GenAI training becomes table stakes for IT services and consulting, but specialization remains selective

In the short-to-mid-term, TBR expects generative AI (GenAI)-specific training to become a standard part of an IT services or consulting professional’s basic tool kit, with specialized training around technology partners’ solutions or a company’s own IP and platforms reserved for those professionals dedicated to AI roles. While some may argue every role is an AI role, the near-term reality is that only a select few among the broader professional services talent base will need specialized training, and the associated budgets will decrease in the coming years.
 
In the long term, we expect vendors’ announcements about training their entire workforce will seem less relevant compared to what is on the horizon for GenAI. That change may take a bit longer, in part because training will affect IT services companies’ commercial models.
 
For example, Infosys’ three talent categories — traditional software engineers, digital specialists focused on digital transformation and ongoing support, and Power Programmers — allow the company to balance innovation and growth while calibrating its business and commercial models. The Power Programmers group consists of highly skilled professionals who are responsible for developing products and ensuring that the intellectual property they create and use meets the cost-saving requirements Infosys pitches to clients.
 
While the other two groups follow a traditional employee pyramid structure, the Power Programmers group is much leaner and resembles the business models that many vendors, including Infosys, may aspire to adopt in the future.

Developing a GenAI-ready, partner-aligned workforce allows vendors to demonstrate value as the market evolves toward SLMs, but accounting for new commercial models will force pyramid calibration

According to TBR’s 4Q24 AI and GenAI Market Landscape, “As TBR predicted in the first half of 2024, the trend around IT services companies and consultancies committing to training their professionals on GenAI platforms and solutions specific to their (preferred?) technology partners accelerated as the year went on. IT services companies and consultancies continued moving away from vendor-agnosticism.
 
Technology partners, most notably the hyperscalers, continued to see their IT services and consultancy partners as essential to convincing enterprises to adopt GenAI solutions, generating further demand for technology. And every professional services company TBR covers announced new training or some kind of benchmark achieved in training their talent on GenAI.”
 
Highlighted activities by vendors in TBR’s Spring 2025 Global Delivery Benchmark reflect the direction of the GenAI market, especially as buyers lean on their existing IT infrastructure and systems to ensure they capitalized on their data lakes to build industry- and/or function-specific small language model (SLMs), compelling IT services vendors to build their GenAI skills around tech partners.

• Accenture, Microsoft and Avanade launched a Copilot practice in November 2024 that houses 5,000 professionals. Additionally, through its collaboration with Stanford University, Accenture launched an on-demand GenAI learning platform that curates AI content from Stanford Online.
• In October Atos and Amazon Web Services (AWS) established a GenAI Innovation Studio in Pune, India, enabling both companies to collaborate with clients on industry-specific use cases. The studio will offer training and certification programs, hackathons, and AWS DeepRacer competitions, in addition to hosting technology events as the partners try to foster joint innovation.
• In July HCLTech expanded its learning resources through a partnership with upGrad Enterprise to create a learning program around GenAI development. HCLTech will establish a Data Science and AI Academy of Excellence, providing upGrad’s education frameworks and resources alongside HCLTech’s industry and technology content. In May 2024 HCLTech worked with Google Cloud around HCLTech’s AI Force platform, bringing in Google Gemini’s AI and large language model (LLM) capabilities. Through its collaboration with SAP, HCLTech continues to enhance its positioning around AI technologies. In addition to leveraging the SAP Learning Platform and expanding its certifications, HCLTech opened an innovation lab for SAP Business AI in December. The lab, located in Munich, will provide SAP S/4HANA Cloud, RISE with SAP and SAP Business AI technology to guide clients’ AI adoption and improve business operations.
• To support joint activities with AWS, IBM Consulting trained 10,000 people on AWS GenAI services through the end of 2024.
• Wipro expanded its relationship with Google Cloud during 3Q24. The company will leverage Google Cloud’s Vertex AI and Gemini offerings, enabling its employees to help clients with their cloud migrations and GenAI adoption.

Vendor Headcount Growth, 4Q23 vs 4Q24 (Source: TBR)

Choppy market demand buys vendors time to adjust staffing pyramids and test new operating models to account for GenAI implications

Headcount growth improved across benchmarked vendors in 4Q24, which was a reversal from a trend that began 12 months ago. The expansion, however, was rather small, with average headcount increasing 0.4% year-to-year in 4Q24, largely due to Accenture adding over 55,000 net-new additions mainly through acquisitions, which skewed the overall direction.
 
Meanwhile, vendors are at the crossroads of adjusting staffing pyramids to account for long-term GenAI implications and operating in a stagnant market where any spend is oriented toward large transformational deals that require quality in service delivery, often achieved through reskilling and/or acquiring partner-certified staff.
 
Securing trust with legacy and large technology alliance relationships as well as investing in knowledge management frameworks are essential for vendors to protect their incumbent positions. Growing technology complexity is accelerating demand for data and AI security capabilities, compelling vendors to build skills that can enable them to operate in both legacy and new GenAI-enabled environments, further challenging their staffing decisions as the opportunity for robots protecting from other robots might seem enticing at first but carries a fair amount of risk in the long term.
 
In the short-to-mid-term, acquisitions and staff rebadging will likely remain the two main levers for any net-new staff additions as vendors focus on reskilling existing staff as they take a wait-and-see approach until macroeconomic conditions improve.
 
We expect one of two scenarios to occur in the next six months: First, vendors remain diligent and continue to calibrate and fine-tune their staffing pyramids, keeping overall headcount flat to declining with one-off strategic acquisitions and/or rebadging to provide a blip in sequential headcount expansion.
 
Alternatively, macroeconomic conditions improve, largely enabled by better-than-anticipated tariff deals paired with deregulations and lower corporate tax rates in the U.S., resulting in an accelerated rebound in discretionary spending. As a result, vendors race back to hire in bulk quickly, forgetting about their GenAI-fueled optimism and the need to adjust operating models to account for GenAI implications.
 
A bonus scenario: Demand for GenAI drives the need for specialized talent, especially as vendors see the opportunity to pursue custom model development. While this might seem counterintuitive to the promise that the tech will supplement coders, the trust in the technology is not there yet, creating an opening for vendors to hire and train at speed.

TBR’s Global Delivery Benchmark

TBR’s Global Delivery Benchmark is a semiannual research program providing efficiency comparisons, assessments and insight into global delivery strategies and investments across 14 leading IT services firms.
 
Vendor coverage for this research includes Accenture, Atos, Capgemini, Cognizant, Conduent, Dell Technologies Services, DXC Technology, HCLTech, Infosys, IBM, NTT DATA, Tata Consultancy Services (TCS), T-Systems and Wipro IT Services (Wipro ITS). Market segments covered include systems integrators (SIs) with support and maintenance, SIs, and India-centric vendors, while service lines covered are application outsourcing, IT outsourcing, business process outsourcing, and consulting and systems integration.
 
Download a free preview of TBR’s latest global delivery benchmark research: Subscribe to Insights Flight today!

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 March 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.

While DOGE had no material impact on CGI Federal’s top-line growth in 1Q25, bookings growth was likely impeded by its actions

CGI corporate tendered its 1Q25 earnings on April 30 with estimated* quarterly revenue of $401 million for CGI Federal (the company’s U.S. Federal operations), representing 8.9% year-to-year growth.
 
A strong inorganic tailwind from the company’s 3Q24 strategic acquisition of Aeyon, the largest peer purchase in company history, continues to bolster CGI Federal’s top-line growth. We estimate Aeyon will add between $140 million and $150 million in inorganic revenue (on a full-year basis) for CGI Federal once the acquisition is fully integrated from a revenue standpoint. The company contributed roughly $40 million to CGI Federal’s top line in 1Q25. The integration period, which began in 3Q24, is set to end in 2Q25.
 
While top-line growth remained robust, CGI Federal’s bookings dipped below CA$300 million for the first time since 1Q21, falling to CA$231 million ($161 million USD, est.) in 1Q25 from CA$357 million ($255 million USD, est.) in 4Q24. While seasonal contraction in bookings is typical in CGI Federal’s order book from the fourth calendar quarter of one year to the first calendar quarter of the next, the decline observed in 1Q25 may be due to DOGE’s actions in the federal IT market. CGI’s executives indicated during the company’s 1Q25 earnings discussion that since the November election and January administrative transition, federal agencies have preferred smaller-scale “bridge” contracts rather than multiyear renewals to keep current work ongoing until there is greater budget clarity in federal IT procurement.
 
Corporate level days sales outstanding (DSO) was down to 34.28 in 1Q25 from 35.12 in 4Q24. DSO in 1Q25 was also the lowest receivables collection time TBR has observed since CGI posted DSO of 33.44 in 1Q21.  While company executives declined to provide a specific DSO figure for CGI Federal, they noted that neither invoice approvals nor payments from federal market clients were taking longer than usual to obtain. CGI corporate also placed greater emphasis on improving receivables collection in FY25 (which commenced in calendar 4Q24), particularly in its U.S. federal operations as a hedge against any post-election turbulence in the federal budget process.

Strategic M&A in 2024 buffered top-line growth and better aligned CGI Federal’s portfolio with DOGE’s efficiency agenda

Acquiring Aeyon enhanced CGI Federal’s digital modernization capabilities and provided the company greater access to civilian, space and homeland security agencies. Aeyon was an aggressive acquisition that enhanced CGI Federal’s portfolio and delivery scale in IT modernization at the time of the purchase and has positioned CGI Federal strongly to capitalize on DOGE’s goal to drive greater efficiencies in federal operations by leveraging AI, analytics, automation, big data and cloud technologies, all capabilities expanded by the Aeyon purchase.
 
Aeyon’s civilian clients include the Federal Aviation Administration (FAA), which awarded CGI Federal a contract in April 2025 worth up to $186.4 million to migrate the FAA’s Notice to Airmen (NOTAM) system to a cloud-based environment. Obsolete and antiquated legacy hardware and software in the NOTAM system have been blamed for numerous air traffic stoppages that have disrupted thousands of flights and cost airlines millions since 2023.
 
Additionally, Aeyon expanded CGI Federal’s footprint in the Department of Defense (DOD), which could bode particularly well for CGI Federal as the Trump administration indicated in early April plans to submit a FFY26 (federal fiscal year 2026) defense budget request that could top $1 trillion for the first time in history, up from $895 billion in FFY25 and $841 billion in FFY24. CGI Federal does not build weapons platforms or munitions, but it offers robust proprietary solutions such as Sunflower (cloud-based asset management) and Momentum (financial management) that have relevance for DOD agencies and services branches looking to enhance fiscal and supply chain management, especially to comply with DOGE-related mandates. CGI Federal also provides defense agencies cybersecurity solutions.
 
Lastly, acquiring Aeyon expanded CGI Federal’s presence with NASA and other space-related areas in the federal market, in which the Trump administration plans significant budget increases, primarily to support global defense and intelligence operations but also to increase the resilience of IT systems used by federal law enforcement agencies.

CGI Federal expects greater emphasis on outcome-based contracting during Trump 2.0

CGI Federal generates over 50% of its revenue from outcome-focused engagements, typically contracts structured as fixed-price awards. Federal IT contractors can expect a general shift from cost-plus to fixed-price arrangements as agencies adopt a more outcome-focused mindset regarding new IT outlays. When the federal IT procurement environment begins focusing more on outcome-based contracting, it will shift more risk of cost-overruns or delivery delays to the vendors — a potentially margin-erosive scenario for federal system integrators (FSIs) that fail to maintain strong program execution.
 
CGI Federal is confident it can adapt to outcome-focused contracting in federal IT but is uncertain how quickly the transition can be completed. CGI Federal has been a perennial margin leader in TBR’s Federal IT Services Benchmark due to its traction with its ever-expanding suite of homespun intellectual property (IP)-based offerings like Sunflower and Momentum, and demand for these offerings will at least endure, but likely increase, under DOGE.

CGI Federal is on DOGE’s federal consultancy ‘hit list’ but may fare better than other advisory-led FSIs

The General Service Administration (GSA) continues to review contracts held by CGI Federal and nine other companies** the Trump administration instructed DOGE to initially target in an effort to cut $65 billion in consulting fees the federal government is set to pay in FFY25 and future years. According to GX2’s DOGE-Terminated Contracts Tracker, which tracks developments in federal contracting, CGI Federal has had a total of $13.4 million in contracts terminated by DOGE as of the publishing of this blog. For comparison, Accenture Federal Services has had over $193 million in cancellations, Deloitte Federal lost over $473 million worth of contracts, and IBM has had over $40 million in awards canceled by DOGE.
 
Only five total awards in CGI Federal’s book-of-business are listed as cancelled on the GX2 website, the largest termination being a $6 million contract for application development services for the Federal Communications Commission.  Other cancellations, albeit small in scale and total value, appear to have hit CGI Federal in its asset and financial management wheelhouse. These contracts include a $4.6 million cancelled deal for digital asset management solutions with the GSA, a $2 million contract to operate a procurement platform for the Department of Justice, an award worth $785,000 for asset management services with the Department of Transportation, and a $66,000 contract for property management software with the Federal Mediation and Conciliation Service.
 
CGI Federal claims it only generates 2% of its sales from “discrete consulting services,” which TBR assumes is a reference to the type of management or strategic consulting services most vulnerable to DOGE. The $13.4 million in DOGE-related cancellations represents less than 1% of CGI Federal’s trailing 12-month revenue of $1.55 billion (as of 1Q25).
 
*CGI corporate reports its fiscal data, including business line revenue, in Canadian dollars (CAD). TBR estimates fiscal information for CGI corporate and CGI Federal in U.S. dollars by multiplying the reported quarterly data in CAD by the average exchange rate for the quarter as provided by www.x-rates.com (0.696539 in 1Q25). CGI Federal reported sales of CA$575.5 million in 1Q25, or $401 million U.S. dollars (USD).

**Accenture Federal Services, Booz Allen Hamilton, Deloitte Consulting, General Dynamics IT, Guidehouse, HII Mission Technologies, IBM, Leidos, SAIC

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.

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 March 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.

DOGE’s aggressive cost-cutting activities impacted IBM-Fed* in 1Q25

IBM tendered its 1Q25 earnings on April 23, and while the company does not disclose fiscal data about the federal operations of IBM Consulting, IBM’s executives did provide useful color on IBM-Fed and the impact of DOGE. Not surprisingly, IBM-Fed’s contracts with the U.S. Agency for International Development (USAID), much maligned by the Trump administration, suffered cancellations and drawdowns.
 
According to the DOGE-Terminated Contracts Tracker on the GX2 website, which tracks developments in federal contracting, IBM-Fed has had a total of $40.1 million in contracts terminated by DOGE as of the publication of this blog. Cancellations included awards with the Department of the Treasury ($17.5 million in TCV), the Department of Health & Human Services ($3.4 million in TCV), the Commerce Department ($1.3 million in TCV), and the Department of Education ($18 million in TCV). Without disclosing specific revenue data for IBM-Fed, IBM noted that its federal business accounts for less than 5% of IBM’s total corporate revenue and less than 10% of IBM Consulting sales, or, according to TBR estimates, about $490 million in 1Q25, up 3% year-to-year.
 
We note that none of the USAID awards terminated or scaled back by DOGE were listed on the GX2 website. IBM CFO Jim Kavanaugh indicated during the 1Q25 earnings call that IBM-Fed had a “handful of contracts” canceled by DOGE, affecting about $100 million worth of contracts in IBM Consulting’s $30 billion (on an annualized basis) backlog.

The advisory business within IBM-Fed bore the brunt of DOGE-based pressures; the company’s core technology operations may have largely been spared

IBM indicated during the earnings call that 40% of IBM-Fed’s revenue stems from technology-focused work described as “high-value annuitized revenue under contract” and, by implication, is so far unscathed by DOGE. IBM-Fed blends its hybrid cloud, AI and security technologies to offer federal agencies a suite of transformative solutions that are very technology-centric and mission-enabling by nature. Conversely, 60% of IBM-Fed’s sales derive from advisory-based work, which company executives noted during the earnings call would be “more susceptible to discretionary efficiency-type programs.”
 
Based on data about IBM-Fed’s canceled contracts on the GX2 website, we believe the advisory work affected by DOGE included cloud transition and support services, data standards testing and implementation, data quality support services, the acquisition and implementation of integrated workplace management system licenses, and “data at rest” support services (i.e., data that is stored and not being actively used or transmitted). Other contracts were “terminated for convenience,” according to the GX2 website, which did not provide a specific description of the canceled services.
 
IBM-Fed, according to IBM CEO Arvind Krishna, processes claims for veterans, provides procurement services to the General Services Administration (GSA), and has implemented and is currently operating payroll systems for several federal agencies. Krishna acknowledged that “some areas around the edges” of this work “could be viewed as discretionary” by DOGE, but that the bulk of IBM-Fed’s services are mission critical and technology focused.

IBM-Fed will double down on its core cloud, security and AI capabilities to successfully traverse the DOGE-disrupted federal IT space in 2025

According to TBR’s 1Q25 IBM Consulting Earnings Response, “IBM Consulting could experience variability in revenue growth in 2025, and IBM is cautious about the revenue contribution from the business to total corporate revenue due to possible further tightening of discretionary spending driven by macroeconomic uncertainty and the U.S. Department of Government Efficiency’s (DOGE) activities.
 
However, IBM Consulting will continue to gain ground in areas such as generative AI (GenAI) due to IBM’s early advances in the segment, diversifying revenues through new areas of expansion.” To buffer its 2025 sales growth against DOGE’s cost-rationalization efforts and offset revenue losses from the cancellation of advisory work deemed discretionary (and thus expendable) by DOGE, IBM-Fed must play to its strengths in AI- and security-infused hybrid cloud solutions and emphasize how well its offerings align with DOGE’s efficiency agenda.
 
IBM-Fed won large-scale programs with civilian and defense agencies in 2024, thanks to the additional delivery and offerings scale in digital transformation it obtained by acquiring Octo Consulting in late 2022, another advantage and a key selling point for IBM-Fed when advising or coaching the DOGE advisory board. While Octo’s pure play advisory capabilities expose IBM-Fed to DOGE’s federal spending cuts in traditional consulting services, Octo’s oLabs center of excellence showcases IBM-Fed’s acquisition-enhanced cloud, security, data science and DevSecOps capabilities that sync well with the IT priorities of the Trump administration.

IBM-Fed must accelerate its expansion within the DOD and among national security agencies, particularly by emphasizing its strengths in cloud

Octo’s oLabs also serves national security and defense agencies. The Trump administration has indicated national security will be an overarching budget priority during its term and has hinted at a federal fiscal year 2026 (FFY26) defense budget surpassing $1 trillion for the first time, underscoring the urgency for IBM-Fed to accelerate its expansion with the Pentagon, where it has been gaining traction since acquiring Octo.
 
According to TBR’s 1H25 IBM Federal Vendor Profile, “Some federal IT industry observers believe the Trump administration’s DOGE will accelerate cloud investment as federal agencies may be forced to outsource more operations deemed outside ‘Inherently Governmental Functions (IGF).’ Cloud adoption in the Department of Defense (DOD) continues to far exceed civilian cloud investment, which the GSA’s Federal IT Dashboard (FITD) estimated to be $8.2 billion in FFY24, up from $5.5 billion in FFY23.”
 
IBM-Fed could leverage IBM’s 1Q25 $6.4 billion acquisition of HashiCorp to accelerate DOD-based expansion, as HashiCorp has helped the DOD migrate more than 3,000 applications to the cloud with its Terraform (Infrastructure as Code software) and Vault (identity-based security) tools designed to facilitate migrations to multicloud architectures. The DOD has clearly indicated it favors a multicloud approach for implementing cloud-based edge computing solutions.
 
*TBR refers to IBM Consulting’s federal IT operations as IBM-Fed. IBM-Fed is not an official business line title used by IBM or IBM Consulting. The business defined by TBR as IBM-Fed resides within IBM Consulting’s U.S. Public and Federal Market group.

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.

Significant market disruption likely in near and long term

Trade wars and tariff uncertainties conjure up visions of cargo ships, ports, factories and stacks of goods stranded by economic chaos, not consultants and IT services professionals. Fear, uncertainty and doubt are usually good for the consulting business, while the higher costs of running a business fuel demand for more outsourcing. This time, things might be different. This trade war, even if partially suspended for now, may significantly disrupt professional services, especially if tariffs continue creeping into new areas and the trust deficit continues to grow. Steel now, services later.
 
TBR believes three areas will likely experience added near-term stress if the trade war continues: acquisitions, sales cycles and staffing. Longer-term, more seismic changes may come to the H-1B visa program, regionalization efforts among the Big Four firms, and onshore/offshore talent models. Looming over all of these disruptions, at least at the moment, is the potential for a grand decoupling of the U.S. and China economies, with incomprehensible knock-on effects. Those near-term disruptions share a common denominator: macroeconomic uncertainty.
 
Making the business case for a significant acquisition becomes harder in a recession-fearing market. When clients extend sales cycles because they’re afraid to commit suddenly more precious resources to upgrades, modernizations or transformations, growth slows for consultancies and IT services companies. And when growth slows, so does hiring.
 
At its core, professional services is all about people. And when recruiting, rewarding and retaining people are pressured, everything is pressured. To understand how tariffs and trade wars could hurt consultancies and IT services companies, even in the short run, it is critical to step back and realize these professional services providers serve every industry. They may be in and of one industry themselves — professional services — but their clients span every industry that exists. When the steel, computer chip, automobile, bourbon and lumber industries get upended by tariffs, so do the consultancies and IT services companies serving them.
 

Local and regional talent may be key to revenue growth

Powering through the near-term challenges, IT services companies and consultancies may then face structural changes to their operating environment, many centered on talent, starting with a reevaluation of the onshore/offshore mix. India-centric companies, which have historically relied on H-1B visas (at least to some degree; TBR appreciates that their reliance has varied widely), may find a less accommodating atmosphere in the U.S. and possibly even an unwillingness by potential candidates to relocate to the U.S.
 
At the same time, the Big Four firms may slow down their regionalization efforts, as having highly country-specific capabilities and dedicated staff may become a greater asset than more explicitly globalized organizations. TBR believes the more extreme outcomes around H-1B visas remain unlikely, while staying cognizant that the current trade war and tariff uncertainty also seemed unlikely a year ago. TBR does believe one highly likely outcome of the current trade crisis is a reassessment — by all IT services companies and global consultancies — of the overall onshore/offshore model. The recent uptick in global captive centers in India may be indicative of an enterprise trend toward more tightly owned and controlled offshore resources, but that was already the norm among IT services companies and consultancies prior to the trade war threat.
 
If trade wars persist, local and regional talent may become the key to sustained revenue growth, tied to local and regional economic growth overall. In other words, whichever company has the most and the best people on the ground in the fastest-growing places will continue to grow the most rapidly. It seems like a good time for the Big Four to have every country member firm run its own show as the on-the-ground market conditions start becoming even more disparate.
 

Watch now: TBR Principal Analyst & Practice Manager Patrick M. Heffernan discusses trend expectations for GenAI in the Professional Services market in 2025

Tariffs on services could further complicate market landscape

Returning to the starting image, trade wars evoke cargo ships, not consultants, and so far the Trump administration has not included services on the various tariff schedules. The U.S. currently runs a services trade surplus, and tariffs on services (as well as software) for various countries would be insanely difficult to assess. Artificial intelligence and the application of generative AI (GenAI) to procurement could make tariffs on services more manageable, but any efficiencies gained through those efforts would potentially erode the low-cost arbitrage advantage enjoyed by IT services companies and technology providers, damaging the overall U.S. trade balance.
 
Further complicating this picture, advances in AI and automation could mean any manufacturing jobs created in the U.S. as a direct result of tariffs would be digital FTEs, benefiting technology companies but undermining the Trump administration’s stated goals. In all, a mess, even if services remain off the tariff schedule.

Companies pursue multiple strategies around U.S.-China decoupling

Another potential scenario: Some economic and consulting leaders have been advocating for a U.S.-China decoupling for a few years, a possibility that is more likely now as every day brings another parry in the U.S.-China trade war. Some global consultancies have been kicked out of China. Others have downgraded their offices or quietly left on their own. And some are maintaining an arm’s-length relationship, and some are doing business as usual. Fools would predict which strategies will win out. TBR simply notes that companies may pursue multiple strategies.
 
For example, in August 2024 IBM closed its China Development Lab and China Systems Lab, laying off more than 1,000 employees across Beijing, Shanghai and Dalian. The closure was part of IBM’s initiative to relocate R&D functions to India and other countries due to competition and geopolitical tensions. However, IBM remains committed to working with clients in the Greater China region. In March IBM launched an initiative to expand in enterprise AI, hybrid cloud and industry-specific consulting services to drive digital transformation and implement AI and cloud solutions in China. As part of this initiative, IBM is working with China-based Great Wall Motor Co. Ltd. on digital transformation and global expansion. A complete decoupling may be unlikely, but consultancies and IT services companies that have financial flexibility and leaders who are prepared to take risks and withstand uncertainty will likely continue to thrive.

Amid ongoing organizational shifts at the Big Four, 5 key questions are consistently heard among their employees, clients and ecosystem partners

The Big Four professional services firms — Deloitte, EY, KPMG and PwC — have all been undergoing organizational changes in the last couple years. TBR regularly hears five questions about how these firms manage themselves, grow and change. Taking a longitudinal view allows TBR to see that recent restructurings, layoffs and offerings all reflect how these firms are trying to address the following: who gets the best talent, who decides what’s next, who sells, how everyone in a firm knows what everyone else does, and what role will managed services play.
 
At any given moment, one or more of these firms may have solid answers, a consistent strategy and a fit-for-purpose organizational structure. Eventually, all that changes. TBR keeps these five questions in mind as we cover the Big Four, and in this blog we’re unpacking each question and why it matters.
 

Question 1: Who gets the best talent?

The Big Four firms have some intellectual property, well-established brands and continually evolving alliances with technology providers, but their core asset is simply people. The firms bring clients talented people to solve business problems, provide assurance and/or implement a technology, leveraging a people arbitrage business model: I’ll supply the talent when you need it and for as long as you need it, then I’ll take that talent back. The catch? Within the firm, who decides which clients get the best talent? When capabilities around a particular technology or offering are in short supply, who decides how to allocate limited resources? Local office leaders, country leaders, regional leaders, global leaders, industry leaders, lead client service partners, technology alliance leaders?
 
Managing these competing demands for resources requires exceptional leadership and, as we’ve seen through the years, sometimes means upending the organizational structure to better suit a new way of deciding who gets the best talent.

Question 2: Who decides what’s next?

Over the last decade, the Big Four firms have launched practices in areas such as blockchain, cloud, AI, people advisory, a collection of SaaS offerings, and cybersecurity, to name a handful. Some of those practices have grown, some have disappeared and some just continue to be. In every case, a collection of partners made a business case to the partnership as a whole, getting enough consensus to invest people and money into building something new. At the same time, every Big Four firm has tweaked how it makes those decisions: which partners lead on new offerings, how consensus is built and how new offerings are evaluated over time — essentially, what’s next. If this seems like an inside-the-firm small consideration, look back at the list of practices — at least three generate significant revenue streams for each firm. With hindsight, maybe those new practices and offerings appear to be no-brainers, but some group of partners in each firm still had to make the case, pull together resources and convince the firm to bet on something new. Being late to market changes the way this question gets answered. So does the fear of being too entrenched in selling today to see what’s going to sell tomorrow.

Question 3: Who sells?

Speaking of selling, the Big Four have traditionally eschewed traditional sales teams, relying on every partner (and wannabe partner) to be responsible for landing new clients and expanding footprints within existing client bases. For generations, that worked well enough; however, as all of the Big Four firms’ offerings have become increasingly infused with technology, two developments have forced some changes.
 
First, highly skilled technology-focused talent didn’t always have the skills needed to sell and so couldn’t be evaluated, promoted and compensated in the traditional partner model. The Big Four all adjusted, creating new career paths for the valuable but not-partner-track professionals. Second, the technology-dependent offerings themselves became too complex for most partners to understand and sell on their own, creating an opening for professionals who combined tech skills and sales savvy. The ongoing challenges? Who decides which partners sell to clients? Software is fundamentally different from services, so if a firm experiments with selling software, is a dedicated software sales team necessary? How can partners in one service line sell clients on tech-heavy, specialized offerings from another service line? The Big Four firms continue bending the traditional selling model, and nearly every organizational change includes some element of tackling these “Who sells?” questions.

Question 4: How does everyone in a firm knows what everyone else does?

No one has conquered knowledge management — in any company, anywhere. The Big Four firms have repeatedly launched initiatives, platforms, and evaluation and compensation metrics trying to ensure that tax partners understand all the consulting offerings and that audit partners know when and how to bring in transaction partners. TBR believes the digital transformation and innovation centers that all four firms launched in the mid-2010s (e.g., PwC’s Experience Centers) were intended, as a side benefit, to enhance internal knowledge sharing. Big Four leaders have told TBR that their fellow partners across all service lines learned something new about their own firm every time they attended a client session at one of the centers.
 
Today, all four firms are leveraging AI-enabled platforms to enhance internal knowledge management and will likely see significant improvements. But the challenge will persist, as new offerings, capabilities, use cases, learnings and people constantly refresh the pool of knowledge, which needs to be shared for the Big Four to bring their entire selves to clients. Further, forming regional super-partnerships and reducing 100-plus member firms to a few dozen reflect the need for operational efficiencies, better service for international clients, and, yes, enhanced knowledge management so that everyone in the U.K. knows what everyone in Singapore is doing.

Question 5: What role will managed services play?

If the previous four questions have been perennial challenges for the Big Four firms, shaping organizational structure and leadership priorities, this last one has been a slow-building, nearly existential question. How will professional services firms built on a prestigious reputation and elevated fees staff, price, manage and even grow managed services practices that are, by nature, more transactional than the traditional client relationship model? Each of the Big Four firms has taken a different path (which is one reason TBR sees these firms as concurrently so similar and so different), and each firm has adjusted its vision for managed services at least once in the last four years.
 
And, once again, one common element among all the reorganizations and restructurings has been competing views — within the firms themselves as well as among the partners — about what happens next with managed services. In TBR’s view, the role of managed services may prove to be the biggest differentiator among these four firms over the next five years, even as managing talent in a generative AI (GenAI) world and keeping pace with technology partners’ shifting demands challenge Big Four leadership.
 

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Conclusion: What it all means for clients, partners and the ecosystem as a whole

If you’re reading news on the Big Four, keeping these five questions in mind can be useful to understand the “why” behind the “what.”
 
If you’re a client, other questions matter more. (Are they solving your problem or not? Do you trust them? Do they bring you people you like? Nothing else matters.)
 
If you’re a technology partner in the Big Four ecosystem, these five questions are critical to understanding where your alliance is headed. Does your Big Four partner have the right talent to dedicate to your shared clients? Are they innovating with you, and who is leading that effort? Can they capably sell your technology? Do you understand what they bring to the table and what differentiates them from the other Big Four firms and the sea of IT services companies? Are they investing for the long haul or for a quick consulting gig?
 
Circling back, if you’re running a Big Four firm, how you’re addressing these questions helps determine your internal organizational structure and your strategy for the next five years. And how you explain it all to your ecosystem partners may determine how fast you grow alongside them.