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

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Services regain strategic importance

Services are cool again. Native AI companies are embedding services offerings around their products and thinking about services as part of their long-term strategy — well, not too long-term, as how long can a strategy remain the same?


Suppose native AI companies want to deliver services. How will they compete, or perhaps even partner, with traditional IT services companies and management consultancies, which are pursuing their own AI opportunities? These assertions and questions came up repeatedly this summer, and as 2025 winds down, we are starting to see some outcomes and answers.


TBR attended several tech conferences and analyst events in recent months, and AI was the inescapable topic at each one. In particular, KPMG’s Technology and Innovation Symposium in Deer Valley, Utah, stands out, in part because of the sheer breadth of opportunities discussed, use cases highlighted, and future hopes and fears laid out in stark detail.


In our latest blog series, TBR on AI in 2025, we intend to connect those ideas with research and analysis conducted by TBR over the last few years to highlight implications for the companies we cover across the technology ecosystem. Previous topics about the agentic AI age have included human resources management and expectations for enterprise IT architecture. Future posts will discuss who gets first and consistent access to limited resources like energy.

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

AI-native platforms disrupt the people-dependent services model, forcing incumbents to rethink partnerships

Native AI companies folding services offerings into their products and platforms follow in the large footsteps of the cloud and ERP vendors that persistently maintain professional services offerings to complement their cloud infrastructure and software money-making machines. As these giants have learned, success in services is harder than it looks and requires, at minimum, people and permission. Services are inherently a people business, and delivering consistently, with quality and at scale demands teams of people and staff to support them. No clients buys services without first being certain the provider can deliver (i.e., permission). Cloud and software companies have always had the latter locked up. Who knows SAP better than SAP professionals, and who can deliver Azure better than Microsoft? But the people part continually presents a stumbling block, or at least a check on scale and growth.


Why does all this framing around the cloud and software giants matter to native AI companies with their products and platforms? It doesn’t. However, it’s the world in which IT services companies and consultancies have been operating. Partnering with native AI companies looking to expand their services offerings will not be the same as fending off Microsoft Professional Services or SAP Services. At TBR, we constantly examine the largest IT services companies and consultancies, studying how they operate, partner, go to market and generate revenue. All of these aspects are changing rapidly in the agentic AI age, allowing us to bring that research to this developing space.

What roles will traditional IT services companies and management consultancies play, particularly as AI companies’ products permeate enterprise clients?

TBR sees three, not mutually exclusive, roles for traditional IT services companies and management consultancies: venturer, concierge and rival.


Most IT services companies and consultancies lack an impressive track record of investing early in startups, often acting more like traditional service providers than venture capital firms. At traditional IT services companies, the quarterly earnings clock, management and oversight layers, and competing offerings typically keep startup incubator programs relatively small (and too frequently underfunded).

Why does the people challenge not apply to native AI companies in the ways we have seen with traditional cloud and ERP players?

Solving the people problem is, inherently, part of AI, no matter how often one hears the “human in the loop” chorus. Services offerings folded into native AI companies’ products start optimized for minimal human touch. IT support through a chatbot? Built-in. FinOps solutions? Native.

Yes, services at scale has always demanded people and support staff, but that imperative is fading fast and will not apply to native AI companies.


Consulting firms have not fared much better, given the need for consensus around strategy and investment. Notably, some of the Big Four firms have become more adept at making small investments, capturing enough of a stake to influence without owning. KPMG, in particular, has developed a consistently funded, well-managed startup support program that has seen success in the last couple of years.

Consultancies’ change management expertise positions them as vital partners to emerging AI vendors

Investing can be the gateway into a concierge-like relationship between these giant companies and firms and the relatively small native AI companies. Most commonly, these relationships focus on making introductions to enterprise clients, providing strategic counsel, offering financial and tax advice, and mentoring leaders. TBR sees a critical new opportunity, expressed clearly at the KPMG Technology and Innovation Symposium: change management.


Speakers at that event and professionals across the AI and consulting space in subsequent discussions noted that most native AI companies have not worked out the potentially massive change management requirements and implications of adopting their products. Many IT services companies and all management consultancies excel at change management and could be well positioned to provide clients consulting services entwined with a native AI companies’ product, provided all parties understand both the complementary offerings and the commercial models. And these elements echo TBR’s ecosystem research, which has repeatedly shown that leading companies invest in understanding their alliance partners’ offerings and sales structures.


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.

“When I think of knowledge, there are two pieces. One is, what are the insights to build the product? That’s where our people come in, because we have practitioners who are working with clients on this product, using the right insights to build the right product. That’s Part 1. And second is, do your salespeople know those product features to help go sell? And I think the second part, I definitely see opportunity. There’s a little bit of upscaling and change management required for a lot of these sales folks across the board on how to sell these modern version of their software in the agentic world.”
– AI professional speaking to TBR about knowledge management, sales and AI

 

And then, there is always the possibility of rivalry

Every traditional IT services company and management consultancy that TBR covers, including Tier 2 companies (enterprise systems integrators, in TBR’s terms), has its own products, and most have platforms. Although not all vendors sell products as stand-alone offerings, they all have accelerators and AI-enabled solutions — quite a few acquired over the last couple of years.


At a technology level, these solutions and AI native companies’ products may compete or complement, but at a business-model level, what matters are the attached services. The traditional IT services companies and consultancies have relied on client intimacy, scale and industry knowledge to stay sticky with their clients, holding off challengers. AI becomes intimate more quickly than traditional ERP. Industry-specific AI is coming fast, so traditional companies and firms will need to rely on scale, for now, to keep native AI companies’ services offerings at bay, at least with enterprise clients. As many traditional companies and firms seek new markets among smaller clients, focusing on investing and partnering will become the only path to sustained success. Or simply acquire, of course.

What comes next for traditional IT services companies and consultancies?

History keeps rhyming. Native AI companies understand that the services business model often clashes with product and platform strategies. As a result, their investment in services will rise and fall with client demands, leadership changes, market opportunities, and the successful moves of the smartest traditional IT services companies and consultancies.

Human Capital Management in the Age of (Agentic) AI

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How all of HR will be upended by agentic AI

Let’s start by raising a glass to the human resources personnel who have stuck it out since January 2020, through a pandemic; quiet quitting; slashing layoffs, especially in the tech sector; and generative AI (GenAI) eliminating jobs. The hope now is for stability, for at least a few years, at which time digital full-time employees could shift from curiosity to commonplace.

TBR attended several tech conferences and analyst events in recent months, and AI was the inescapable topic at each one. In particular, KPMG’s Technology and Innovation Symposium in Deer Valley, Utah, stands out, in part because of the sheer breadth of opportunities discussed, use cases highlighted, and future hopes and fears laid out in stark detail. In our latest blog series, TBR on AI in 2025, we intend to connect those ideas with research and analysis conducted by TBR over the last few years to highlight implications for the companies we cover across the technology ecosystem. Topics will include how to talk to AI agents, who gets first and consistent access to limited resources like energy, and expectations for enterprise IT architecture in the agentic AI age.

In this blog, we analyze how human resources personnel and processes — really all of HR — will be upended by agentic AI.

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

Digital employees challenge HR models, creating opportunities for consultancies but hurdles for enterprises

Humans will get in the way of transformation in the agentic AI age. Full stop. As with all new, emerging technologies, resistance to change, inability to fully leverage new technologies and pure inertia will delay or prevent enterprises from transforming (or “reinventing”) with the assistance of AI-enabled solutions and tools. In particular, we expect:

  • The vast majority of HR teams are not prepared to hire, manage, evaluate and fire digital employees. Digital full-time employees (FTEs) necessitate a reevaluation of HR, from processes and IT architectures to required skill sets. Consultancies and platform providers see opportunities, but HR professionals see change, change and more change.
  • Everyone in the AI space talks about the “human in the loop,” but are humans ready for what that will mean in terms of day-to-day tasks and overall job performance (and satisfaction) as well as the constant change possible with the loop? It remains to be seen if a human in the loop will always result in a slow rollout of agentic AI.
  • Consultancies enjoy advising on generational gaps in the workforce and offering retraining for employees being run over by emerging technologies, but AI, in particular agentic AI, may challenge even the most adept consultants and their abilities to support HR teams.

So, who benefits from agentic AI?

Consultancies, IT services companies, and the software companies selling platforms will see their markets expand while facing tremendous competitive pressure and decreased opportunities to differentiate. As TBR has repeatedly shown through its research and analysis, companies in the tech space that partner well, partner differently, and effectively leverage multiple partner arrangements will outperform peers. Transformation in the agentic AI age will prove this out again.

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.


But what about employee experience? We all remember the first half of 2020, when every company extolled their employees’ virtues and invested in keeping their talent healthy and happy. That wore off, and now the remaining employees — and the HR professionals supporting them — must contend with agentic AI digital employees as well as rising confusion and spiking costs, for some companies, around H1-B visas. Whether hiring people or robots to manage other robots, what will remain most critical is recruiting and retaining the best HR people possible, because neither the problems nor the humans are going away.

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

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CIOs are stuck on GenAI, but is the future autonomous AI?

TBR attended several tech conferences and analyst events in recent months, and AI was the inescapable topic at each one. In particular, KPMG’s Technology and Innovation Symposium in Deer Valley, Utah, stands out, in part because of the sheer breadth of opportunities discussed, use cases highlighted, and future hopes and fears laid out in stark detail.

In our latest blog series, TBR on AI in 2025, we intend to connect those ideas with research and analysis conducted by TBR over the last few years to highlight implications for the companies we cover across the technology ecosystem. Topics will include how to talk to AI agents, who gets first and consistent access to limited resources like energy, and humans in the age of AI transformation. In this blog, we analyze the prospects for accelerated AI adoption if CIOs continue to focus on the architecture needed for generative AI (GenAI) outcomes rather than planning for the architecture needed for autonomous and deterministic AI.

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?

Listen now: Evolving Complex Ecosystems to Solve Enterprise Transformation

Agentic AI promises enterprise transformation, but messy data, tech fatigue and architecture demands slow ROI

For years, consultancies have been exceptional at making sure CIOs become part of the business, not a cost center. In the most successful cases, IT has been a growth driver. So, agentic AI provides another opening, right? For consulting, yes, but the near-term business impact and midterm return on investment look less likely, in part because of a refrain TBR hears constantly from CIOs and their consulting and IT services providers: The data is a mess. Compounding this reality is that the relentless new technologies all require new budgets and increased spending. Just as CIO and IT departments understand how to shift their IT architecture to take advantage of GenAI, the consulting and IT services message for agentic AI changes to, “That’s not going to be enough.” At what point does fatigue take over and cause “good enough” to replace the fear of missing out (FOMO)?

Further, what will autonomous and deterministic AI architecture look like? Can enterprise IT buyers be certain today that investments in agentic AI will hold up for long enough to see some ROI or even simply be adequate for the next wrinkle — or wave — of change in the AI ecosystem? Will today’s ideas hold up? And new architecture necessitates change management, which no enterprise loves to pay for and many IT services and consulting buyers may be scarred by past experiences with cloud, blockchain, metaverse and GenAI. Are CIOs really going to believe they need to change to be ready for next-generation AI architecture needs?

So many questions, and here are some thoughts about answers (for now):

  • Leaders, the crowd and the lab: At the 8th annual KPMG Tech & Innovation Symposium, one of the speakers proposed that smart organizations will have leaders informed about and committed to AI, a wide range of employees experimenting with AI (“the crowd”), and dedicated employees developing solutions that can scale to meet the organization’s unique needs and fit its tech environment (“the lab”). Consultancies have an opening to help identify and develop internal advocates for agentic AI adoption among all three groups. Think of it as whole-of-enterprise agentic AI change management, reaching beyond the CIO while building constituents for additional investments in AI and the architecture needed to support AI agents.
  • FOMO is a multispeed reality: Consultancies can influence the narrative around AI’s promise and tangible ROI, but they need to account for how differently the various parts of an organization will experience the highs and lows of new technologies. Let’s bring this back to IT architecture: No one outside the IT organization will care, but understanding enterprisewide AI adoption requires changes across the IT stack that can help sustain internal support and turn fear into “You got this.”
  • Structured, regulated and mission-critical IT functions — read: cyber and cloud, with data governance an aspirational goal — can be fertile grounds for early agentic AI wins, particularly when IT architecture depends on proven, flexible and resilient platforms and underlying technologies.

We keep coming back to this, even when we get into weedy areas like consulting around enterprise IT architecture: AI adoption in the enterprise requires change management, and change management requires — demands — leadership from the CIO and the CIO’s boss. Also, plain old vanilla AI (not Amazon Alexa, not even GenAI), can be really valuable. With the advancements in data strategy and structure, there are insights to be drawn and even captured with agentic models to act on. AI doesn’t need to necessarily generate anything to support better decisions. And we all want better decisions.

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

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

TBR perspective

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Conclusion

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

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

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

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

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

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

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

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

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

A few additional points, from TBR’s perspective:

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

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

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

 

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

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.

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.

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

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Capgemini acquires WNS to accelerate its journey toward intelligent operations in BPO

On July 7, Capgemini announced its intent to acquire WNS for $3.3 billion. The acquisition will not only add scale to the company’s business process outsourcing (BPO) capabilities with more than 64,000 employees but also provide Capgemini with a broader client base. TBR estimates that Capgemini’s BPO revenue was $597 million in 2024, and WNS had $1.3 billion in BPO revenue in the same period, meaning acquiring WNS would more than triple Capgemini’s revenue in the segment. If the acquisition is approved, Capgemini will leverage WNS’ client base to jump-start its intelligent operations model, going beyond the traditional BPO model dependent on labor arbitrage and introducing generative AI (GenAI) and agentic AI capabilities to build autonomous workflows.

 

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. During Capgemini’s analyst session on the WNS acquisition, the company disclosed it had more than €900 million in GenAI bookings in 2024. Leveraging the acquisition to stimulate organic growth, however, will require Capgemini to be mindful of service quality during the integration process while continuing to build out its portfolio offerings to secure new bookings.

Careful integration will create synergies, but persistent portfolio investments and well-timed headcount adjustments will support new revenue model

Although Capgemini is no stranger to large acquisitions, it does not complete them often. In the past 10 years, Capgemini has only completed a couple of other similar-size purchases. Capgemini purchased IGATE in 2015, which at the time generated $1.3 billion in revenue and added 30,000 professionals. In 2020 Capgemini completed the acquisition

 

of Altran at €3.6 billion with €3.2 billion in revenue and approximately 50,000 employees. Capgemini purchased Altran with the intent of using the company’s intelligent industry solutions as well as bringing more transformation capabilities in AI, cloud, digital, edge computing and IoT. Altran also brought new capabilities in engineering and R&D services. The acquisition of Altran fueled a 71.8% year-to-year growth rate in Capgemini’s Operations & Engineering segment in 2Q20. Following the completion of the acquisition, the company added new solutions to its portfolio to maintain momentum.

 

In 4Q20, Capgemini released a set of intelligent industry offerings in 5G and edge as well as in driving automation systems. After completing the integration of Altran and capitalizing on the new synergies, the company formed the Capgemini Engineering segment, which incorporated the former Altran business. In 4Q21 Capgemini’s Operations & Engineering revenue increased 9.1%, and overall corporate revenue grew 15% year-to-year, of which 14.1% was organic. Although Capgemini was able to see initial growth in the segment, albeit lagging the company’s overall growth, the segment’s revenue is not much higher today. In 4Q21 Operations & Engineering revenue was €1.5 billion, and in 4Q24 it was slightly higher at €1.6 billion. If Capgemini wants to leverage WNS as part of its AI strategy, it may need to be more vigilant about sustaining momentum.

 

TBR expects Capgemini to take a similar approach with WNS as it did with Altran, first taking time to integrate the business while building out its GenAI and agentic AI capabilities, then adjusting its workforce to account for any talent overlap and prepare for structural changes brought about by increased automation. Capgemini will try to make its new workforce leaner, especially as WNS is expected to expand total headcount by 18.8% while only increasing revenue by 5.5%. Some of the adjustments will come naturally as hyperautomation capabilities will cannibalize traditional labor arbitrage. On the other hand, Capgemini will have more room to introduce new GenAI and agentic AI offerings in BPO, providing the company with the opportunity to learn best practices in a lower-stakes environment before introducing the technology to its other segments, Strategy & Transformation and Applications & Technology.

The BPO segment is an easier area for companies to test GenAI and agentic AI offerings and apply those lesson

s learned to other segments. Making an acquisition in this segment, as Capgemini has announced, is a way to get a head start, and other peers could follow suit. For example, Deloitte has prioritized expanding its Operate nearshore and offshore resources, but completing an acquisition of one of WNS’ peers, such as Genpact or EXL, would provide the company with more opportunity to innovate with a broader client base.

 

As IT companies seek to expand business services operations to boost their ability to deliver new technologies, they are competing on market share. Other companies, particularly Accenture, already have a much bigger presence in the segment. In 2024 Accenture’s BPO revenue was $10.7 billion; even with acquisitions, this level will be difficult for most other companies to attain. Potential investments from other firms that already have a large BPO business could threaten Capgemini’s strategy.

 

As part of Capgemini’s intelligent operations vision, the company wants to implement an outcome-based pricing model. Although this is a good long-term goal, the company faces many hurdles. Of WNS’ total revenue, 24% is derived from non-FTE-based pricing. However, the acquisition will greatly increase headcount, and Capgemini still needs to ramp up its agentic AI and GenAI offerings, meaning that implementing outcome-based BPO pricing is still years away. WNS will likely bring efficiencies to the company in other ways. WNS’ annual revenue growth has slowed in recent years, from year-to-year growth of 7.7% in 2023 to 1.1% year-to-year in 2024. Yet the company has a healthy operating margin, averaging 10.8% in 2024 and reaching 15% in 1Q25. The slowdown makes it a well-timed sell for WNS shareholders as BPO’s operating model is changing, but the company holds value in its wide client base.

 

WNS has a strong pipeline with a backlog-to-revenue ratio of 3.2. Capgemini has the opportunity to use this acquisition to facilitate innovation and deliver its emerging GenAI and agentic AI capabilities to clients, which are increasingly searching for more operational efficiencies. The acquisition could bring capabilities beyond initial inorganic revenue if Capgemini maintains service quality while investing in emerging capabilities in hyperautomation.

DOGE Federal IT Vendor Impact Series: Maximus

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The Trump administration and its Department of Government Efficiency (DOGE) have generated massive upheaval across the board in federal operations, including in the federal IT segment. As of May 2025, thousands of contracts described by DOGE as “non-mission critical” have been canceled, including some across the federal IT and professional services landscape. TBR’s DOGE Federal IT Vendor Impact Series explores vendor-specific DOGE-related developments and impacts on earnings performance. Click here to receive upcoming series blogs in your inbox as soon as they’ve published.

 

Maximus is unfazed by the uncertainty in the federal IT market

While vendors like ICF International have disclosed devastating impacts to their FY25 revenue as DOGE upends the stability of the federal IT market with stop work orders and contract cancellations, Maximus remains largely unaffected. Maximus’ leadership team stated on May 8 that a mere $4 million of its FY25 revenue had been negatively impacted year to date by DOGE’s actions.

 

Maximus’ U.S. Federal Services segment has continued to rapidly expand, generating $778 million in revenue during 1Q25. This represents an improvement of 10.9% on a year-to-year basis and is all organic. U.S. Federal Services’ operating margin also kept improving as it expanded 340 basis points year-to-year and 260 basis points sequentially to 15.3% in 1Q25.

 

These robust top- and bottom-line expansions were driven largely by volume growth on clinical assessments. U.S. Federal Services has benefited from the steady increase in demand for medical disability exam (MDE) services since the Honoring Our Promise to Address Comprehensive Toxics Act was passed in 2022. Maximus has been increasingly leveraging productivity-enhancing tools like AI to support these types of engagements so the company can successfully take on higher volumes of work while relying less on temporary contract workers.

 

Maximus has landed in a better position than it was in when the Trump administration first took charge in 2017 with significantly expanded capabilities, breadth and scale. While it processes these clinical assessments and supports the Centers for Medicare & Medicaid Services’ multibillion-dollar Contact Center Operations (CCO) contract, Maximus has continued to parlay its existing relationships with clients into more lucrative opportunities like systems integration and digital transformation work.

 

Maximus is also taking advantage of the bipartisan support for federal agencies to augment their citizen-facing services. The vendor unveiled the Maximus Total Experience Management solution in 2024 to gain traction with the Federal Reserve System and other agencies making these investments.

 

Maximus has booked $2.9 billion in total contract value year to date across its U.S. Federal Services, U.S. Services and its Outside the U.S. segments and has an additional $451 million in unassigned awards in its pipeline as of 1Q25.

 

Maximus estimated the value of its total addressable market at $41.2 billion as of 1Q25, down from $41.4 billion in 4Q24. Roughly $24.7 billion, or 60% of Maximus’ total addressable market, is tied to the U.S. Federal Services segment. It is also worth noting that over 60% of Maximus’ revenue during the first half of FY25 was derived from performance-based and fixed-price contracts, which is the Trump administration’s preferred contracting method.

How Maximus will navigate 2025

Maximus will likely continue to be shielded from the brunt of DOGE’s disruptions, given the bipartisan support for Maximus’ critical citizen services like the CCO and MDE contracts. These two engagements alone were last disclosed as being responsible for around 25% to 30% of Maximus’ $4.9 billion in total FY23 revenue. With the CCO recompete withdrawn and domestic Regions 1 through 4 secured, Maximus’ long-term prospects are more favorable than they were in summer 2024, but the vendor is not completely immune from the surrounding chaos.

 

While the bulk of DOGE’s contract cancellations and stop work orders have focused on various consulting and engineering services, Maximus could still face some disruptions, given the department’s activity in the federal civilian market. Maximus is heavily entrenched in this space and has flagged the Centers for Disease Control and Prevention, IRS and U.S. Securities and Exchange Commission as crucial long-term clients. Maximus’ relationship with the IRS has notably evolved over the years and is the epitome of the vendor’s go-to-market strategy.

 

Maximus gained traction with the IRS initially through its BPO-oriented work before expanding the scope of its services for the agency and becoming a valued technology integrator. Maximus is now competing against top-tier players like Accenture Federal Services as part of the IRS’ $2.6 billion Enterprise Development, Operations Services blanket purchase agreement while providing other crucial services like transitioning the IRS to a cloud-based Enterprise Data Platform. However, like many other agencies, the IRS’ budget could be slashed by billions of dollars in federal FY26. With spending from key clients under threat, Maximus needs to demonstrate that its services are mission critical and in line with the Trump administration’s long-term priorities.

 

A part of DOGE’s stated goals is to modernize agencies’ systems and streamline processes. Maximus can showcase how its technologies are reducing the amount of time needed to deliver critical citizen services without negatively impacting the customer experience (CX). Maximus can also leverage the case studies illustrating how the company’s digital transformation as well as modernization services have positioned agencies for success and put them on the path to responsibly utilize AI. Maximus leadership team recently disclosed that the vendor is currently discussing with clients and even DOGE representatives how to make processes across the government more efficient.

 

Partnerships will be integral as vendors across the federal IT market look to quickly demonstrate their value to the new administration. While Maximus has historically been quiet regarding its alliance activity, this could change as the vendor aims to avoid falling behind. For example, Maximus recently announced a partnership with Salesforce to augment its CX as a Service efforts. The Maximus Total Experience Management solution is being augmented with the Agentforce platform to provide clients with AI agents tailored to their needs that use data to adapt to citizens’ needs and simplify interactions.

 

Maximus is also one of the vendors currently considering M&A activity to bolster its operations despite the ongoing uncertainty in the federal IT market. While Maximus will not make any blockbuster moves like when it purchased Veterans Evaluation Services in 2021 to rapidly expand its clinical assessments business and relationship with the U.S. Department of Veterans Affairs, the company will explore tuck-in acquisitions that can strengthen Maximus’ capabilities with emerging technologies and its presence in core markets like the health sector.

 

Maximus’ venture capital arm will also closely monitor potential candidates that fit that criteria. Maximus disclosed during its 4Q24 earnings call that Maximus Ventures has made its first investment since being established in 3Q23. The unnamed company is optimizing technicians’ workloads when providing clinical assessment services with human-in-the-loop AI.

 

TBR anticipates that while Maximus will keep prioritizing federal opportunities relating to CX as a Service as well as technology modernization and optimization, it will balance the risk of its portfolio mix with state and local opportunities. The U.S. Services segment is particularly well positioned to support state and local governments in navigating the Trump administration’s sweeping changes and use these relationships as a chance to provide other services like unemployment insurance support.

 

TBR predicts that Maximus’ FY25 revenue will be $5.3 billion, representing a decline of 0.2% over FY24. Although U.S. Federal Services will continue to rapidly expand, its growth will not offset the normalization of the U.S. Services segment’s performance and the Outside the U.S. segment divestitures. TBR believes that these divestitures and the volume growth on key programs will cause the vendor’s operating margin to just narrowly surpass its FY24 operating margin of 9.2%.

 

TBR’s DOGE Federal IT Impact Series will include analysis of Accenture Federal Services, General Dynamics Technologies, CACI, IBM, CGI, Leidos, IFC International, Maximus, Booz Allen Hamilton and SAIC. Click here to download a preview of our federal IT research and receive upcoming series blogs in your inbox as soon as they’ve published.