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.

 

Content Updated: June 11, 2025

DOGE notwithstanding, SAIC’s 1Q25 fiscal performance was on target with expectations and historical patterns

SAIC reported its CY1Q25 (FY1Q26) fiscal results on June 2, and as in CY4Q24, the impact of DOGE was minimal on the company’s P&L, backlog or other fiscal markers. During SAIC’s 1Q25 earnings call, CEO Toni Townes-Whitley indicated that the annualized impact of DOGE on SAIC’s top-line revenue remained less than 1%, which TBR assumes refers to the proportion of total company annual revenue, or less than $75 million (based on FY25 sales of $7.59 billion).

 

SAIC posted quarterly revenue of $1.88 billion in 1Q25, up 1.6% year-to-year. Quarterly sales and year-to-year growth in 1Q25 were below TBR’s projections for revenue of $2 billion, or 8.3% year-to-year growth, but still in line with overall company guidance for FY26. SAIC’s 1Q25 gross margin of 11.1% was slightly weaker than TBR had expected, but operating margin of 6.4% came in stronger than TBR projections.

 

Company backlog of $22.3 billion was up 1.8% sequentially from $21.9 billion in 4Q24, with the sequential increase consistent with historical patterns. Bookings of $2.4 billion in 1Q25 were on par with the year-ago quarter ($2.6 billion in 1Q24) and were up sequentially from $1.3 billion in 4Q24, consistent with seasonal bookings patterns. SAIC’s quarterly book-to-bill ratio of 1.3 in 1Q25 was on par with its year-ago book-to-bill ratio of 1.4, though on a trailing 12-month (TTM) basis, book-to-bill of 0.8 in 1Q25 was down from 1.0 a year ago in 1Q24.

SAIC remains on track to reach its FY26 fiscal targets, at least as of 1Q25

SAIC does not expect erosion to its top-line growth, margins, earnings, adjusted EBITDA or cash flow from DOGE in the company’s FY26. SAIC also maintained its outlook for downward adjusted EBITDA guidance later in FY26. The federal procurement environment remains unstable, the federal fiscal 2026 (FFY26) budget negotiations must still take place, and the full scope of the Trump administration’s IT spending and other budget priorities is still in development.

 

For example, SAIC’s business development teams have experienced delays in procurement patterns with increasingly elongated decision cycles that could delay awards expected during FY26 until FY27. SAIC also reported high, post-inauguration turnover of procurement personnel at federal agencies in 1Q25 that has impeded business development and program funding, particularly on larger strategic awards, while procurement processes at some agencies are currently being revamped.

After the near-term disruption subsides in federal IT, the Trump administration’s IT investment plans will generate long-term opportunities

SAIC believes its portfolio of mission-centric solutions, its emphasis on speed-to-market in deploying its offerings, and its focus on embedding commercially developed digital technologies into its solutions align well with the Trump administration’s technology priorities and DOGE’s efficiency optimization goals.

 

In the Department of Defense (DOD) and Intelligence Community (IC), where SAIC generates 75% of its revenue, overall budget growth is expected in FFY26 prioritizing national security and force readiness, particularly in the U.S. Navy, U.S. Air Force and U.S. Space Force. Conversely, SAIC anticipates some funding challenges in its U.S. Army account during the remainder of FFY25 and into FFY26. Since FY24, SAIC has aggressively expanded its bidding activity across the federal space.

 

In 1Q25 alone, the company tendered proposals with a total contract value (TCV) of more than $7 billion with a FY26 goal to submit between $28 billion and $30 billion in bids. The company has nearly $20 billion in awards awaiting client adjudication as of 1Q25.

 

TBR expects the competition for net-new work and recompetes will intensify during the latter half of FFY25 (2Q25 and 3Q25), particularly in the civilian market. More than half of the $2.4 billion in new bookings SAIC landed in 1Q25 were for net-new programs, which the company hopes is an early sign of accelerating IT procurement activity across the space.

 

On-contract growth will also remain one of the chief objectives of SAIC’s business development strategy for the remainder of FY26, particularly with new programs being delayed by staffing shortages within agency-based procurement teams. Standing by its FY26 guidance also implies to TBR that SAIC expects the pace of on-contract growth will remain strong enough to sustain momentum toward its FY26 fiscal objectives, and sufficient to offset any deceleration in net-new award activity.

SAIC’s Civil business posted strong results in 1Q25; the company appears better positioned than some peers to ride out the DOGE-based disruption

By market, growth was led by SAIC’s Federal Civilian business group with 8% year-to-year sales growth in 1Q25 up from a year-to-year revenue contraction of 0.2% in the DOD & IC unit. In comparison, Leidos’ Health & Civil group expanded sales 7.7% in 1Q25 while CACI’s Federal Civilian Agencies unit grew revenue 13.2%.

 

In stark contrast, Booz Allen Hamilton (BAH) suffered a very sudden stoppage in growth in its Civil group in 1Q25. Year-to-year top-line expansion in BAH’s Civil unit decelerated after the segment posted 13 straight quarters of double-digit growth from 3Q21 through 3Q24. Civil growth was 7.8% in 4Q24 and -0.1% in 1Q25.

 

According to TBR’s 1Q25 Booz Allen Hamilton Earnings Response, “The volume of disclosed deal activity plummeted in 4Q24 and 1Q25, a harbinger of tough times ahead for federal IT’s most venerable advisory-led firm.” BAH also expects a low-double-digit decline in Civil revenue in FY26, with the bulk of the contraction transpiring in FY1H26 (2Q25 and 3Q25). BAH’s Civil unit posted FY25 sales of $4.17 billion, up 5.7% year-to-year from $3.83 billion in FY24. A year-to-year decline between 10% and 12% in FY26 implies Civil sales of between $3.57 billion and $3.67 billion, or down between $400 million and $500 million.

 

Conversely, SAIC expects favorable IT spending patterns in FFY26 in the company’s five largest civilian accounts, which account for over 70% of the company’s Civil revenue (or about $1.23 billion based on FY25 civilian sales of $1.75 billion). The Department of Transportation is expected to receive $1 billion in the federal budget to support modernization at the Federal Aviation Administration, while the Department of Homeland Security (DHS) will be allocated over $40 billion to develop and install new border security technologies.

 

IT spending at the U.S. Department of State is expected to remain stable, and SAIC recently won a two-year extension on the department’s strategic Vanguard program. SAIC also anticipates higher IT budget outlays for modernization initiatives at the Department of Treasury and the Department of Veterans Affairs (VA). In the past, SAIC has struggled to win some big-ticket recompetes and typically factored renewal risk into its guidance, but as of 1Q25, the only recompete headwinds on its books are the loss of a NASA program in FY25 and the company’s decision to forgo bidding on lower-margin portions of the recent Cloud One recompete.

 

SAIC is instead focusing on the higher-value aspects of Cloud One where the company can showcase its expanding cloud capabilities (another area of SAIC’s portfolio that lines up well with the IT spending priorities of Trump 2.0).

 

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 receive upcoming series blogs in your inbox as soon as they’ve published.

 

Hardware vendors are diversifying their portfolios to drive higher software attach rates, while software-centric vendors like Microsoft and Oracle greatly prioritize cloud-native software

Over the past several years, the cloud software components market has shifted. Microsoft and Oracle are no longer dominating the market as they prioritize their native tool sets and encourage customers to migrate to public cloud infrastructure. Driven largely by weaker-than-expected purchasing around Microsoft Windows Server 2025, aggregate revenue growth for these two software-centric vendors was down 3% year-to-year in 3Q24.
 
Over the same compare, total software components revenue for vendors covered in TBR’s Cloud Components Benchmark was up 14% in 3Q24 and total cloud components revenue was up 8%. In some ways, this dynamic has made room for hardware-centric vendors such as Cisco and Hewlett Packard Enterprise (HPE) to move deeper into the software space, particularly as they buy IP associated with better managing orchestration infrastructure in a private and/or hybrid environment.
 
Though revenue mixes are increasingly shifting in favor of software, driven in part by acquisitions (e.g., Cisco’s purchase of Splunk), hardware continues to dominate the market, accounting for 80% of benchmarked vendor revenue in 3Q24. Industry-standard servers being sold to cloud and GPU “as a Service” providers are overwhelmingly fueling market growth, more than offsetting unfavorable cyclical demand weakness in the storage and networking markets.
 
This growth is largely driven by the translation of backlog into revenue, but vendors are still bringing new orders into the pipeline, which speaks to ample demand from both AI model builders and cloud providers. However, large enterprises are increasingly adopting AI infrastructure as part of a private cloud environment to control costs and make use of their existing data.
 

 

Key takeaways

Average cloud components revenue growth among benchmarked vendors accelerated to 26.2% year-to-year in 3Q24. Hardware leaders like Dell Technologies and Lenovo continued to benefit from strong hardware demand.
 
Cisco’s acquisition of Splunk is greatly bolstering the company’s top line, though it is not enough to offset challenges the company continues to face in its networking business.

Ongoing strength in AI demand from services providers continues to offset relatively weak demand from enterprises; however, enterprise AI demand is expected to grow materially in 2025

Despite ongoing cyclical weakness in the data center networking market, strong demand for cloud services, including those supporting AI and generative AI (GenAI) workloads, drove 28.1% year-to-year growth in benchmarked cloud components hardware revenue during 3Q24. Many organizations have been hesitant to deploy AI infrastructure on premises as they continue to evaluate the optimal methods and architectures to handle workloads tied to the rapidly developing technology.
 
As such, many organizations have been leveraging cloud services for their AI and GenAI workloads, but as the technology matures and new applications are developed, TBR expects organizations will increasingly embrace hybrid AI, leveraging public cloud services and AI deployments on premises both in the core data center and at the edge, which will continue to drive robust demand for cloud components hardware.

Cloud hardware components segment vendor spotlights

Dell Technologies

Dell Technologies continued to lead all benchmarked vendors in terms of cloud hardware revenue scale in 3Q24. While TBR estimates Dell’s cloud revenue expanded across all three hardware segments in 3Q24, Dell’s growth was most robust in the cloud server segment, where the company remains a leader among its OEM peers due to its brand legacy and its strong relationship with key suppliers, such as NVIDIA, and large-scale buyers, including enterprises and services providers.

Lenovo

With manufacturing facilities around the world and ODM-like capabilities unmatched by its infrastructure OEM peers, Lenovo is uniquely positioned to take advantage of demand from cloud services providers. These types of deals often require custom design and engineering components and are high volume but low margin by nature, driving Lenovo’s near triple-digit year-to-year aggregate cloud hardware growth. It is worth noting these deals with cloud services providers center on Lenovo storage and compute servers.

IBM

While IBM’s proprietary servers, such as the Power lineup, continue to be favored by certain industries for specific mission-critical and data-intensive workloads, such as SAP HANA and S/4HANA, organizations are increasingly prioritizing spend on industry standard infrastructure for both accelerated and traditional computing to support next-generation AI workloads. As such, IBM’s benchmarked aggregate infrastructure and cloud hardware revenues have both suffered due to falling sales.

TBR’s cloud research

TBR’s Cloud & Software market and competitive intelligence research gives clients a true understanding of how technology and business strategies are being used by leading vendors to address the growing desire for cloud-enabled solutions. Our unique research in this space includes financial data that goes beyond just reported data, revenue and growth benchmarks, go-to-market analysis, ecosystem and partnership teardowns, and market sizing and forecasting.
 
Vendor and market coverage in TBR’s cloud research stream includes, but is not limited to, Accenture, Amazon Web Services, Google, Microsoft, Oracle and SAP as well as cloud and software applications, cloud infrastructure and platforms, cloud data and analytics, and the cloud ecosystem.
 
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Current state of deployment services in the telecom industry

With deployment services growth tied to 5G rollouts in large markets — notably India, China and the U.S. — most vendors in TBR’s Telecom Infrastructure Services Benchmark saw segment revenue decline in 3Q24 as these markets are in post-peak 5G spend territory. The pace of India’s aggressive 5G build has decelerated since 4Q23. Ericsson outperformed its closest peers due to its Cloud RAN deployment for AT&T.
 
The deployment services market faces growing headwinds, including communication service provider (CSP) consolidation, open vRAN’s lower installation costs, and reduced demand for site location and construction (SL&C), offset somewhat by hyperscaler spend and 5G rollouts in select developing markets. Hyperscaler investments provide incremental volume to the market, and TBR notes these companies are increasing their investments in access technologies (e.g., Google Fiber).
 
Over the past few years, Ericsson, Nokia and Tech Mahindra have deemphasized deployment services to improve telecom infrastructure services (TIS) margins, and other vendors have similarly reduced their own exposure to labor-intensive deployment, especially as wage inflation accelerates. Ericsson outsourced field services in the U.S. to Authorized Service Providers effective Oct. 1, 2023. This could drive more field installation work to third-party construction firms, such as Dycom and MasTec.
 
5G RAN projects drive investment in optical transport for fronthaul, midhaul and backhaul, as well as the core network. Ciena, most notably, has capitalized on this trend. Part of the rationale for Nokia’s acquisition of Infinera is to gain greater exposure to this domain.
 
CSPs have deferred 5G core investment in general because they do not see a clear path to ROI and standards that would enable new features for the network, especially those that pertain to B2B, have been delayed. The ability to deploy 5G-Advanced services will spur only incremental growth in this area of the market.
 
TBR expects fiber deployment will increase in 2025 and 2026 as broadband services are extended to unserved and underserved areas globally, with government funds supporting CSP efforts in this area, especially in the U.S.
 

 

China-based leaders’ TIS revenue declined as domestic 5G RAN rollouts slowed; Nokia’s revenue decreased due to reduced activity in India and lower market share in the U.S.

Deployment services leaders

Revenue leader: China Communications Services (CCS)

CCS derives most of its deployment services revenue from the network infrastructure domain but is increasing its exposure to data center deployments to diversify. The supplier is taking market share from smaller competitors in China as well as Huawei and ZTE. CCS is aligned with and has benefited from the Chinese government’s Belt and Road Initiative, which supports international revenue.
 
Revenue declined year-to-year in 3Q24 as 5G deployment activity in China lessened, partially offset by CCS increasing its account share from its largest customer, China Telecom. TBR believes CCS’ installation work as part of 5G RAN builds is transitioning to maintenance. CCS is increasingly deploying gear in international markets such as MEA, particularly Saudi Arabia and CALA, though volumes in this region pale in comparison to the company’s presence in China.
 

 

Growth leader: Hewlett Packard Enterprise (HPE)

Deployment is a noncore area of HPE’s TIS business as the company is much more concerned with monetizing maintenance services. HPE largely leaves deployment to its partner base.
 
TBR believes HPE participates in some server installs for CSP clients adopting its hardware as part of open and/or virtualized RAN deployment, such as for Telus in Canada.

Telecom infrastructure services market overview

TIS revenue continued to shrink outside North America in 3Q24 while operating margins sustained recovery

Aggregate TIS revenue among benchmarked vendors declined 2.8% year-to-year in 3Q24, falling across all segments and regions, with the exception of North America, which grew 1.9% year-to-year. North America growth was largely due to favorable comparisons to 3Q23, when aggregate revenue declined 12.9% year-to-year, but also because of AT&T’s open RAN deployment and hyperscaler investments in optical projects.
 
Conversely, several vendors, including Nokia, Ericsson, Samsung and Ciena, are seeing sharply lower revenue in APAC as India’s CSPs reduced investment following 5G RAN rollouts by Reliance Jio and Bharti Airtel. Huawei and ZTE are also seeing revenue in APAC decline due to loss of share in India as their installed bases of LTE and optical equipment are replaced by equipment from trusted vendors, as well as lower spend on 5G RAN deployments in China, which peaked in 2022.
 
As CSPs wind down 5G coverage rollouts in China, the U.S. and India in favor of densification, TIS operating margins are growing. Declining deployment activity, which tends to carry the lowest margins among TIS segments, in these markets — especially India — is the main driver of improving TIS operating margins. In 3Q24 deployment services constituted 18.2% of aggregate revenue, down 120 basis points year-to-year. Meanwhile, maintenance services, which tend to carry the highest margins among the TIS segments, grew to 34.2% of aggregate revenue, up 80 basis points year-to-year.
 
Benchmarked vendors’ aggregate TIS operating margin increased year-to-year for the fourth consecutive quarter, following six consecutive quarters of declines. Aggregate operating margin grew from 11.1% in 3Q23 to 12.4% in 3Q24. TBR expects aggregate TIS operating margin gains to continue into 2025 despite an anticipated rebound in TIS revenue in India (where margins are typically low) as new RAN agreements that Ericsson, Nokia and Samsung have with Vodafone Idea and Bharti Airtel come online, due to the relatively smaller scale of these contracts compared with initial coverage rollouts by Bharti Airtel and Reliance Jio. In addition, TBR believes the digital transformation market will recover as CSPs receive clarity on M&A, driving high-margin professional services revenue for several IT services vendors. Further, AT&T’s open RAN rollout will peak in 2025, though it will continue through at least 2026, and margins in the U.S. tend to be higher than in other countries.

TBR’s Telecom Infrastructure Services Benchmark

Telecom infrastructure services includes all external spend (capex and opex) on services by communication service providers (CSPs), including telcos, cablecos and hyperscalers, on or related to communications and IT infrastructure. For our Telecom Infrastructure Services Benchmark, TBR categorizes TIS revenue into four main segments: deployment services, professional services, maintenance services and managed services.
 
Vendor coverage for this research includes, but is not limited to, Amdocs, CGI, Ciena, Ericsson, Fujitsu, Infosys, Juniper, Nokia, Oracle, Samsung, Tech Mahindra and ZTE.
 
Download a free preview of TBR’s latest telecom infrastructure services research: Subscribe to Insights Flight today!

Moratorium on PwC business tells cautionary tale

My previous and current careers collided last week when the Kingdom of Saudi Arabia’s Public Investment Fund (PIF) announced a one-year moratorium on doing business with PwC (details continue to emerge even as I type this and the exact contours of the new Saudi PIF and PwC arrangement will likely shift, so I won’t try to evaluate a moving target). Having spent 13 years as a U.S. diplomat — including living in the Middle East for four years and taking at least a dozen trips to Saudi Arabia while working at the U.S. State Department, White House, and Department of the Treasury — I have some thoughts on how business and politics work in that region. I’ve also spent almost two decades trying to understand the Big Four firms, and I recently sat down in Washington, D.C., with some of PwC’s leadership to discuss the market, the firm’s ecosystem and what’s coming in 2025.
 
Bottom line upfront: Understand that this is a Saudi story, not a PwC story, although undoubtedly it doesn’t feel that way in PwC’s corridors right now. Saudi Arabia has an opportunity to send some critical messages to players in the country, in the region and globally, and the kingdom is taking advantage. If you’re among the many IT services companies and consultancies — and other multinational companies, although they’re less of a concern to me professionally right now — investing aggressively on growth in the Middle East and you’re misinterpreting this recent development as what PwC did wrong instead of listening to what the Saudis are trying to say, take a long pause and step forward only cautiously.
 

What are the Saudis saying?

First, the Saudis, through the PIF, have issued a warning — a shot across the bow — to management consultancies, IT services companies and others that have been enjoying a seemingly relentless flow of funds from the kingdom: Tighten up your accounts, sharpen your delivery, ensure your value proposition and the Saudis’ return on their investment in you will be abundantly clear. The McKinsey & Co., Boston Consulting Group and Deloitte partners may be enjoying some schadenfreude at the moment, but they understand the message coming from the Saudis: Bring tangible value, or don’t send us a bill.
 
Second, the Saudis have been feeling the positive heat of the world’s economic attention for a few years now, particularly as new leadership has pushed hard to invigorate the non-oil part of the kingdom’s economy. I wrote recently about what that has looked like in the United Arab Emirates — based on a webcast by PwC, coincidently — and for the Saudis, the initial success of those efforts and the increased global market and investor attention have been welcomed. What better time to send a message that Saudi Arabia has a transparent, high-functioning, rules-based economy, long since evolved from the souks of the old days and the opaqueness that characterized so much of the kingdom as late as the mid-2000s?
 
The Saudi Arabia and PwC story serves that purpose perfectly: We’re holding accountable a Big Four accounting and consulting firm and subjecting them to our high standards, just like every other advanced economy. The particulars of the kingdom’s regulatory environment and business culture can certainly be up for discussion, but the message, again, is clear: Everyone needs to play by the Saudis’ rules.
 
And maybe that’s the biggest takeaway as this story develops. Operating in the Middle East requires local knowledge, a regional presence, and an on-the-ground understanding that can only be sustained by being there. Yes, I am writing this 6,303 miles from Riyadh, but lessons learned hard are lessons long remembered, even over long distances. TBR has seen a surge in IT services companies’ and management consultancies’ investments in the Middle East and heard expectations around growth in the near term.
 
In my view, those investments and expectations are smart strategies and well founded. It’s the execution that matters, and a significant — perhaps the most significant — part of that execution comes from knowing the ground, reading the messages being sent, and understanding the story behind the story.

IT services leaders navigate choppy macroeconomic waters as discretionary spending tightens

Increased managed services activities around cost optimization and streamlined business processes and the recovering BFSI segment will help vendors alleviate revenue growth pressures in 2025

Due to tightened discretionary spending, the top 10 IT services revenue leaders continued to experience decelerating or declining trailing 12-month (TTM) revenue growth year-to-year in U.S. dollars during 3Q24. Accenture’s revenue landed above the midpoint of the company’s guided range, as Accenture leveraged its scale and broad-based functional and technology expertise across service lines to drive sales around helping clients build and manage secure foundations. Accenture’s FY24 total revenue growth of only 1.2% year-to-year — compared to 4.1% in FY23 and 21.9% in FY22 — reflects the choppy macroeconomic environment Accenture has been navigating, particularly in Accenture Strategy & Consulting, as buyers continue to limit discretionary spending.
 
At the same time, managed services enabled through Accenture Technology and Accenture Operations remains a strategic priority for clients seeking to drive cost optimization and streamline business processes, evidenced by Managed Services growth of 4.6% year-to-year in 3Q24 and 3.9% year-to-year in FY24.
 

 
Tata Consultancy Services (TCS), which currently ranks No. 2 in revenue in TBR’s IT Services Vendor Benchmark, has noted that clients remain cautious about spending, but the company’s solid internal execution has led to deal momentum across markets. Banking, financial services and insurance (BFSI), TCS’ largest revenue-contributing segment, is rebounding, which indicates a positive trajectory for the company heading into 2025.

IT services operating margins are stabilizing

Average TTM operating margin contracted for 4 of the top 10 category leaders

Operating margin performance is stabilizing in IT services, as just four of the top 10 margin leaders experienced year-to-year TTM operating margin contractions in 3Q24, compared to eight of the top 10 margin leaders experiencing margin contractions in 3Q23.
 
Infosys’ TTM operating margin declined 40 basis points year-to-year in 3Q24, landing within the guided range of between 20% and 22%. The use of generative AI (GenAI)-enabled sales automation tools, such as the Navi sales assistant, which accelerates time to insight, will help Infosys further improve utilization and decrease its reliance on sales support personnel. This will bolster the company’s margin, provided Infosys can withstand potential clients’ requests to lower pricing related to the use of automation.
 
TCS’ TTM operating margin improved 40 basis points year-to-year in 3Q24 as wage inflation appears to have leveled off and overall headcount remains stable. We expect TCS’ operating margin to remain in a similar range for the foreseeable future, as the company’s pricing flexibility, supported by its lower-cost resources, can help offset cost increases.
 
Wipro IT Services’ (ITS) TTM operating margin increased 10 basis points year-to-year in 3Q24 as the company benefits from operational improvements. While Wipro ITS faces pressures from furloughs and salary increases, it benefits from streamlined operations and a successful sales strategy to drive margin improvements. However, Wipro ITS’ margin performance might worsen as the company executes on training programs to build industry and technology capabilities in an effort to better work with clients, as well as expands its pool of AI experts, which currently consists of 44,000 employees.

IT services market outlook

Average revenue growth for benchmarked vendors will accelerate but also remain pressured due to macroeconomic challenges

TBR estimates IT services TTM revenue will increase slightly in 4Q24 compared to revenue growth of 0.1% in 3Q24 and a deceleration from revenue growth of 3.5% in 4Q23. Demand for greater productivity and lower costs continues to create digital transformation opportunities around finance and supply chain improvement, cloud modernization, and application development. Lingering pressures in discretionary spending negatively affected consulting activities and backlog realization in 3Q24, and this trend will continue in 4Q24. However, managed services activities are picking up speed as clients strive to optimize costs and streamline business processes.

TBR vendor spotlights

Accenture added $785 million in net-new revenue in FY24, the lowest amount since FY09 and FY10, following the financial crisis. We expect Accenture to improve performance and add over $3 billion in net-new sales in FY25. Maintaining a strong household name among IT buyers often comes at a price, with the company accelerating its acquisition activity to protect its turf. While Accenture has added new skills and IP that can help drive long-term organic revenue, the company’s acquisitions have also helped to buy short-term revenue growth as half of the projected expansion in FY25 will be due to inorganic contribution. Additionally, Accenture’s aggressive investment activity within the GenAI space has left partners and rivals wondering why Accenture is making so many acquisitions now when all vendors face similar challenges when it comes to securing the data quality needed to explore the full potential of the technology.
 
TCS’ core capabilities in integration, application and outsourcing services engagements sustain its healthy revenue growth levels. To reach the upper range of its revenue growth targets, TCS is strategically investing in GenAI capabilities. By initially focusing on lower-risk, high-volume applications like chatbots and virtual assistants, TCS is building a strong foundation of AI expertise. As GenAI matures in the market, the company aims to expand its offerings, positioning TCS to capitalize on the GenAI-related market opportunity and deliver enhanced value to clients. The company’s continued development of proprietary software and platforms aims to attract clients and support engagements as a foundational framework.

 

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