compact, its scaled-down CBRS-based solution, which followed Nokia’s October 2023 launch of a scaled-down version of its Digital Automation Cloud (DAC) PCN solution called DAC Private Wireless Compact. These solutions are aimed at small and midsize industrial sites, carpeted office environments, and campuses — areas where the traditional private 5G solutions from these vendors would be unnecessarily large and expensive. Ericsson and Nokia are the suppliers for some of the best reference cases for CBRS-based 5G PCN deployments, including Tesla (Ericsson) and Deere & Co. (Nokia) factories. In carpeted enterprises, Celona has made significant inroads, thanks to its lightweight PCN solutions that aim to make PCNs as easy and cost-effective to deploy as Wi-Fi.

5G CBRS momentum should spur growth for minor players in the market. For example, Samsung’s alliance with Amdocs focuses on PCN opportunities that use CBRS spectrum, with Amdocs providing systems integration (SI) in joint engagements. Although DISH has gained minimal traction in PCN thus far, the vendor will benefit from its vast CBRS PAL (priority access license) spectrum licenses, which cover 98% of the U.S. population; DISH won the most CBRS licenses in the 2020 auction.

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TBR estimates the private 5G network market will grow at a slower rate than the industry originally expected, reaching $3.5B in 2028, due to persistent ecosystem maturity challenges

Private 5G Network Infrastructure Spend for 2023 through 2028 Estimate (Source: TBR)

TBR Assessment: TBR expects the private 5G market to grow at a more gradual rate and take longer to reach maturity than the industry originally expected as compatible endpoint devices and key 3GPP (3rd Generation Partnership Project) standards are slowly commercialized.

Most non-CSP entities are being selective about where and how to use 5G. The more mission-critical the environment, the more likely 5G will be utilized. In instances where reliability, speed and/or security are the top concerns, companies are prioritizing 5G.

Though enterprise and government interest in 5G remains robust, the timing of deployments is contingent on ROI and the availability of compatible endpoint devices. The fact that Wi-Fi remains a legitimate alternative to cellular technologies for private networks, mitigating some of the need for 5G, is also a headwind.

Private 5G spend will lag private LTE spend through the forecast as the market is hampered by a slowly maturing device ecosystem and lack of certainty around ROI

Global Private Cellular Networks 5G & LTE Spend for 2023 through 2028 Estimate (Source: TBR)

TBR Assessment: TBR expects growth in the private LTE market will slow and then decline during the remainder of the forecast period, but the slowdown will be more than offset by robust growth in private 5G investment as enterprises and governments adopt the next-generation technology for a broad range of use cases.

Private LTE has been in use for over a decade, and there is a robust vendor, device and application ecosystem that underpins this market, which reduces costs. LTE is sufficient in handling many popular and proven use cases for PCN, reducing the need for 5G. Enterprise CIOs who adopt LTE are reassured about achieving ROI, while 5G ROI is unproven.


Another reason LTE remains the dominant technology is that some vendors offer software upgradability of private LTE solutions to 5G. This approach optimizes TCO and entices enterprises to commit to their platforms before they adopt 5G. Due to these dynamics, TBR expects 5G spend to lag LTE spend through the forecast period.

Telecom AI Market Landscape

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Post updated: Feb. 13, 2026

 

AI will change the telecom industry, but the timing of this transformation will take longer than anticipated; AI ecosystem is exhibiting bubble behavior, and a reset is likely

A new network architecture is required for AI, as current networks will not suffice

One key aspect of AI workloads, especially those emanating from end-user devices, is that they are uplink-intensive, meaning they rely more heavily on uplink resources from the network than on downlink resources. This is a fundamental issue because macro, cellular-based networks are optimized for downlink capacity (typically a 10:1 downlink-uplink ratio from a resource-allocation perspective). To optimize networks for uplink, CSPs will need to make significant investments in new network technologies and rethink how spectrum resources are utilized.
 
AI traffic also tends to require lower latency than current networks and can support higher bursts of traffic than video and other media consumption. AI networks require uplink bandwidth, lower latency (compared to current networks) and the ability to handle higher bursts in traffic patterns at scale, and none of these requirements can be achieved just by increasing capacity. These requirements are the opposite of how networks are architected today — optimized for downlink, best-effort or good-enough latency, and optimized for more predictable traffic patterns — necessitating significant investment by CSPs. This will be a gradual transition, as there is no silver bullet to address this problem quickly. The best approach appears to be decoupling the downlink from the uplink to address transmit power asymmetries, enabling network resources to dynamically adapt to traffic demands in real time. Additionally, there is concern as to how willing CSPs will be to invest in uplink when ROI is uncertain.
 

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Hyperscalers’ network needs for AI drives opportunities for CSPs

Hyperscalers’ rapidly expanding AI workloads are reshaping their network requirements, creating opportunities for CSPs. Training and running large-scale AI models demand massive, low-latency, high-capacity connectivity between data centers, cloud regions and edge locations — capabilities that align closely with CSPs’ core strengths in fiber, long-haul transport, metro networks and subsea infrastructure. As hyperscalers prioritize speed of deployment and geographic reach, CSPs can monetize dark fiber, wavelength services, private optical networks and data center interconnection, positioning their networks as enablers of AI scale rather than commoditized connectivity.
 
AI workloads behave differently compared to traditional network traffic, necessitating changes in networks and their architecture. Some CSPs have become proxies for hyperscalers, such as Lumen and Zayo, which are tackling some of the network needs for hyperscalers by selling dedicated, wholesale capacity (usually transport solutions for data center interconnect [DCI] and metro backhaul). The inferencing opportunity will emerge, likely over the next few years, but clearer ROI will need to be demonstrated to justify the investment necessary to scale.

CSPs have an opportunity to capture meaningful value from AI, but realizing this opportunity requires expeditious action and investment

Realizing the $170 billion total annualized opportunity TBR estimates AI presents telecom operators by 2030 requires CSPs to act differently

  • Address change management (e.g., workforce training and development; AI impact and implications on day-to-day operations, business processes and customer outcomes)
  • Build corporatewide governance framework for how to handle AI internally and between partners and customers
  • Build a corporatewide data strategy with long-term road map toward a single, unified platform
  • Empower BUs to implement AI in situations where there is a clear ROI
  • Make additional budget available whenever clear, ROI-positive opportunities emerge

 

Total Annual Potential Value of AI to CSPs by 2030 (Source: TBR)


 

Hyperscalers are becoming the de facto AI backbone for telecom, reshaping CSP AI strategies and investment priorities

Most hyperscalers are vertically integrated across the AI stack, spanning multiple domains including custom semiconductors (e.g., AWS Trainium and Inferentia; Google Tensor Processing Unit [TPU]), ICT infrastructure (hyperscale data centers and backbone networks), cloud platforms for AI workload hosting, AI-enabled devices (e.g., smartphones and endpoints), foundational AI models (e.g., large language models), and AI software platforms and applications (e.g., Microsoft Copilot, contact center solutions).
 
Hyperscalers either own, control or hold significant strategic stakes in leading foundational model developers (e.g., OpenAI, Anthropic) while also developing proprietary AI models in-house. In parallel, they design custom silicon optimized for AI training and inference, operate the underlying infrastructure required to run AI workloads at scale, and package AI capabilities into products that can be embedded into enterprise and industry-specific solutions. As a result, hyperscalers are likely to remain the de facto providers of foundational AI models, platforms and tooling that CSPs will leverage for telecom-specific use cases such as network operations, customer care and customer journey orchestration.
 
The current AI investment cycle, catalyzed by the launch of OpenAI’s ChatGPT in 4Q22, prompted hyperscalers to reassess capital allocation priorities. This has driven a renewed emphasis on centralized hyperscale data centers, which are best suited to the extreme compute density, power availability and cooling requirements of large-scale AI model training. At the same time, investment momentum in edge cloud infrastructure has slowed temporarily, as near-term AI economics favor centralized training and inference.
 
Nearly all CSPs are expected to rely on hyperscalers in some capacity to enable AI across both network and business operations, whether through public cloud services, AI platforms, foundation models or ecosystem partnerships.
 
Amazon, Alphabet and Microsoft are pursuing dual strategies: enabling CSPs’ internal digital transformation and AI adoption while also partnering with CSPs to distribute AI-enabled solutions to enterprise and SMB customers.
 
China’s hyperscalers — notably Alibaba, Baidu and Tencent — are advancing AI strategies broadly similar to those of U.S.-based hyperscalers, including investments in models, platforms and infrastructure. However, large China-based CSPs are simultaneously investing heavily in proprietary AI capabilities, reducing their reliance on hyperscalers relative to peers in other regions. This contrasts with most global markets, where U.S.-based hyperscalers function as the primary providers of AI technologies, both directly and through partner ecosystems.

The Future of Managed Services: Partner-led Growth and the Ongoing Market Disruption

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Watch now: The Future of Managed Services

 

The future of managed services: Partner-led growth and the ongoing market disruption

Once dominated by global systems integrators (GSIs) and traditional outsourcers, the managed services market has seen rising competition over the past few years as cloud providers, infrastructure OEMs, VARs and specialized pure play managed services providers (MSPs) vie to deepen their engagements with customers and grow their recurring revenue bases.

 

In this TBR Insights Live session, TBR’s Principal Analyst Patrick Heffernan and Senior Analyst Ben Carbonneau deep dive into how a widening variety of industry groups are leveraging their unique strengths, expanding partnerships, and providing new offerings and pricing models to differentiate their value propositions and cement their share in the ever-growing managed services market. From traditional IT outsourcing to cybersecurity offerings and managed AI solutions, TBR market analysts discuss how these enterprise and SMB services continue to evolve.

 

In the session below on the future of managed services you’ll learn:

  • How commercial models in the managed services market are evolving
  • The emergence of multivendor collaboration: How GSIs, hyperscalers and pure play MSPs forge partnerships for scale and specialization
  • TBR’s forward-looking expectations for the managed services market in terms of leaders, laggards and emerging disruptors

 

Watch now

 

 

Excerpt from The Future of Managed Services: Partner-led Growth and the Ongoing Market Disruption

From capex to opex and outsourcing to outcomes

  • The “as a Service” model proves lucrative
  • The pandemic created accelerated public cloud migration.
  • Managed services engagements present upsell and cross-sell opportunities.
  • Consumption-based, outcome-based and KPI-based pricing models are growing in popularity.

Excerpt from TBR Insights Live “The Future of Managed Services: Partner-led Growth and the Ongoing Market Disruption”

 

 

Visit this link to download the presentation’s slide deck.

TBR Insights Live sessions are held typically on Thursdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous sessions can be viewed anytime on TBR’s Webinar Portal.

 

 

DOGE drives civil sector slowdown; defense contractors gear up as Trump’s budget shifts billions to military priorities

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DOGE generated significant initial turmoil in federal IT that could linger through the end of FFY25, but in the longer term, the key technology focus areas of Trump 2.0 will generate new growth streams

Following the January 2025 inauguration, President Trump’s administration immediately generated upheaval across the federal IT segment with the creation of the Department of Government Efficiency (DOGE). Within weeks, thousands of technology and professional services contracts described by DOGE as “non-mission critical” were canceled or scaled down. Federal IT and services vendors also struggled with an initial lack of clarity and transparency as to how DOGE’s advisory board would evaluate the merit of federal contracts, making effective strategic planning nearly impossible.

As 1Q25 progressed, the IT priorities of Trump 2.0 began to take shape, and the administration slowly increased its collaboration with technology industry vendors to develop and implement digitally based solutions to drive greater efficiencies in government operations. The administration’s IT strategy is heavily biased toward accelerating the digital modernization of federal IT infrastructures, maximizing border security with advanced digital technologies, and implementing software-defined capabilities across defense and national security operations while pivoting from a hardware-centric to a software-centric approach in technology procurement.

The Trump administration also has plans to leverage digital technologies to fortify the nation’s electrical grid, modernize air traffic management, ensure dominance in the maritime and space domains, and enhance healthcare services for veterans. The Department of Defense (DOD) is prioritizing the development of the “Golden Dome” missile defense shield, and federal IT contractors with large-scale DOD-based operations like Booz Allen Hamilton (BAH), CACI, General Dynamics Technologies (GDT) and Leidos are already collaborating with Pentagon planners to develop initial pilot programs.

The specifics behind Trump 2.0’s investment imperatives regarding defense and national security, IT modernization and other areas are still in development, though early indications from the administration’s 2026 budget request suggest federal IT vendors can expect significant new outlays by Trump 2.0 in digital transformation and in technologies that support DOD and Intelligence Community (IC) missions. The federal IT community will have to navigate additional disruptions from DOGE and the typical budgetary turmoil in Congress as new budgets are debated and discussed, but the longer-term outlook for the sector is positive in TBR’s view.

DOGE’s impact varies across the vendors covered in TBR’s Federal IT Services Benchmark. The contractors with the most extensive footprints in the defense and intelligence sectors experienced minimal DOGE-based disruption to their P&Ls or order books in early 2025. The opposite was true for vendors with a significant share of their operations in the civilian sector, though, and was especially apparent among the consulting-led vendors (i.e., Accenture Federal Services, BAH, Deloitte Federal, IBM Consulting and, to a lesser degree, CGI Federal).

The impact of DOGE on the federal M&A market, which saw a minor resurgence in activity in 2024, remains unclear, though Leidos did end its two-plus-year M&A hiatus with the purchase of a cybersecurity specialist early in 2Q25.

BAH and ICF brace for contraction in FY26 as defense-aligned peers prepare for growth under Trump’s pro-defense agenda

BAH and ICF International were hit particularly hard by DOGE in 1Q25, and each company’s respective outlook for the remainder of FFY25 and the beginning of FFY26 is a clear reflection of how DOGE has upended the civil market. BAH’s Civil unit posted flat sales in 1Q25 following 13 consecutive quarters of double-digit growth from 3Q21 through 3Q24, and the company expects low-double-digit contraction in civilian-sourced revenue in its FY26 (ending March 31, 2026), which in turn will significantly moderate the firm’s FY26 overall sales growth.

BAH is projecting that its FY26 revenue will be flat to up only 4% following three straight years of double-digit top-line expansion, with the steep deceleration driven exclusively by the company’s expectations for contracting civilian growth. ICF’s full-year revenue growth guidance currently ranges between -10% and 0%, which translates to between $1.82 billion and $2.02 billion in revenue during 2025.

The Trump administration’s recent “skinny” budget proposal for FFY26 suggests that nondefense spending will fall from around $720 billion in FFY25 to approximately $557 billion in FFY26, representing a 23% decline. Contractors with any level of exposure to the civilian sector can expect agency reorganizations, layoffs, budget reductions and in-depth contract reviews within civil agencies for the remainder of FFY25 and likely into at least the first half of FFY26. The pace of new awards has already slowed significantly at some civilian agencies, as has the rate of new bookings on existing civilian engagements.

BAH, CACI and Leidos anticipate continued strong growth in their DOD and IC units in FY26. This is consistent with what TBR has observed at other defense- and intelligence-focused federal IT peers, which appear to be well aligned with the Trump administration’s emerging defense and national security priorities. Defense discretionary spending will not be reduced, according to the Trump administration’s skinny budget proposal, and could even surpass $1 trillion when factoring in the House and Senate Armed Services Committees’ proposed defense reconciliation bill.

The federal IT community should expect some progress toward federal procurement reform during Trump’s second term, including a marketwide shift to more fixed-price and outcome-based structuring of IT engagements. Some federal professional services and IT vendors claim they have been advising federal clients to embrace more fixed-price contract approaches for years. Others are already working with federal procurement organizations, such as BAH, which is helping the General Services Administration develop innovative ways to transform federal procurement using digital technologies.


TBR has already observed several federal IT contractors adjust their go-to-market messaging to emphasize how they deliver innovation at speed within outcome-based contracting arrangements, as well as to deemphasize anything that could be considered consultative in their portfolios. Vendors will also be tapped by federal agencies to navigate the elimination of regulations and ways to enhance public-private collaborations between government agencies and industry.
Having a well-managed, robust ecosystem of partners will be key for federal IT vendors to navigate the near-term DOGE-based disruption and to position strongly for new opportunities to digitally enhance operating efficiencies in the later years of Trump 2.0.

 

TBR’s Federal IT Services Benchmark focuses almost exclusively on the U.S. federal IT market. The benchmark provides growth data and analysis specific to the federal defense and federal civilian sectors. Some of the vendors we track have operations in public sector markets outside the U.S. federal government sector. We detail some additional developments and/or market trends in other public sector markets in the report’s appendix, but our principal research and analytic focus remains the U.S. federal IT sector. To gain access to our latest federal IT data and analysis, start your TBR Insight Center™ free trial today.

TBR Launches Enterprise Systems Integrators Market Landscape

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Technology Business Research, Inc. (TBR) is pleased to announce the launch of the Enterprise Systems Integrators Market Landscape, which examines business models, trends and challenges for IT services companies with fewer than 100,000 employees and less than $5 billion in annual revenues. This new research is an extension of TBR’s current research around the business models, strategies and performances of companies in IT services, consulting and professional services, including IT outsourcing, business process outsourcing, management consulting, systems integration, managed services and applications outsourcing.

The initial publication is a close-up look at the ESI market midway through 2025 and includes performance analysis of Ensono, TIVIT, Globant, Hexaware Technologies, Persistent Systems, Protiviti, Stefanini Group, EPAM, Indra Group and LTIMindtree.

“What smaller IT systems integrators lack in scale they make up for with closeness to clients, flexible financial models, and innovation opportunities for cloud and software alliance partners. TBR’s newly launched Enterprise Systems Integrators Market Landscape uses a representative sample of these ‘Tier 2’ consultancies and SIs to answer TBR’s clients’ questions around value proposition, strategy, differentiation and partnering,” said TBR Principal Analyst & Practice Manager Patrick Heffernan. “With additional context, data and analysis from other TBR reports, such as the Voice of the Partner Ecosystem Report, readers of this new market landscape get an informative snapshot of a highly volatile market and can begin extrapolating trends, strategies and lessons learned across the broader IT services and technology ecosystem.”

Enterprise systems integrators (ESIs) traditionally need to focus on a country or region, a select few industries or a technology niche, at least in their early stages. To capture some of the changing dynamics in the ESI space, TBR’s research focuses on companies as small as 3,000 employees and as large as 80,000, as well as pure IT services companies and those with more diversified portfolios, with TBR estimates and company-reported figures included in the data.

The first publication of this annual report is now available. 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 here.

Highlights from the Summer 2025 Enterprise Systems Integrators Market Landscape

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 digital transformation (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 generative AI (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.

Enterprise Systems Integrators Market Landscape

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 DT services vendor

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.

“One is, you, that you want a competitive bid. So, nobody should ever feel entitled that this is there, even though it may be a similar project. ‘Hey, I did a cloud migration project last year. I want to do another one of those projects this year.’ You got to win it. You got to bid on it. Yes, the partner that did the work last year probably has knowledge about my environment, etc., etc. That’s of some value, but you still got to win it. You can’t be 20%, 30% more expensive than the other. It’s just not working. But that’s one aspect. The other part, as you said, is if it’s brand new, etc. And then the third is the obvious one, which is you got to be performing. If you’re not performing, you’re going to be out.” — CIO Insurance

Enterprise Systems Integrators Market Landscape

Fujitsu Eyes Americas Growth with Alliances and Innovation

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On June 5 and 6, 2025, Fujitsu hosted around 25 analysts and advisers for an Executive Analyst Day event in Santa Clara, Calif. Fujitsu leaders from across the globe spoke on various parts of the company’s business and Fujitsu subject matter experts demonstrated solutions currently in research development or recently piloted with a few Fujitsu clients. The following includes insights from the event and analysis based on TBR’s ongoing research around Fujitsu and the broader IT services sector.

Fujitsu is putting the pieces together

The Fujitsu story keeps getting better. A year ago, TBR was struck by Fujitsu’s grounded and comprehensive approach to artificial intelligence. Later in 2024, Fujitsu’s Uvance initiative led TBR to conclude that the company had “the right vision, strategy and approach. We will continue to monitor the company’s ability to execute.” And this June Fujitsu extended a few more pieces, continuing to demonstrate capabilities, vision and a grounded approach that should garner steadily improving results, especially in the Americas. Those pieces? An enhanced alliances strategy and organization, ambitious and well-supported acquisition and investment capabilities, and an improving story around Uvance. Key components continue to evolve, such as Fujitsu’s AI offerings and global delivery operations, both of which support success in the Americas and contribute to a strengthening brand. In TBR’s view, Fujitsu has positioned itself, perhaps quietly compared to larger peers in the Americas, as a potentially disruptive force in those arenas where it chooses to compete.

Fujitsu positions its Americas practice and startup strategy as growth pillars

Speaking specifically about the Americas practice, Fujitsu leaders noted a strong performance in 2024 (a 7% profit, the highest among Fujitsu’s international regions), intentions to partner and acquire more aggressively, and a sustained focus on seven countries and specific U.S. states. Asked how Fujitsu Americas keeps up with quickly changing market conditions, Fujitsu leaders mentioned quantum capabilities, innovation, and partnering with ServiceNow while keeping the company focused entirely on services.

Breaking down various revenue streams, Fujitsu leaders said roughly 40% of revenue comes from Application Development Management and Application Solutions; 30% from partnering with SAP, ServiceNow and Oracle; 20% from workplace solutions and cloud migrations; and 10% from data and AI. In TBR’s view, Fujitsu Americas has built the solid foundation needed to outpace the overall company in terms of growth, provided the Wayfinders initiative gains traction and Fujitsu Americas stays focused on core industries in which Fujitsu has permission to play. Acquisitions and increased investments in alliance partnerships should be fuel added to a well-built fire.

Fujitsu executives highlighted the company’s startup strategy and some recent success stories, including a Japan-based AI biopharma company and an Italy-based AI governance company. Overall, Fujitsu’s startup strategy follows one of two paths: Either Fujitsu takes its own IP and licenses it to a startup (or invests in a startup rather than collecting a licensing fee), allowing the startup to test the market, likely reaching clients not typically within Fujitsu’s target market; or Fujitsu partners with a startup, providing funding, tools, platforms and entrée to Fujitsu’s client base. The second approach, according to Fujitsu, is utilized when the company comes across a technology and thinks, “Fujitsu would not have thought of this.”

In TBR’s view, both approaches reflect Fujitsu’s starting point with startups: R&D. In contrast to peers, which attempt to read market trends, capture emerging customer sentiment or conduct intensive gap analysis, Fujitsu relies on its deep R&D experience and extensive research and technology network to uncover startups well-suited and complementary to Fujitsu’s offerings or doing something unique and worthy of Fujitsu’s investment. Or, one suspects, both.

Advise, design, implement, support

First, the hard truth: In TBR’s view, Fujitsu needs a cleaner, more compelling Uvance story, at least in the Americas. Fujitsu executives said the Uvance percentage of the company’s Service Solution business increased from 10% to 30% from 2022 to 2025, so Uvance is resonating in the market and is increasingly a critical part of Fujitsu’s overall business. Challenging more accelerated growth in the Americas, in TBR’s view, is the mixed messaging about what Uvance is and what it brings Fujitsu’s clients. At various times over two days, Uvance was described as:

  • “solving cross-industry issues, filling in the white spaces”;
  • a “product and an accelerator” taking “proof of concepts to commercialization”;
  • as a means to “address social challenges” not just “solving business problems”; and
  • and “the center of our business.”

Yes, Uvance can be all those things, but the message then gets muddled.

Second, the rest of the truth: In TBR’s view, Fujitsu’s strategy around Uvance, Wayfinders and consulting writ large positions the company well, given Fujitsu’s strengths, accelerating change in the overall consulting business model, and market opportunities. Fujitsu positions Uvance Wayfinders as engaging clients “before implementation,” reflecting the company’s technology-centric value proposition. Fujitsu is not proposing business strategies or solving business problems but is instead applying its core technology strengths to a defined client technology environment and bringing efficiencies and improvements. As one Fujitsu executive said, “Like Accenture, not McKinsey.”

In TBR’s research, clients appreciate IT services companies and consultancies that stay within their own lane, doing what they do well and not persistently looking to upsell or increase their footprint. As management consultancies face the existential disruption of AI on their business models, Fujitsu’s Uvance neatly complements the company’s extensive AI-enabled offerings and capabilities. Fujitsu can advise — and, more importantly, implement — based on experience and talent at scale, harnessing AI disruption rather than being upended by it. Lastly, Fujitsu’s focus on three specific industries in the Americas  — public sector, manufacturing and retail — helps tremendously. No company has deep expertise in every industry, so delivering a message that Fujitsu excels in three specific areas builds credibility in a market where Fujitsu does not have a large-scale footprint or presence. In TBR’s view, this strategic decision to stay focused will be critical to Fujitsu’s continued growth in the Americas.

Deepening ServiceNow partnership

In a session dedicated to Fujitsu’s global alliances, the company brought in an executive from ServiceNow, complementing the Fujitsu presentation with specific examples of the two companies’ strategies and partnership. Fujitsu’s global alliances lead, Fleur Copping, noted that technology alliance partners provide entrée to new customers or position Fujitsu differently in the market, essentially amplifying the Fujitsu brand. Notably, every IT services company partners with nearly every technology partner, and differences in technology capabilities barely register, compelling Fujitsu — like other IT services companies — to differentiate in how they partner.

Copping said Fujitsu had professionalized its alliances organization and go-to-market efforts in recognition of the criticality of alliances in the emerging IT services ecosystem. Fujitsu has designated strategic partners —Amazon Web Services (AWS), SAP, ServiceNow, Microsoft and Salesforce — with an intent to develop and deploy scale around all five without becoming siloed around a specific partner. Copping adding that co-selling with these partners means being “coherent in front of the clients.” In TBR’s view, keeping the alliance focus on clients and their outcomes, rather than the commercial models or specific go-to-market motions, is an ideal strategy but is difficult to execute, in part because it is a break from previous practice.

The last two years have seen a “massive uptick in how Fujitsu shows up in the ecosystem,” according to the ServiceNow executive. A few highlights:

  • Fujitsu acquired a ServiceNow boutique consultancy in the APAC region.
  • ServiceNow’s “mature rigor” in its process of evaluating partners and offering expanded incentives to drive partner behavior spotlight Fujitsu’s higher ranking across the pre-sales to post-sales spectrum.
  • Fujitsu has been an early participant in ServiceNow’s Enterprise Training Agreement program.

Fujitsu and ServiceNow have invested in training their sellers on each other’s portfolios.

Highlighting the third bullet, the ServiceNow executive said, “What does good look like in building talent [around ServiceNow’s portfolio]? Fujitsu is the partner I point to.” In TBR’s view, having a clearly defined and easily understood differentiating quality — that is clearly tied to the partnership and not an attribute applicable to the company as a whole — is critical to helping technology alliance partners and clients understand what added value an IT services company brings. TBR also noted that ServiceNow uses net-new annual contract value as an incentive for sales staff; in contrast, Fujitsu’s revenues depend on client retention and managed services contracts. Innovation, according to both companies, serves as bridge between the divergent sales incentive structures. TBR notes that innovation remains difficult to measure, but we see the evident alignment of ServiceNow’s and Fujitsu’s strategy and leadership approaches as perhaps more consequential for the long-term alliance. In sum, Fujitsu and ServiceNow presented a compelling partnership story — one that bears close scrutiny as the broader technology ecosystem evolves.



“In terms of the services, kind of scoping and bundling, that was typically a black-box process. So, we bring each other in at the right times, but they [services partners] never included us in terms of the actual kind of creation of the services offerings and the margins and the profitability, etc. So, we were only kind of aware of that, on a very macro level. It was just the solutioning part of it, saying, ‘OK, we know that this is the top-line business initiative that we’re solving for. And then we need to create the underlying products and services around that to create the recording of the product.’ So that’s the way that we typically work with them.” — Senior Manager of Global Channels and Alliances, Cloud

What peers can learn from Fujitsu

Competitors and technology alliance partners should keep an eye on Fujitsu’s acquisitions, investments in startups and new partnerships. Fujitsu’s investment portfolio has a mandate to invest for accelerated growth, has leadership support at the highest level, and has experience that has been built over the last few years. In TBR’s view, all three of those elements — a mission, leadership, and the muscle memory around acquiring, investing and partnering — are essential. Further, when a Fujitsu executive said the company’s CEO starts every acquisition discussion with questions around the technology and the customers, TBR saw a perfect reflection of the company’s overall culture and value proposition: take technology and solve customers’ (and societal) problems. Fujitsu executives did note concern that the market has been changing so rapidly that acquisitions made today may become less valuable by the time they are absorbed into the company. Overall, TBR believes Fujitsu will invest more in partnering (traditional alliances and corporate venture capital) more because of the current market dynamics and not because of a lack of appetite for acquisitions. Circling back to the competitive and alliances implications: be wary of — or partner with — a company that knows how to execute on M&A.

Final thoughts

So, what comes next? In TBR’s view, Fujitsu has the opportunity to expand its market presence and success in the Americas, particularly if the company can leverage three advantages and strengths it enjoys right now. First, technology alliance partners, such as ServiceNow, Salesforce and AWS, are aggressively partnering with IT services companies and consultancies that can show flexible commercial arrangements, bring new clients and coinnovate. Second, Fujitsu has the resources and resolve to aggressively acquire, partner or invest. TBR has not seen an IT services company or consultancy grow without attitude and resources. Third, across all the company’s recent analyst events and briefings, Fujitsu’s core culture has remained focused on bringing technology solutions to clients.


Focus and staying within a company’s strengths, in TBR’s view, separate well-run, high-performing consultancies and IT services vendors from peers. TBR does not anticipate that Fujitsu will wander from its path but does expect that analyst events in 2026 will bring additional Fujitsu strengths to the forefront.

Immigration Policy Changes Portend a Growth Shock for the U.S. Wireless Industry

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U.S. wireless operators added more than 51 million new wireless phone connections from 2018 to 2024. Where did they come from?

According to company-reported data, industry data, U.S. government data and TBR estimates, U.S. wireless operators collectively added more than 51 million wireless phone connections (prepaid and postpaid) from the beginning of 2018 through the end of 2024, a relatively large number considering the organic population growth rate in the U.S. has slowed significantly over the past two decades as Americans have fewer children and since most people in the country already have at least one wireless phone.


A portion of this increase in phone connections can be explained by situations where one person has multiple lines, such as through work (e.g., business line or first responder line) or by long-tail situations, such as younger and older people subscribing to wireless phone plans for the first time, as well as the net change from births and deaths in the overall population.

However, based on TBR’s research, this only accounts for approximately 56% of total wireless phone net additions during this time frame. Where did the rest of these phone connections come from?

Approximately 44% of wireless phone connection net additions in the U.S. from 2018 to 2024 were from immigrants (legal and illegal)

According to TBR’s research, these 51 million new phone connections fall into four main categories, as outlined in Figure 1.



As shown in figures 1 and 2, immigration (both legal and illegal*) was the largest driver of wireless phone net additions for U.S. operators from 2018 to 2024, accounting for an estimated 22.3 million net additions, or nearly 44% of total wireless phone net additions during this seven-year time frame.

This number makes sense considering that, according to official government statistics such as from the Department of Homeland Security (DHS) and Customs and Border Protection (CBP), more than 30 million immigrants (legal and illegal) entered and stayed in the U.S. between 2018 and 2024. Of this number, it is reasonable to assume around three-quarters of these immigrants obtained cellphone service (prepaid or postpaid).

One of the first things immigrants do when they enter the country (legally or illegally) with the intention of staying is to purchase wireless phones and wireless phone service. Most people who enter the country are of an age that they would use phones.

This significant influx of new population into the U.S. drove a secular growth trend for wireless phone connection additions for the wireless industry from 2018 to 2024, and immigration represented the largest driver of wireless phone connection additions for U.S. wireless operators.

However, now that immigration policy is fundamentally changing under the Trump administration, this tailwind has become a headwind for operators and will require a structural reassessment of growth prospects for the industry.

TBR expects this growth shock will begin to present itself in operators’ 2Q25 results, with the effects more clearly seen in 2H25 results.

*Legal immigration primarily includes green card holders, visa holders (e.g., H-1B for temporary works; F1 and J1 for international students) and refugees/asylum seekers. Illegal immigration primarily reflects CBP encounters (all borders), “gotaways” and visa overstays.

 

Why will there be a growth shock for wireless phone net adds in the U.S. in 2025?

Given this growth slowdown, U.S. wireless operators face a conundrum. How will they continue showing robust net phone additions every quarter? There is no easy solution, but in the last section of this report TBR outlines some tactics operators are employing, or might employ in the future, to mitigate the negative immigration-related effects on their earnings results.

Since the start of President Trump’s second term, there has been a reduction of more than 80% in the flow of illegal immigrants into the country, and legal immigration into the U.S. has also declined significantly. Additionally, there are other population headwinds at play:

  • Deportations of immigrants currently residing in the U.S. are ramping up (U.S. government agencies are on pace for over 500,000 deportations in calendar year 2025, up from over 271,000 in 2024)
  • Emigration has increased as more people are choosing to leave the country voluntarily.
  • Slowing birth rate
  • Increase in death rate as the baby boomer generation ages

If we use a conservative estimate and assume a 50% reduction in the number of total new immigrants entering the U.S. from 2025 onward (and if other variables stay constant), this implies a reduction of more than 20% in the total level of new wireless phone connections, a significant challenge for wireless operators since phone connections are operators’ most lucrative offering. Even a 20% reduction in total wireless phone net additions would have a significant impact on operators’ revenue, margins and cash flow.

It is incorrect to assume immigrants only use prepaid plans

Despite claims by the U.S. wireless industry that immigrants predominately use prepaid phone service, the reality is that total prepaid phone connections declined by nearly 5 million in aggregate from 2018 to 2024 while postpaid phone net additions exceeded 56 million in the same period. Given that more than 30 million immigrants are estimated to have entered and stayed in the U.S. during that seven-year period (according to official U.S. government statistics from agencies such as CBP and DHS), it is unreasonable to assume that such a large influx of the population was absorbed by the prepaid market. Rather, it must have been mostly absorbed by the postpaid market.


What U.S. telcos are not saying but Canadian telcos are

U.S. wireless operators have been asked by Wall Street analysts on quarterly earnings calls and at investment conferences about the potential effects of immigration policy changes on their phone connection metrics. Thus far, operators have unanimously downplayed any impact. However, given immigration levels have plummeted since January 2025 (illegal border crossings are down 80% to 90% year-to-year) and voluntary and involuntary deportations are ramping up, there must be at least some impact.

Given immigration has represented approximately 44% of total phone net additions from 2018 to 2024, assuming legal and illegal immigration levels are down a conservative 50% compared to the past seven years, this would imply a reduction of more than 20% in the level of phone net additions moving forward, essentially taking the seven-year annual average of 7.3 million industrywide wireless phone net additions down to an annual average of 5.8 million moving forward. This reduction in new phone additions (which is operators’ most lucrative connection type from an average revenue per user [ARPU] and margin perspective) implies a growth shock, which would force operators to lower revenue and earnings projections. It is possible that operators expect most or all of any reduction in the immigration aspect of their phone connection dynamics could be mitigated by growth in other phone connection types, but history suggests that is unlikely.

The minimal wireless phone connection net addition impact observed in U.S. wireless operators’ financial results in 4Q24 and 1Q25 is likely due to the following reasons:

  • Lag time between when someone enters the country and obtains a phone and phone plan and when that result is reflected in U.S. wireless operators’ earnings reports
  • The timing of the new administration taking over and implementing and enforcing policy changes
  • The delay between when someone is deported or emigrates and their phone line is shut off
  • The lag in company reporting — earnings are publicly released one to two months after the quarter ends; there was a surge in immigrants entering the country leading up to the change in administrations and immigration reform began to be implemented and enforced in late January 2025

However, this will change, starting as soon as in 2Q25 and more so in 2H25 as the decline in net immigration begins to flow through U.S. wireless operators’ quarterly figures.

By contrast, the Big Three telcos in Canada have been very forthcoming in talking about and shaping expectations with stakeholders about the effects of immigration policy changes in the country. In 2024 the Canadian government reduced target levels for permanent residents by 20% from 2025 to 2026, set caps on international students, and tightened eligibility requirements for foreign workers. These policy changes are not at the same level as those in the U.S. Why are operators in Canada publicly stating that the country’s lower immigration targets are slowing their subscriber net additions, yet U.S. telcos claim there will be no meaningful impact? Something does not add up.

“We anticipate the environment for our businesses to remain competitive in the coming year with continued moderating wireless subscriber growth versus 2024 as Canada’s immigration and foreign student levels decline.” — Glenn Brandt, CFO, Rogers, 4Q24 earnings transcript

“The decrease in gross and net additions this quarter was a result of a less active market, slowing population growth as a result of changes to government immigration policies, and our focus on attracting subscribers to our premium 5G Rogers brand.” — Rogers 1Q25 earnings press release

“In the quarter, Rogers delivered a combined 34,000 net new wireless subscribers, down from 61,000 last year, reflecting the smaller market size due to reduced immigration.” — Glenn Brandt, CFO of Rogers, 1Q25 earnings transcript

Canadian telecom industry experiencing ‘strong subscriber growth’ thanks to immigration: report — Mobile Syrup, Feb. 22, 2024

Telcos blame Canada’s immigration policies for slower subscriber growth — Mobile Syrup, May 12, 2025

AT&T, T-Mobile and Verizon all gained the most subscribers from immigration and now have the most subscribers to lose

The largest U.S. telcos will be disproportionately affected by lower immigration levels. These operators have been the biggest beneficiaries of immigration flows, adding millions of net-new wireless phone subscribers to each of their businesses since 2018, but now this tailwind is turning into a headwind.



All of the major U.S. telcos have clusters of branded retail stores near major border-crossing areas with Mexico, such as in southern California and parts of Texas. Having store clusters near crossing hubs enables telcos to cater to the needs of migrants coming into the country (one of the first things immigrants do when they come into the country is buy wireless phones and phone plans) and jockey for new phone subscriber opportunities.

Tactics U.S. telcos can employ to mitigate the immigration impact

Though some telcos might start to publicly discuss the impact of immigration on their businesses, TBR expects most U.S. telcos to remain cagey about these changes and the effects of immigration on their businesses. TBR believes the telcos can leverage certain tactics to mask or mitigate the impact to their business results.

Indicators to watch

  • Free line offers: Offering free lines enables telcos to show enhanced phone connection figures even though the revenue from the free line is not generating the revenue of an actual phone subscriber. Telcos will likely still receive activation fees and collect some other taxes and fees for allowing subscribers to carry the “free” line.
  • Increase in competitive pricing offers and promotions: Special deals enable telcos to retain existing customers and take phone connection share from other operators. This could serve to offset some of the negative effects of immigration-related phone disconnections.
  • Timing of line shutdowns: Another potential tactic telcos could employ is to delay the roll-off of line shutdowns. One situation where this can occur is when illegal immigrants are deported, leaving their phone service still in effect even though no one is using it and the bill is unlikely to be paid. There is also a trend of emigration, whereby immigrants (legal or illegal) leave the country voluntarily, canceling their phone service before they leave. This is another headwind to phone connection metrics for the telecom industry.
  • Increase in allowance for doubtful accounts: This is also referred to as allowance for credit losses. The shutdowns described above typically lead to bad debt expense, which will likely rise with deportations on pace to exceed 500,000 in 2025.

Key takeaways

If you see minimal impact in operators’ headline wireless phone subscriber numbers from immigration, keep in mind that the aforementioned tactics are likely in play.

The negative effects might not show up in 2Q25 results and might not show up in a major way thereafter because wireless operators might be able to hide most of the impact via programs like offering a free phone line on multiline plans, such as what T-Mobile is doing.

Conclusion

Though the topic is rarely discussed, U.S. wireless operators have been relying on both legal and illegal immigrants to drive a significant portion of their underlying growth in phone connection net additions.

U.S. wireless operators face a major new headwind starting in 2H25 as traditionally important drivers of net wireless phone additions — operators’ most lucrative customers — slow meaningfully. With total immigration levels (legal and illegal) into the U.S. down by more than 50% so far this year compared to year-ago levels, coupled with an increase in deportations of existing residents as well as other population headwinds, telcos will struggle to demonstrate the same level of phone net addition numbers they have enjoyed for the past decade.

 

The Good, the Bad and the GenAI Opportunity in Cloud Ecosystems

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Watch now: The Good, the Bad and the GenAI Opportunity in Cloud Ecosystems


Hyperscalers and their partners need each other more than ever

In the current cloud and IT market, the success of both hyperscalers and their partners has never been so intertwined. Partners, most critically consultants, systems integrators, managed services providers and ISVs, are the most important route to market for hyperscalers to achieve growth. And for those partners, their business models depend on large-scale cloud environments that incorporate AI, generative AI (GenAI) and other emerging technologies that their customers desire.

 

In this TBR Insights Live session, Principal Analyst Allan Krans, Senior Analyst Catie Merrill and Senior Analyst Alex Demeule preview TBR’s latest partner research for hyperscalers, IT services providers and ISVs. The team also shares exclusive feedback from all parties within these ecosystems, taken from TBR’s new Voice of the Partner, Hyperscaler report, which identifies areas that are still working and still challenging for these partnerships as well as the direction these relationships will go moving forward.

 

In the below session on opportunities within the cloud ecosystem you’ll learn:

  • The most critical elements for a successful partnership
  • Partner perceptions of Amazon Web Services, Microsoft and Google Cloud
  • The ways GenAI is impacting partner activity and opportunity, including how AI ISVs partner differently with hyperscalers
  • How hyperscalers’ marketplaces serve GenAI tools (and how hyperscalers deploy capital)
  • The current challenges within ecosystems
  • Where the greatest opportunity for future success lies

 

Watch now


 

Excerpt from The Good, the Bad and the GenAI Opportunity in Cloud Ecosystems

Hyperscalers value partner capabilities over exclusivity and even pricing

Key takeaways:

  • The biggest thing hyperscalers value in their partners is proficiency and the ability to demonstrate skills.
  • Cloud providers say their priority partner groups are:

1.SIs

2.GenAI ISVs

3.MSPs

  • Over the next year, recruiting new partners will be a bigger priority than more effectively tiering existing partners.

Excerpt from TBR Insights Live session “The Good, the Bad and the GenAI Opportunity in Cloud Ecosystems”

 

Visit this link to download the presentation’s slide deck.

TBR Insights Live sessions are held typically on Thursdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous sessions can be viewed anytime on TBR’s Webinar Portal.

 

 

Geopolitics with Purpose: EY-Parthenon Drives Strategy, Not Just Awareness

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In early July, TBR met with Oliver Jones and Antony Jones, both part of EY-Parthenon. Oliver Jones runs the firm’s Geopolitical Risk Advisory practice, and Antony Jones manages the Parthenon brand. The following reflects that discussion and TBR’s ongoing analysis of EY, the rest of the Big Four, and the management consulting space.

EY-Parthenon turns geopolitical risk into strategic growth opportunities

TBR has long maintained that the Big Four firms have an inherent advantage against all competitors when it comes to understanding and advising on geopolitical risk. Perhaps only the U.S. government has the same global spread of talent, with professionals in nearly every country, most intimately aware of local business, economic and even political trends. When EY-Parthenon showed off its Geopolitical Advisory team recently, TBR wanted to know: Is this something special?
According to EY, there are several factors that make its Geopolitical Advisory practice special, or at least different than its peers’ similar practices. First, the firm backs its current assessments with eight-plus years of geopolitical research, giving the firm’s analysis additional perspective and depth. Second, according to Oliver Jones, EY-Parthenon’s Global Geostrategic Business Group leader, EY’s counsel addresses issues at a highly granular level — industry, geography, technology, location and business model — rather than maintaining just a broad view. Third, Jones said EY-Parthenon helps its clients to answer the question, “Well, what should we do about it?”

The firm does not stay stuck in “interesting conversation mode,” examining the nuances of tricky geopolitical situations and trends, but instead takes on clients’ challenges and provides advice informed by EY’s research. In Jones’ phrase, “geopolitics in practice,” he added one more nuance that perhaps separates EY from peers in this area: The geopolitical advisory team emerged from and belongs to EY-Parthenon — the firm’s transformative strategy and transactions arm — and not from the Risk practice, as is the case at most peers. This evolution, according to Jones, gives EY’s team “investment DNA” and not “risk DNA,” so the team’s value proposition is not only risk mitigation but also growth strategies.

Putting geopolitics at the heart of a growth strategy

Oliver Jones acknowledged that knowledge management at EY can be as challenging as it is everywhere else and said his team focuses on getting all the money-making engines within the firm thinking about geopolitical risk, a task made slightly easier by the constant barrage of geopolitical news, including kinetic wars and trade wars. He said EY-Parthenon’s research shows geopolitical risks and artificial intelligence have risen to the top of boards of directors’ concerns. Of the two, geopolitical risk is more immediate and visceral while also underpinning some of the AI-related concerns around data center locations and hyperscaler dominance.

He also explained that chief risk officers have not been his practice’s main focus — back to the advisory DNA — but instead his team works alongside other EY-Parthenon professionals as they engage with board chairs, board members, CEOs and chief strategy and/or chief sustainability officers. As Antony Jones, EY-Parthenon Brand, Marketing and Communications leader, noted, EY’s brand centers on strategic issues, and EY-Parthenon — and EY broadly — has access to boards, senior private equity and government clients, providing a natural entrée for  brand centers on strategic issues. The firm routinely has access to board chairs, providing a natural entrée for geopolitical advisory. As for the commercial models, Oliver Jones explained that the firm offers both monthly retainer services, a kind of managed services offering with dashboards and indicators, as well as bespoke engagements, typically focused on a specific problem set or location.

Is EY really different? Way back in 2017, we wrote about PwC’s Growth Markets Centre and how that firm provided “analysis for clients and partners, supplemented by PwC professionals with direct experience in previous engagements. The firm assists clients with regional-, country- and city-level market analysis and, when possible, information from and the views of PwC partners who have worked in the selected cities with clients in the same or similar industries.” The partner who led that effort came from the firm’s strategy organization and now resides within PwC’s International Growth Practice. Deloitte and KPMG appear to house geopolitical risk either across multiple practices (Deloitte) or within Risk (KPMG), separating, at least on paper if not in practice, those firms’ strategy consulting “arms” from their geopolitical risk “fingers.”

Organizational structure, DNA and even knowledge management can only differentiate a firm so much, and none of those issues and decisions matter to clients looking for advice. For EY and peers, the challenge remains permission: Do clients want to pay you for your insights on trade wars, shooting wars, supply chains, elections, regulations and geopolitical risks? Framing a discussion around what is happening in the world, what those developments mean in a client’s industry and geography, and then moving to what the client should do about it attacks that permission question directly. More than smart thinking, EY’s focus starts with clients’ paths to growth.


Other firms will say they are doing the same thing, just in a slightly different way, and TBR does not doubt that. What could separate a firm is the willingness and ability to tap into that global talent pool we mentioned at the start of this post. You have a global client headquartered in Frankfurt, Germany, that wants to know how French politics might dampen economic growth? Maybe ask the 33,000 professionals you have living in Paris and beyond what they think. When the CIA wants to know what is happening, the first place it turns to is the people with boots on the ground.

Manufacturing Growth Slows, But EMEA IT Services Vendors Find Lifeline in Public Sector Wins 

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TBR FourCast is a quarterly blog series examining and comparing the performance, strategies and industry standing of four IT services companies. The series also highlights standouts and laggards, according to TBR’s quarterly revenue projections and geography estimates. This quarter, we look at Accenture, Atos, Capgemini and IBM Consulting in the Europe, Middle East and Africa (EMEA) market, and compare how their industry diversification, portfolios and localization strategies position them for revenue growth. Atos and Capgemini, the two IT services companies whose EMEA revenue makes up over half of total revenue, experienced a steady decline in trailing 12-month (TTM) year-to-year revenue growth in recent quarters. Yet, Accenture and IBM were better able to maintain growth as macroeconomic conditions deteriorated in recent quarters.



IT services revenue in EMEA has experienced slow expansion rates for several quarters, with trailing 12-month (TTM) revenue growth at only 0.8% to 0.9% year-to-year in 3Q24, 4Q24 and 1Q25, according to TBR estimates provided in our IT Services Vendor Benchmark, which tracks 31 companies. In the most recent quarter, EMEA experienced the slowest growth among all geographies due to ongoing challenges in the manufacturing sector. At the same time, IT services companies were able to capture more deals in financial services and the public sector, as the European Central Bank (ECB) cut rates in 4Q24 and 1Q25 and the European Union (EU) increased defense and modernization spending. Companies’ successes in recent quarters were dependent on their ability to diversify revenue, but, as always, their portfolio investments and localization and acquisition strategies will determine growth long-term.

Aligning portfolios and resources to demand in the public sector is vital to capturing revenue growth opportunities

Accenture, Atos, Capgemini and IBM Consulting are focusing more on opportunities in the public sector in EMEA, especially as manufacturing faces persistent challenges and the Department of Government Efficiency (DOGE) is causing some revenue loss in the U.S. public sector. For example, Capgemini’s largest vertical is manufacturing, but the company is capitalizing on more deals in the public sector. According to TBR’s 1Q25 Capgemini report, the company “is combining capabilities around digital engineering, data and AI, cybersecurity and digital transformation to enable activities such as around military transformation, improving supplier networks, delivering production management and ensuring quality standards. The company is also working with defense organizations around integrating workforce management and data and AI technologies.” With the U.K.’s Department for Business and Trade, Capgemini is delivering data and product services to support the department with digital, data and technology related to trade and regulation.


Historically, Atos has been very involved in the European public sector, which we believe accounts for about 20% of the company’s revenue. However, client trust has wavered due to Atos’ most recent financial restructuring, which was completed in December, in addition to the company’s frequent CEO turnover in recent quarters. The company nevertheless secured deals with Serbia’s Office for IT and eGovernment and the U.K.’s Department for Environment, Food and Rural Affairs (DEFRA) and National Savings and Investments bank. The European public sector presents an interesting opportunity for other vendors, notably IBM, as Atos fails to entirely capture its usual market share.


IBM, along with Accenture Federal Services (AFS), has experienced DOGE-related pressures. According to TBR’s 1Q25 IBM Consulting report, “TBR expects IBM Consulting’s 2025 revenue in the U.S. federal sector, which accounts for less than 10% of the business’s revenue, to be negatively affected by DOGE initiatives as IBM stated during its earnings call that two contracts were negatively impacted by DOGE in 1Q25.” In January, IBM completed layoffs in its public sector headcount in Raleigh, N.C.; Dallas; New York; and California. IBM is turning to new markets to bolster its public sector revenue segment. For example, IBM recently secured a deal with the U.K.’s Home Office to design, build and integrate an Emergency Services Network and deliver IT infrastructure. As IBM already seems to be rebalancing its resources, TBR anticipates the company will capture more public sector deals across Europe, which will help recover some revenue recently lost due to DOGE cuts.

 

Capgemini EMEA and Atos EMEA TTM Revenues and Growth Rates (SOURCE: TBR)


Accenture also suffered DOGE-related setbacks and is taking a similar approach. Accenture’s health and public service sector revenue is up 8.2% year-to-year. TBR anticipates the sector’s performance will continue to improve with Accenture’s recent investments in sovereign cloud offerings with Amazon Web Services (AWS) and Google Cloud, complementing the EU’s efforts to strengthen defense and security. Further, Accenture is leveraging its partnership with Google Cloud to drive cloud adoption by developing sovereign cloud offerings and a Center of Excellence (CoE) in Saudi Arabia, supporting its ability to capture local clients. Accenture is not the only company to be diligent in expanding its portfolio to cater to governments in EMEA.


Although Atos’ public sector revenue has faced many challenging quarters, most recently declining 16.4% year-to-year in 1Q25, the company is leaning into its strengths. Atos is focused on the expansion of its security portfolio, especially after the sale of its Advanced Computing, Mission-Critical Systems and Cybersecurity Products division to the French government fell through. Although Atos has received a new confirmatory offer from the French government, it is only for the company’s advanced computing business. In April Eviden formed a partnership with Cosmian to release a joint sovereign encryption key management solution, which is supported by the integration of Eviden’s Hardware Security Modules and Cosmian’s crypto agile key management system, aligning with increased demand among countries in Europe for more sovereign solution. If Atos is able to regain and maintain client trust with its renewed liquidity and financial stability, the company may be able to capture more deals in security, supporting growth across its largest geography.

Strategically adding onshore skills and local centers enables clients to provide more in-depth value

IT services companies are focused on balancing onshore skills, as evidenced by Accenture’s recent launch of a CoE in Saudi Arabia. IBM leverages its proximity to clients to deliver value. In March IBM announced it will deploy the IBM Quantum System Two in San Sebastian, Spain, at the IBM-Euskadi Quantum Computational Center at the Ikerbasque Foundation for the Basque government. The joint center will serve members as well as academics, research institutions and industry experts. Additionally, Accenture launched a National Security Operation Center in Kuwait to provide local cybersecurity services for the Kuwait government’s Central Agency for Information Technology.

 

Accenture EMEA and IBM Consulting EMEA Revenues and Growth Rates (SOURCE: TBR)


In addition to leveraging localization strategies, IT services companies still use EMEA locations to grow AI. Capgemini announced it will open an AI CoE in Cairo focused on supporting clients across the globe with adoption of generative AI (GenAI) and agentic AI, particularly through creating industry-specific use cases for life science, aerospace and energy verticals. Although Capgemini’s offshore resources remain largely India-based, the company is strengthening relations with Egypt. Capgemini’s CEO of Egypt, Hossam Seifeldin, was appointed a member of Egypt’s Advisory Committee on Digital Economy and Entrepreneurship to facilitate economic growth and digitalization within the country. Similarly, Capgemini CEO Aiman Ezzat was appointed chair of the France-Egypt Business Council in France. The two additions will likely provide Capgemini with better access to resources in the country.


Meanwhile, Atos continues to rotate its top leadership to strengthen its direction in EMEA. Atos appointed Merecedes Paya as head of Iberia with the intention of capitalizing on opportunities in cloud, supercomputing and cybersecurity. Also, Atos appointed Rama El Safty as general manager of its Egypt business to capture opportunities in services and AI and for digital transformation in the public sector. Atos initiatives may help these areas, but continuous new appointments create uncertainty among clients. Unlike the other three selected vendors, TBR estimates Atos already has approximately half of its resources in EMEA, positioning it well to deliver better value with proximity.

Investing in more Europe-based innovation to enhance portfolios helps vendors differentiate

Of the four companies covered in this blog, only Accenture and Capgemini have completed acquisitions in Europe within the past calendar year. Accenture is moving away from large acquisitions and instead using its purchases to boost struggling verticals and expand specialized capabilities. This is evident in Accenture’s acquisition of U.K.-based Altus Consulting, which helps the company’s position in financial services and insurance and in product design, customer experience and administration. Additionally, Accenture’s acquisition of Staufen AG augments Accenture’s manufacturing vertical with supply chain and operations professionals. Capgemini is continuing to pursue targets that have niche capabilities, most recently acquiring Delta Capital BV, which will enhance Capgemini’s financial crime, risk management and regulation compliance offerings within the financial services industry in Europe. In addition, financial services was also a struggling vertical for Capgemini, with revenue contracting during most of 2024.


As Accenture and Capgemini continue to engage in small, strategic acquisitions, they are becoming much more active in startup investments. Capgemini has launched an investment fund with ISAI, ISAI Cap Venture II. The fund will focus on B2B startups and scaleups in the U.S. and Europe and will provide Capgemini with new revenue opportunities with companies that reach maturity. Accenture is also increasing its investments but is focused on the U.S. market. For example, Accenture Ventures recently invested in Voltron Data, Auru, Workhelix AI, QuSecure and Workera, spanning different technologies such as AI post-quantum cryptography. Although the regional focus is not surprising as the U.S. has a multitude of startups based in Silicon Valley, investing in Europe first when applicable could help firms better compete in the market.


IBM, on the other hand, has focused on larger acquisitions in the U.S. in AI, cloud and data. The last acquisition completed in Europe was Bulgaria-based Pliant in March 2024. As IBM remains a U.S.-based company, TBR does not anticipate that IBM will start prioritizing acquisitions across EMEA as the company’s innovation tends to be developed in its Americas region first. IBM seems to be leaning more into its Americas presence as the company announced at the end of April that it will be investing $150 billion in the region over the next five years. The investment includes $30 billion allocated to research and development of new mainframe and quantum computers. However, as IBM executes on its Americas-focused innovation strategy, it may miss innovation opportunities with European clients.

Playing to strengths while enhancing client value through increased proximity and innovation will boost vendors’ positioning in EMEA

When comparing TBR’s revenue projections for the four selected companies, Accenture has had the fastest revenue growth with the highest projections. Accenture’s unique acquisition pace is responsible for the acceleration and will help propel the company forward. For example, the company’s TTM year-to-year organic growth from 1Q25 was 0.7%, but this figure rose to 4.1% when including inorganic growth. Its acquisitions in EMEA have undoubtedly contributed to the company’s growth with increased access to innovation as well as in support of volatile verticals. Further, the company’s careful bets in localization have improved ties across EMEA.

 

IT Services Revenue Forecast for Accenture, Atos, Capgemini and IBM Consulting (SOURCE: TBR)


Capgemini continues to rely on its offshore resources, but a bit more emphasis on localization, often preferred by public sector clients, may help Capgemini be even better positioned for deals in the sector. Capgemini’s stronger emphasis in Europe-based innovation differentiates the company from the other selected vendors. This may help the company deliver new innovation to EMEA clients, especially given that Capgemini’s presence in EMEA is larger proportionally compared to Accenture and IBM. On the other hand, IBM’s investments in innovation continue to be based in the U.S., which will likely lead to a delay in delivery in its EMEA market. However, if IBM prioritizes working with clients closely as it has recently done recently with the Basque government, this will help the company maintain its growth trajectory.


Atos’ revenue has been continuously declining for the past 13 consecutive quarters, and its performance in EMEA has been no outlier to its struggles. Yet, continued strategic investments in areas of strength such as security would help Atos win back some public sector revenue. As the company has struggled with debt and profitability, Atos is in an unfavorable position to compete with acquisitions, particularly as it is focused on divestments. Doubling down on the company’s strengths could help restore performance.


The selected four companies all have a strong foothold in the EMEA market, but balancing investments in innovation, such as through startup investments and skills development, with close client relations, through releasing relevant portfolio offerings and localization efforts will be key in competing for market share. Adapting to demand changes in the public sector and in recently underperforming verticals, such as financial services and manufacturing, have enabled Accenture, Atos, Capgemini and IBM Consulting to capture some growth but balancing resources with innovation will promise stronger performance.