TBR’s Business Insights

Skills Shortage Will Challenge the Scaling of Sovereign AI in 2026

02.20.26

AI-related skills will remain scarce across both buyers and ecosystem partners as the rapid pace of innovation and the technical complexity required to enable sovereign AI continue to hinder adoption. These challenges, combined with a lack of clearly defined and compliant use cases among sovereign customers, gaps in sovereign cloud infrastructure availability and steep AI learning curve faced by ecosystem partners, will constrain meaningful investment and implementation of sovereign AI throughout 2026.

PaaS Revenue Will Outpace SaaS Revenue for Cloud Software Vendors

02.17.26

Enterprise customers are prioritizing the modernization of their existing SaaS estates rather than adding new applications, driven by market saturation, accumulated technical debt, and a growing imperative to become AI-ready. As IT buyers shift their focus toward modern platforms, traditional SaaS leaders should expect their PaaS segments to continue significantly outperforming their core SaaS businesses in revenue growth.

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Alliances Will Extend Beyond Core Offerings as AI-driven Sales and Marketing Reshape Ecosystems

02.12.26

IT services companies have their limits, and clients have preferred technology vendors, leading IT services companies to look to alliances to drive new growth. We have seen this pattern before, but in 2026 we will see IT services companies extend those alliances into devices, connectivity and even silicon, requiring a multiparty alliance approach that will strain commercial models, sales strategies and alliance leaders across the ecosystem.

Consulting Will Rebound in 2026

02.10.26

After a period of relative softness, consulting revenues are expected to rebound to high-single- or low-double-digit growth as pervasive uncertainty pushes enterprises to seek external guidance. Demand will be particularly strong around risk mitigation, strategic planning and AI adoption, positioning forward-deployed engineers, supply chain management and people advisory services as leading revenue drivers in 2026.

Bad Debt Expenses Will Rise for CSPs in 2026

02.06.26

In a K-shaped economy that increasingly separates financial winners from losers, the majority of households and businesses on the lower arm of the “K” are under mounting financial strain and are finding it more difficult to pay their bills. As these economic pressures persist, communications service providers (CSPs) should expect bad debt expenses to continue rising, with the potential to meet, or even exceed, levels experienced during the Great Recession.

How Will Advanced AI Impact Pricing, Labor Practices and Client Expectations?

02.05.26

Advanced AI may be front and center in IT services strategy, but execution challenges remain a familiar story. Despite ongoing hype around unlocking new efficiencies and nonlinear growth, IT services firms continue to grapple with the reality of needing labor arbitrage in the short term and meeting client expectations.

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AI Alliances Will Increasingly Target OT

02.03.26

New and expanding partnerships are increasingly targeting the convergence of IT and OT, as system integrators (SIs) align with OEMs, manufacturing ISVs and silicon providers. This momentum is driven by the strong growth potential in high-tech manufacturing, where solutions that improve accuracy, efficiency and safety can be deployed on-site without reliance on rack-scale compute systems in neoclouds or Tier 1 clouds. As a result, while AI has long operated at the edge, these partnerships will accelerate both the sophistication of AI-driven use cases and the pace of solution framework development.

Agentic AI Adoption Is Pressuring Security Architectures to Converge

01.29.26

The emerging pattern of multicloud security consolidation has direct implications for both Amazon Web Services (AWS) and Microsoft, as enterprises reassess detection pipelines, governance models and operating frameworks heading into 2026. Although AWS remains well positioned in analytics-heavy workloads, the company needs to reevaluate its long-established “building block” approach, especially as peers deliver more integrated platforms. For Microsoft, its strengths will continue to be with organizations where Microsoft 365 already anchors their identity and collaboration strategies.

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The U.S. doesn’t have a Spectrum Shortage — It has a Utilization Problem

01.13.26

The mobile industry continues to beat the drum for more spectrum, but it should instead focus on fully utilizing the spectrum already allocated. TBR notes there are vast tranches of spectrum in the U.S. market that are broadly underutilized, either for technical or economic reasons. And challenges will only worsen as the industry aims to bring upper midband frequencies into the fray, which have greater propagation challenges and are less suited for macro coverage.

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Shutdown Ends, but Federal Contractors Face a Slow Return to Normal

12.17.25/by John Caucis, Senior Analyst

The 43-day U.S. federal government shutdown, the longest in history, came to a welcome end on Nov. 13, 2025, but for some federal systems integrators (FSIs), the shutdown’s impact could linger well into federal fiscal year 2026 (FFY26). According to the Professional Services Council, the national trade association for federal technology and professional services contractors, it will take three to five days for agency functions to return to normal for each day of the shutdown, implying that operations at some agencies may not return to normal until March 2026.

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Partnerships, Not Products, Will Define How Consultancies and Native AI Companies Share Value in Agentic AI Era

11.03.25/by Patrick Heffernan, Practice Manager and Principal Analyst

Just like supporting startup programs, many traditional IT services companies and consultancies have struggled to adequately put themselves in their alliance partners’ shoes. And when those partners are startups or immature native AI companies, that struggle will be harder in the absence of leadership, strategic direction and sustained investment. But that’s the potential downside. The upside is that consultancies are perfectly positioned to be change management specialists, helping their largest clients adopt the best new AI.

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Human Capital Management in the Age of (Agentic) AI

10.07.25/by Patrick Heffernan, Practice Manager and Principal Analyst

Fundamentally HR management remains a back-office function that IT services companies and consultancies can use to drive managed services engagements. And TBR’s research shows that managed services can lead to additional consulting opportunities, particularly when managed services providers (whether a traditional IT services company or consultancy) partners smartly with technology companies, leveraging the data and insights generated through back-office platforms to uncover issues and opportunities.

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GenAI Outcomes or Autonomous AI Architecture: Where Should CIOs Focus?

10.01.25/by Patrick Heffernan, Practice Manager and Principal Analyst

What good are AI-enabled solutions if an enterprise’s IT environment and architecture can’t handle the data orchestration demands and IT becomes a roadblock to faster, better, clearer insights from AI, rather than the business accelerator expected of IT departments in the AI era? After more than a decade of consultancies and IT services companies helping IT departments become business drivers, will inadequate architecture slow down AI adoption and AI agents at scale?

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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

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.

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

09.11.25/by Patrick Heffernan, Practice Manager and Principal Analyst

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

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

08.04.25/by John Caucis, Senior Analyst

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.

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

07.17.25/by Patrick Heffernan, Practice Manager and Principal Analyst

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?

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

07.16.25/by Jill Cookinham

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.

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Capgemini to Acquire WNS for $3.3B, Tripling BPO Revenue and Accelerating AI Ambitions

07.15.25/by Jill Cookinham

The acquisition undoubtedly serves as an important stepping stone to transform Capgemini’s BPO offerings, which are housed in its Operations & Engineering segment, yet Capgemini must be strategic with its approach, balancing new clients’ expectations with the introduction of incremental GenAI and agentic AI capabilities. Capgemini’s recent investments in partner-enabled portfolio offerings position the company well for a large change in the segment, such as its new agentic AI offerings announced with Google Cloud in April and its NVIDIA NIM-powered industry-specific agentic AI solutions and agentic gallery.

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