How IT Services Companies Are Preparing to Capture Surge of Local Opportunities in India

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In this blog, we explore how global companies in ICT are shifting focus from outsourcing to tapping into India’s domestic market due to its rapid growth. To learn more about the next era of India’s economic growth, join TBR for a live discussion and Q&A Thursday, Oct. 31. Join TBR’s Professional Services team as they highlight whether local IT services vendors can capture opportunities from the Big Four, which vendors will lead the market overall and more. Save your seat today!

Global Companies Across ICT Industry Are Positioning for an Increase in Local Opportunities in India’s IT Services Market

As India’s growth has outpaced that of all other major countries for the better part of the last decade, global companies are shifting their focus in India from only outsourcing to realizing the country’s domestic market potential. India-based IT services vendors have seen a significant increase in domestic projects, particularly in 2Q24. For example, Tata Consultancy Services’ (TCS) domestic revenue increased 59% year-to-year and 14.1% sequentially, while Infosys’ increased 17.1% year-to-year and 45.5% sequentially.

 

According to TBR’s Spring 2024 Global Delivery Benchmark, “We expect India to gradually expand its global economic profile, attracting vendors from across the ICT industry to invest and position themselves for locally sourced opportunities.” As always, our analysis starts with the strategies, investments and performances of leading IT services companies and consultancies.

 

This year, Capgemini and Cisco have increased their reach with India-based clients. Capgemini has accelerated its hiring pace in India to support domestic IT services demand growth. HCLTech partnered with KPMG to combine its technology services with the consulting firm’s business expertise to meet India-based client demand for digital transformation projects. Additionally, Kyndryl has signed a deal with Canara Bank in India, while Wipro also has recent domestic deals with Anna University and Rajalakshmi Institutes.

 

In addition to the rising need for IT services in India to serve the local economy, a key driver of the trade interest in India is the desire to reduce dependence on China while geopolitical hostilities are on the rise. Although both demand and interest in trade in India are growing, India’s infrastructure and income disparity consistently remain limiting factors to India’s growth.

Infrastructure Challenges and Investment

Amid growing trade, India’s current transportation networks are often too small and in poor condition. India’s roadways lack the amount of space needed to keep traffic consistently flowing, resulting in gridlock and high transit time and restricting operational efficiency in the economy.

 

Additionally, road damage due to flooding and washout is frequent during the monsoon season, as is damage to other infrastructure. Simply put, India is growing faster than its infrastructure can reasonably withstand, even with extensive infrastructure spending. India’s digital infrastructure also has some challenges, as evidenced by internet shutdowns, including one in Manipur following anti-government protests that blocked internet access for 212 days, affecting 3.2 million people.

 

Since 2015 the government of India has worked to build more robust digital infrastructure to benefit all populations with the Digital India initiative. In 2016, the government launched the Unified Payments Interface (UPI), a digital payments solution for interbank and person-to-person payments, providing security for transactions in the informal economy. The International Monetary Fund (IMF) reports over 8 billion transactions occurred each month in 2022, transforming an economy that had primarily relied on cash. JM Financial, an investment bank in India, estimated before the release of UPI that over 95% of transactions were completed in cash.

 

Perhaps equally transformative is the digital ID system, Aadhaar. Upon Aadhaar’s release in 2009, one in eight citizens had verifiable identification. Verifiable identification improved access to financial institutions, with the percentage of India citizens with a bank account growing from 25% to over 80% currently. The IMF states that, “India’s digital public infrastructure, built within the regulatory system, has enabled its citizens to achieve access to the formal economy through a verifiable digital identity; participation in the nationwide marketplace through a fast payment system; and secure welfare gains in finance, health, and commerce through data empowerment and data sharing.”

IT Services Vendors’ Investment

IT services vendors have also seen the value in professional training and development. Vendors have increased investment in talent and innovation in the local Indian market, especially through centers of excellence (CoEs) in 2Q24.

 

Capgemini has established a CoE in Uttar Pradesh with the Noida Special Economic Zone to develop skills in AI, machine learning, financial technology and robotics for unemployed adults and youths in need. Likewise, IBM launched a CoE with LTIMindtree in India to foster innovation between IBM’s watsonx and LTIMindtree’s engineering skills. At the same time, IBM is working with India’s Ministry of Electronics and Information Technology around innovation in AI, semiconductors and quantum technologies. Infosys partnered with the Financial Times to provide training to India’s youth by utilizing the newspaper’s content and the Infosys Springboard platform.

 

Based on TBR’s ongoing analysis of the IT services and consulting market, we anticipate the companies that will outperform peers in the local Indian market will share three characteristics: working closely with government initiatives, investing in talent and innovation in India, and bringing new technologies to India’s market quickly. Over the next year, TBR will publish special reports about the leading IT services companies and consultancies as they take advantage of — or miss the opportunities in — a changing India market.

GenAI Use Cases: Where Enterprises Are Investing Now and What’s Next for Multimodal AI

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Generative AI (GenAI) clients are looking for offerings that complement existing technologies and use cases built around customer zero and that deliver fast ROI. In this blog, we highlight some of the GenAI use cases currently seen in the professional and IT services, cloud, IT infrastructure, and telecom industries. To learn more about TBR’s AI and GenAI analysis and data, start your TBR Insight Center™ free trial today!

 

Perhaps no two questions have bedeviled the business side of the GenAI space more than which use cases are resonating with clients and where TBR and others expect to see near-term adoption and growth.

 

According to TBR’s research, use cases that provide a quick ROI with minimal enterprisewide disruption and no significant increase in risk profile get funded now; use cases with demands on data, dependencies on external data and/or long horizons to ROI remain the subjects of innovation sessions, proofs of concepts and road maps.

As Multimodal AI Extends GenAI’s Promise, Buyers Still Seek Immediately Effective Use Cases

Different from traditional large language models (LLMs), multimodal AI can process and interpret several types of data inputs, including text, images and sounds, at the same time. This versatility makes multimodal models critical for expanding the viable use cases for GenAI, specifically to support the creation of marketing content.

 

According to TBR’s latest research, multimodal AI is currently a top five use case for GenAI. Cloud service providers and foundation model vendors alike have made efforts to internally develop multimodal models or form collaborations to harness GenAI’s data interpretation capabilities. TBR believes cloud service providers and foundation model vendors will drive innovation of multimodal models to improve data interpretation and insights across all business segments.
 
Graph: Use Cases GenAI Is Currently Best Suited For (2H23)

GenAI Use Cases Across Industries

Professional and IT Services GenAI Use Cases

  • In February 2024 Cisco launched Motific, a SaaS solution that enables adoption and application of GenAI in support of clients’ needs around data, security, AI and overall cost reduction. Through Motific, Cisco speeds up GenAI deployment while using automated controls to reduce the risks associated with the technologies. Leaning on its security prowess, Cisco applies its risk management tools, sensitive data capabilities and monitoring services to protect clients’ environments.
  • Hewlett Packard Enterprise (HPE) introduced HPE GreenLake for LLMs, a cloud service that provisions AI-optimized high-performance computing resources designed for dedicated single-workload utilization, setting itself apart from public cloud resources that share infrastructure and run multiple workloads.
  • Through its partnership with ServiceNow, EY looks to apply GenAI to risk management and governance. In June 2024 EY adopted ServiceNow’s Assist GenAI capabilities to facilitate its internal operations as well as drive innovation in AI risk and regulatory compliance needs.
  • Some ongoing Leidos AI initiatives include helping the Department of Defense make training and other materials more easily accessible and improving the efficiency of new software testing using digital twinning solutions. GenAI also increasingly features in Leidos’ digital transformation work, as the company utilizes the technology to expedite the mapping of legacy IT infrastructures, which in turn accelerates downstream systems modernization. Leidos has also developed AI-based natural language solutions enabling military operators to interact more easily with autonomous drones deployed in contested environments.
  • Infosys launched the Responsible AI suite, which includes accelerators across three main areas: Scan (identifying AI risk), Shield (building technical guardrails) and Steer (providing AI governance consulting). These capabilities will help Infosys strengthen ecosystem trust via the Responsible AI Coalition as well as foundation models and emerging startups. These models and startups are increasingly important among clients, many of which are reaching a point of fatigue and confusion amid a slew of GenAI-related announcements.

Cloud GenAI Use Cases

  • Staying true to its history of releasing nascent services to the market and building them up into more feature-rich offerings over time, Amazon Web Services (AWS) recently launched new capabilities for Bedrock. For example, Custom Model Import allows customers to automatically pull entire Bedrock models they have already customized, likely with SageMaker, into the Bedrock interface. This allows customers to access their own custom model through the Bedrock API interface like they would with any other model from third parties, such as Anthropic and Cohere. The feature, in addition to other built-in tools native to Bedrock, reaffirms AWS’ commitment to making the service the best place to not only access out-of-the-box models but also customize them and develop applications that will ultimately spin the IaaS meter on AWS infrastructure.​
  • Google Cloud is putting Gemini to work, embedding the LLM into core Google Cloud Platform (GCP) products, from BigQuery for analytics use cases like data preparation and query recommendation to Looker for conversational analytics and automated BI. With these features and capabilities, Gemini is now at the heart of Google Cloud’s portfolio and replaces the existing Duet AI tool, which Google Cloud touted as its “always-on AI collaborator” in both GCP and Workspace just a few months ago. Google Cloud’s rapid transition from Duet AI to Gemini speaks to how quickly the GenAI space is evolving, as new vendors enter the market with out-of-the-box LLMs and incumbents expand context windows to make models more powerful and capable of handling more complex tasks.

IT Infrastructure GenAI Use Cases

  • Dell Technologies and Supermicro have seen rapid growth with their 8-GPU servers certified on NVIDIA’s HGX platform and continue to add new liquid cooling options, networking choices and accelerator variants. In recognizing the opportunity in this market segment, Lenovo recently announced its first competing server.
  • HPE’s AI server strategy primarily revolves around its Cray supercomputers and delivering solutions through its flagship HPE GreenLake platform, although the company has also rolled out a smaller validated server stack with NVIDIA.
  • IBM is incorporating AI into its mainframe business through its Telum processor and close integrations with the watsonx platform.

Telecom GenAI Use Cases

The telecom industry is contemplating hundreds of use cases for GenAI, including those that are an evolution of traditional AI, such as chatbots.

Customer care:

  • Chatbots (intelligent versus static) to handle higher-level customer issues
  • Bill explainer
  • Dynamic, contextualized prompts for care agents
  • Foreign language support
  • Truck route optimization

Administrative functions:

  • Meeting transcription — notes/summarization
  • Legal document creation
  • Corporate document querying

IT:

  • Code development
  • Advanced threat detection and autonomous rectification

Sales:

  • First pass at creating proposals
  • Dynamic, contextualized prompts for salespeople
  • Offer customization and personalization

Marketing:

  • First pass at creating marketing materials

Network:

  • Code development
  • Performance monitoring
  • Advanced alarm management

 

What to Expect: Cloud Provider Market Share Through 2027

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Hyperscalers, Traditional Software Players and Consulting Firms Drive Hybrid Multicloud Adoption Amid Shifting Market Priorities

Cloud Providers’ Market Share Projections

Over the next five years, TBR expects to see incremental strengthening of the professional services capabilities of hyperscalers, including Amazon Web Services (AWS), Microsoft and Google Cloud, as well as traditional software players, such as Oracle and SAP. However, professional services companies such as Deloitte and Accenture, along with India-centric players, have demonstrated their ability to scale vast talent benches to serve clients and act as go-to partners for the biggest cloud vendors.
 
Graph: Cloud Professional Services Leaders 2027

Cloud Segment Forecast

Modern IT environments are increasingly relying on hybrid multicloud technologies and cloud-native applications to manage data streams, expanding professional services vendors’ importance in the market. Automation continues to threaten aspects of some segments, such as infrastructure management, but new opportunities will arise with the continual development of emerging technologies.

Cloud Providers’ Geographic Focus

As the U.S. cloud market matures, price is becoming less of a determining factor in enterprise cloud migration decisions. In many cases, customers are willing to pay a premium to get the best business outcome. In line with Western European regulations and the increasing value governments are placing on data sovereignty, cloud vendors are adjusting their go-to-market strategies to lead with localized talent and providing managed services through dedicated cloud regions that offer additional security protocols.

Cloud Market Share Expectations Through 2027

Accenture Is Expected to Continue Its Cloud Dominance, Growing Its Leadership Position Over the Next 5 Years

Accenture’s acquisition strategy has been critical to bolstering the company’s headcount with skilled cloud talent and has helped enhance its cloud business groups and the Accenture Cloud First unit. Further, leveraging inorganic assets will allow Accenture to upsell and cross-sell its consulting and IT services offerings, stimulating revenue growth. For IBM, acquisition candidates primarily consist of companies that specialize in cloud and AI capabilities, as well as industry and niche consulting experts who can support the expansion of IBM Consulting with more software and technical services.

 

Professional service providers continually expand their cloud portfolios through solution development to target cloud opportunities. For example, Cisco invested in technologies to bolster Cisco Customer Experience’s ability to support the adoption of security, cloud, analytics and IoT solutions. India-centric vendors are investing in high-demand solutions and skill sets such as AI, security and engineering to innovate within their cloud portfolios, such as Wipro FullStride Cloud Services and Infosys Cobalt.

 

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Digital Transformation Examples: How Vendors Are Adapting to GenAI and Market Shifts

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Digital Transformation Market Status

As Digital Transformation Programs Mature, So Do Buyers’ Expectations, Testing Vendors’ Engagement and Partner Strategies

As the most mature digital transformation component, customer experience (CX) has compelled buyers to embark on omnichannel projects to unify insights and processes across the customer life cycle for years now. Vendors have plenty of use cases to rely on, but slower discretionary spend is pressure-testing vendors’ value propositions rooted in trusted algorithms.

 

The digital marketing services space, as tracked by TBR, will expand at a CAGR of 6.5% from 2023 to 2028, reaching $145 billion, which is lower than our forecast from six months ago of $152 billion. The marketing industry is on the cusp of transformation with the advent of generative AI (GenAI) chatbots, particularly in relation to content development and brand safety. Vendors have an opportunity to optimize personalization at scale, but only if they also address talent management and data protection, compelling them to carefully balance messaging across ecosystem stakeholders.
 

Watch Below: TBR Principal Analysts Discuss How the GenAI Disruption Is Similar to Prior Disruptions, as well as How It Is Different, and Which Technology Vendors Are Best Positioned to Win and Why

GenAI Remains the Single Most Disruptive Technology, Testing Vendors’ Ability to Deliver Transparent Campaigns Through Ecosystem Lenses

Since we began estimating the digital marketing services market seven years ago, we have projected annually that Strategy and Creative & Branding services would grow the fastest. Creative & Branding served as the DNA of digital marketing, and brands have constantly sought guidance on how to adapt to operating in digital environments.

 

GenAI will change that, as the technology has the potential to bring the cost of content development to $0. This will pressure Creative & Branding revenue growth but also test vendors’ analytics models as the spending shifts toward Advertising & Analytics services, provided vendors ensure that transparency, governance and clear data strategies are in place.

Examples of Vendors’ Recent Digital Transformation Activities

  • Ogilvy launched Influencer Shield, a risk management solution that helps target opportunities around brand safety.
  • Bain strengthened its footprint in APAC with the acquisition of the consulting and managed services division of Max Kelsen, an Australia-based AI and machine learning solution provider.
  • Accenture Song has been chosen as the global creative and content agency of record for the talent company Randstad. Accenture Song will also support the transformation of Randstad’s marketing department through the use of GenAI.
  • AKQA launched a new campaign for IBM, showcasing the transformative power of IBM Hybrid Cloud using visuals and a cinematic storytelling approach.
  • McKinsey & Co. launched its Salesforce-enabled Growth Tech capability. The service will pair McKinsey’s AI modules from QuantumBlack and help the firm pursue business transformation opportunities with clients seeking to optimize the Salesforce stack.
  • Capgemini and Salesforce partner to provide GenAI for CX Foundry to deliver personalized and data-driven customer experiences by automating customized content creation.
  • IBM Consulting launched a practice that helps clients create AI foundation models and large language models utilizing open-source approaches and proprietary data to train purpose-specific AI models through IBM’s InstructLab solution. IBM is also expanding the IBM Consulting Advantage portfolio by adding new assistants, assets and methods that will support specific consulting roles, and client engagements around application modernization and management as well as data and business process transformation.

 
TBR’s Digital Transformation: Digital Marketing Services Benchmark provides key service line, regional and operational data and analysis across 19 leading digital marketing services vendors. Vendor coverage includes Accenture, Capgemini, Deloitte, HCLTech, IBM Consulting, McKinsey & Co., Tata Consultancy Services, and more. Service lines covered are Strategy, Creative & Branding, Web, Mobile & Commerce, and Advertising and Analytics. To access all available Digital Transformation: Digital Marketing Services Benchmark data and analysis, start your free Insight Center™ trial today.

IT Service Vendors Shift Focus to Operational Efficiency and GenAI Investments Amid Economic Uncertainty

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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. This quarter we are looking at Accenture, Deloitte, IBM Consulting and Infosys, including Accenture’s extensive investment in GenAI and IBM Consulting’s and Infosys’ risk of falling into a downward trajectory.  

Vendors Ramp Up Optimization and Operational Efficiency Projects Amid Revenue Deceleration from Tight Client Discretionary Spending

IT services vendors currently face client discretionary spending headwinds, resulting in increasingly long decision cycles. According to TBR’s IT Services Vendor Benchmark, year-to-year revenue growth for the 31 vendors decelerated from 13.8% in 1Q19 and 8.6% in 1Q22 to 2.1% in 1Q24.

 

In response to these headwinds, Deloitte, IBM Consulting and Infosys are slowing their hiring pace and focusing on reskilling and upskilling existing professionals. Accenture will likely follow suit, although it currently maintains its skills-based hiring approach. A closer look shows that Accenture has started slowing organic hiring, but acquisitions are helping the firm offset some of the headcount growth deceleration. As part of its resource management strategy, Accenture is rotating the skills composition of its workforce with the goal of maintaining a large enough bench to meet booked demand while ensuring quality (bookings increased 22.1% year-to-year to $21.1 billion in FY3Q24, putting Accenture on track to reach $80 billion during FY24).

 

As discussed in detail in TBR’s quarterly reports, Accenture and Deloitte are expected to have uneven revenue growth through the remainder of 2024. Amid persistent macroeconomic uncertainty, every IT services company and consultancy is reporting greater customer interest in digital transformation and projects centered on cost optimization and operational efficiency. According to TBR’s December 2023 Digital Transformation: Voice of the Customer Research, “Improving IT operations remains the top DT [digital transformation] initiative for most buyers, but this objective is reaching maturity as more buyers are in the true Transformation stage and are now focusing on extracting benefits from existing assets.”

Investments in Industry Expertise and GenAI Will Position Vendors for Growth in the Market

Not surprisingly, IT services companies are investing in generative AI (GenAI) and industry expertise to capitalize on growth opportunities as they must demonstrate knowledge in both of these areas to stand out among competitors.

 

In TBR’s view, Deloitte and Accenture have invested extensively in industry expertise and GenAI compared to other vendors and have done well in marketing themselves as leaders, helping them better position for near-term growth in demand for operational efficiency and longer-term opportunities around GenAI governance. Deloitte’s broad portfolio and training investments closely align with many of its IT services peers, which is not surprising, given the firm’s position within the value chain.

 

To differentiate, Deloitte’s release of industry use cases as a thought leadership platform is a striking contrast to the approach of its most immediate rival, Accenture, suggesting Deloitte will stay true to its industry-wrapped, consulting-led value proposition. Accenture’s release of its useful “switchboard” tool, which helps clients select the best foundational model for their needs, aligns well with Accenture’s technology heritage.

 

Similar growth pathways are not out of reach for IBM Consulting and Infosys. The former could utilize tuck-in acquisitions to drive specialization and continued collaboration with technology partners and academia to support portfolio build-out and strengthen its position in the market. At the same time, IBM Consulting could leverage hybrid cloud and AI solutions, its incumbency with clients, and its ability to deliver small and large projects at scale to expand wallet share. Meanwhile, Infosys will continue to execute on its strategy to pursue large-scale deals as the company recalibrates and enhances its portfolio offerings to address buyers’ needs. The recent acquisitions of InSemi and in-tech highlight Infosys’ efforts to add skills and capabilities in areas such as chip design and product engineering, supporting the company’s goals of expanding wallet share and capitalizing on its existing relationships while gradually drifting away from commoditized portfolio areas.

If Vendors Fall, They Will Fall for Different Reasons but Will Have Similar Outcomes

 

IT Services Revenue Forecast: Accenture, Deloitte, IBM Consulting, Infosys - September 2024

What Could Go Wrong?

In the worst-case scenario, IBM Consulting’s and Infosys’ revenue could begin to take a negative trajectory for similar reasons: drifting away from hybrid cloud and AI (IBM Consulting) and away from services in pursuit of GenAI-related software licensing sales (Infosys).

 

Unsurprisingly, Deloitte could face quality issues related to its overemphasis on growing the firm’s IT services offerings. In contrast, according to TBR’s 2Q24 Accenture report view, an Accenture slide could come from accelerated GenAI adoption, pressuring “Accenture’s legacy applications and business process management services so much that it cannibalizes revenue to a greater extent than originally anticipated.”

 

For all four vendors, a loss of trust could lead to client retention issues, which would accelerate any downward momentum. To be clear, TBR does not expect any of these companies will experience their worst-case scenarios, but the market pressures and potential for strategic mistakes remain entirely real.

Conclusion

TBR expects IBM Consulting will be the growth leader among this foursome yet will likely continue to trail the overall IT services market, absent a massive GenAI-induced upheaval. Accenture and Deloitte continue to be best positioned to outperform TBR’s projections, although Infosys has been a surprisingly strong player in the market over the last couple of years, reflecting its strong leadership.

 

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How India-centric IT Services Vendors Are Navigating Economic Pressures in 2024

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Overall Revenue and Trends

In late 2023 and thus far in 2024, the companies within TBR’s IT Services coverage faced pressures within their respective financial services practices, experiencing industry declines from a revenue perspective as higher interest rates limited opportunities and hindered growth trajectories.

 

The India-centric vendors TBR covers — Cognizant, HCLTech, Infosys, Tata Consultancy Services (TCS) and Wipro IT Services (ITS) — experienced these financial services revenue declines, despite their efforts to embed automation, AI and efficiency-driven services.

 

The five vendors experienced mixed performance in terms of overall revenue in 2Q24 and pursued varying portfolio expansions and strategy directions. Growth leaders HCLTech, Infosys and TCS have benefited from demand for cloud migration, application management and digital services, which helped to offset declines in financial services revenue. Digital services enabled by innovation-led frameworks remain an important sales engine for Infosys, helping the company build a foundation for future performance.

 

While HCLTech also leverages Digital Workplace Services, the company’s engineering expertise provides an avenue of differentiation as well as relationship building through developed infrastructure and solutions. HCLTech’s integration of its Engineering and R&D Services sales with its IT and Business Services practice enables the company to better address demand for transformation services that stretch across multiple segment groups, driving value creation.

 

Meanwhile, demand for next-generation solutions across connected plants, connected services and intelligent product engineering is boosting TCS’ Digital Transformation Services revenue.

 

Revenue growth for both Cognizant and Wipro ITS was more sluggish during 2Q24 as the companies struggled to capture new opportunities amid limited discretionary spend. Cognizant is experiencing longer contract periods from larger engagements, which extends the revenue generation but leads to smaller pockets of revenue recognition. Wipro is in a slightly more precarious position as it appoints new leadership and establishes new strategic directions. While the investments and leadership transitions will help Wipro evolve its portfolio, the company will continue to struggle to accelerate revenue growth and expand market presence.

 

 

Financial Services

For the India-centric IT services vendors, financial services revenue performance has been hit harder relative to overall revenue as the macro environment remains challenged. Inflation rates, higher interest rates and ongoing economic uncertainty have pushed financial services companies, primarily within the banking space, to reduce budgets and prioritize cost cutting. While financial services companies look to invest in data, AI, cloud and digital platforms, spending restrictions have led to a focus on cost optimization through cloud and digital services.

 

Wipro experienced the greatest impacts on its financial services revenue, owing largely to overall market pressures. The company continues to struggle to fully capitalize on existing client relationships and create upselling opportunities. Leveraging its AI solutions and services for modernization could support the company’s efforts to forge additional discussions among insurance clients but will not offset limited interactions within the banking space. Wipro will likely prioritize engaging with insurance clients rather than banking institutions to generate revenue streams during 2024.

 

Infosys followed Wipro in terms of financial services performance, as a contract renegotiation within the financial services vertical reduced revenue growth by 100 basis points, which negatively impacted Infosys’ P&L and pressured margins. However, there are signs of improvement for Infosys in the segment, with increased activities in the U.S. and six large financial services deals signed in 1Q24. The deals likely comprise a mix of both insurance and banking clients. High inflation and interest rates are limiting client spend, pushing more vendors to prioritize workload and operations optimization.

 

Cognizant also experienced the impacts of limited budgets among its financial services clients. As conditions begin to improve, however, Cognizant management has highlighted new activities around personalization services as well as infrastructure and platform modernization, bringing in opportunities in the industry. Cognizant aims to grow its industry knowledge and specific offerings to better engage with clients and deliver personalized solutions. To address demand, Cognizant will look to create customer experience solutions and workload optimization offerings that leverage AI to strengthen its connection with clients in the sector.

TCS leverages the TCS BaNCS platform to deliver digital transformation services to a variety of financial services clients using a SaaS model or through the cloud. The platform supports infrastructure, application and workflow transformation, enabling users to modernize their environments, enhance customer engagement, utilize data and analytics, and accelerate innovation efforts. The platform allows TCS to deliver core banking transformations for clients and provides more personalized financial management services that can be aligned with budgets.

 

With demand around cloud and AI transformation projected to increase, TCS will develop new capabilities and functions such as TCS BaNCS for Intelligent Experience, allowing for the utilization of data and AI services across banking environments.

 

HCLTech offset a good amount of financial services pressures, benefiting from its digital marketing, data management, digital workplace services and IT transformation. The company was better able to withstand macroeconomic impacts, owing to its software application portfolio as well as experience around data services. Further, the company’s client management strategy enables HCLTech to solidify client relationships, allowing it to capture smaller-scale budget-friendly projects that are geared toward improving business operations and client interactions.

 

Conclusion

Vendors have taken different approaches to capitalize on financial services opportunities as macroeconomic challenges ease. One approach is to focus on the insurance sector, which was more protected from the impacts of reduced customer budgets than the banking sector.

 

While HCLTech maintained a steady performance, generating growth in financial services when excluding 2Q24, its peers invested in portfolio offerings that aligned with trends and demand for data, customer experience, cloud migration and IT modernization. During the remainder of 2024 and into 2025, HCLTech and TCS will likely be stronger candidates for financial services engagements, leveraging large platforms and solutions such as the TCS BaNCS platform to lead the technology-driven transformation across the industry.

 

Further, Infosys could pressure its India-centric peers, leaning on recent investments to strengthen its professional services positioning, such as through the acquisition of in-tech, which bolstered the company’s engineering services.

 

TBR publishes quarterly assessments of these IT services companies as well as others in the IT services, cloud, software, consulting, telecom, infrastructure and devices spaces. To access all current and historical data and analysis, start your TBR Insight Center™ free trial today.

Edge Computing’s Role in Tackling Latency, Privacy and Resiliency Challenges

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TBR’s Enterprise Edge Compute Market Landscape provides insights on marketwide trends among 16 vendors across the edge stack. The research focuses on the infrastructure, software and services that facilitate edge data processing and analysis. Vendor coverage includes Amazon Web Services, Google Cloud, IBM, Amazon Web Services, IBM, Hewlett Packard Enterprise and more. To access the entire report and dataset, sign up for your TBR Insight Center™ free trial today!

Cloud adoption is on the rise, but for many customers, particularly those deploying workloads across multiple clouds, latency, data flow, privacy and overall business resiliency remain core challenges.

 

Edge computing is an emerging segment in IT, giving customers a way to supplement their cloud and IT core investments by processing data locally for minimum latency and backing it up to an adjacent environment for use cases like analytics and application development.

Enterprise Edge Computing Market Forecast

TBR research estimates the enterprise edge computing market will grow at a 19.4% CAGR from 2022 to 2027, surpassing $90 billion by 2027. Professional and managed services will remain the fastest-growing segment, followed by software, at estimated CAGRs of 23.2% and 19.8%, respectively.

Enterprise Edge Compute Spend Forecast 2022-2027

 

We continue to revise our enterprise edge computing market forecast to account for the pullback in spending across traditional IT and cloud markets. Deceleration of growth in the edge market will not be as severe as in other markets due to the strategic nature of edge investments.

 

Further, although the enterprise edge market will benefit from the hype surrounding AI in 2024, many pilot projects may not enter production and more concrete use cases around edge AI need to be developed.

Enterprise Edge Computing Adoption Remains Sluggish, With Other ROI-friendly Alternatives Taking Precedence

Edge Computing Expansion Lags Compared to Other Deployment Methods

According to TBR’s 2Q24 Infrastructure Strategy Customer Research, 34% of respondents expect to expand IT resources at edge sites and branch locations over the next two years. But this is noticeably lower than the 55% who plan to expand IT resources within centralized data centers, while the central cloud and managed hosting are also gaining more traction.

 

The possibility of large capital outlays and an unclear path to ROI remain the biggest adoption hurdles to edge technology, with some customers exploring other alternatives that have a clearer path to ROI.

CrowdStrike Outage Reinforces Edge Computing’s Role in Decentralized IT

There are many lessons to take away from the CrowdStrike incident in July, where a faulty update caused Microsoft Windows to fail, resulting in a major disruption to global businesses. The issue extends well beyond cybersecurity and speaks to the risk of having a centralized IT architecture with limited disaster recovery and backup solutions in place.

 

The CrowdStrike outage has been called out by many edge computing advocates and business leaders, including ZEDEDA CEO Said Ouissal, who argues that a distributed architecture that uses more autonomous capabilities, including edge-specific operating systems, is a much more efficient approach, as opposed to having to manually reset multiple endpoints, as was the case with CrowdStrike.

 

This message certainly has merit, as distributed architectures that are built from the ground up and can effectively extend resources from cloud to edge have been gaining traction among customers and vendors. But securing these distributed architectures remains a big challenge, and vendors have a lot of work to do to assure customers their data is secure across the entire infrastructure landscape.

Hyperscalers Continue to Address the Edge Opportunity, and GenAI May Exacerbate This Trend

AI and generative AI (GenAI) have the potential to gain a lot of traction at the edge, and the hyperscalers are well positioned to address this opportunity. With their vast access to data, the hyperscalers will be a natural choice for customers that do not want to move their GenAI solutions to a separate compute ecosystem but want to process the data closer to the point of use.

 

We continue to see hyperscalers move into the edge space, with Google Cloud’s air-gapped configuration of Google Distributed Cloud and the continued expansion of Amazon Web Services Local Zones, including Dedicated Local Zones, among the key examples.

 

How Agility and Governance Are Key to Thriving in the Evolving Partner Ecosystem

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Mature alliance partnerships have enabled vendors across the spectrum to collaborate as they realize the value of the ecosystem. Cultural, portfolio and leadership DNA have shaped vendors’ behavior when it comes to go-to-market efforts and partner strategies, which is not surprising given that vendors often lean on what they do best when pursuing opportunities. Go deeper in ecosystem research with our new Voice of the Partner Ecosystem Report. Access the entire report with a free trial of TBR Insight Center™. Sign up today!

GenAI Could Disrupt Existing Relationships If Partners Cannot Demonstrate Agility Backed by Common Governance

State of the Ecosystem Landscape

With new technologies including generative AI (GenAI) influencing vendors’ strategies, we expect new relationships to emerge, whether bidirectional or multidimensional, as vendors realize that positioning themselves as end-to-end providers is a thing of the past. We understand that the buyers will be the ultimate judges of these efforts, but laying the groundwork, backed by robust common governance and accountability, will separate leading and lagging alliances.

 

Overall, vendors across the profiled groups are satisfied with their alliance partners, despite differences in commercial, staffing and client management models. We believe the value of the ecosystem has placed some pressure on vendors to think creatively about ways to monetize opportunities with partners.

 

Thus far, the services vendors have demonstrated greater agility compared to other vendors, such as OEMs, that are often stuck in their traditional ways of doing business. Industry specialization appears to be one area where all vendors agree, and we believe this industry focus provides the connecting tissue between relationships, as clients — direct and joint — are all part of a particular vertical, compelling vendors to either demonstrate value through industry know-how or rely on partners.

Vendor and Partner Expectations

Differences in expectations around what will drive the business in the next two years provide a reality check that vendors’ priorities do not always align with their partners’ views. One can attribute some of this difference to vendors’ place in the traditional technology life cycle.

 

For instance, OEMs try to accelerate the hardware refresh cycle and sell more infrastructure to support growth in newer areas such as 5G and edge, whereas cloud vendors remain focused on spinning the meter to support ongoing cloud initiatives.

 

In contrast, services vendors aim to secure foundational revenues in areas like cloud migration and cybersecurity while gradually paving the way for new growth in data management. Despite the ongoing GenAI hype, all vendors agree that the technology will not be the predominant driving force for most opportunities in the next two years. This sober outlook confirms vendors’ understanding of the complexity of the IT enterprise landscape and the need to demonstrate ROI, underscoring the importance of deeper collaboration.

Cultural and Portfolio Synergy Determine Vendors’ Ability to Partner Well and Maintain Steady Trust Within the Ecosystem

Qualities of a Successful Alliance

Although there were a few instances of unhappy partners in TBR’s survey, overall, IaaS and IT services providers appear to generate the most consistent and satisfactory experiences across the ecosystem, with 79% and 81%, respectively, of partner respondents claiming they are either satisfied or very satisfied working with these vendors.

 

We attribute the high levels of satisfaction to vendors’ ability to work with and sell through the ecosystem using embedded sales and project teams as well as their willingness to take on additional risk to drive business outcomes, using frameworks that resonate with end buyers.

Satisfaction Rankings

OEM, management consulting and Big Four vendors appear to have similar overall satisfaction scores, which we see as an area where these vendor groups could align further in the future. While their business models might not be perfectly aligned — OEMs are rooted in a transactional mindset whereas the other two groups are more business focused — they can complement each other, especially as the OEMs appear to be looking for partners that are better able to orchestrate the ecosystem as well as approach opportunities with the end customer in mind, something the management consulting firms and Big Four vendors could help with.

 

Similarly, SaaS and India-centric vendors have similar overall satisfaction rankings, which we believe can give vendors confidence about collaborating more closely, with the SaaS companies’ engineering background and the India-centric vendors’ fee-for-service approach providing the backbone for deeper collaboration.

Accenture Partners: Niche Providers Add Depth to Drive Long-Term Opportunities

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As Accenture’s revenue continues to grow, so does the share of revenue from its top 10 partners, reducing the share of sales from the rest of its alliance partners. With Accenture’s top 10 alliance partners helping to generate close to 50% of the company’s total sales, it remains to be seen whether Accenture will be able to retain its other partner relationships in the long term. Learn more about Accenture’s major partnerships with access to our entire Accenture research. Sign up for your TBR Insight Center™ free trial today!

 

Aligning Resources and Pricing Models Backed by Rigorous Execution Provides a Strong Foundation for Partnering with Accenture

Who Does Accenture Partner with?

Technology providers, both large and niche, compete for Accenture’s attention when seeking to establish long-term alliance relationships.

 

What Should Partners Bring to Accenture?

Deploying price-competitive “as a Service” offerings is key to maintaining the partner’s appeal to both Accenture and upper-midmarket clients as Accenture tries to offset the use of premium-priced consultants with the use of automated project management solutions.

 

How Can Partners Separate Themselves from the Pack?

While Accenture manages such relationships, mostly with large technology providers to demonstrate trust within the ecosystem, vendors seeking to capture Accenture’s attention can approach the company by taking on additional risk and investing — from both a human and financial standpoint — in establishing such units. These relationships are often set through top-down executive and management oversight.

 

Recent Accenture Partnerships

Cisco

Accenture deepened its relationship with Cisco, launching the Accenture & Cisco Business Group ― described by the partners as a “virtual organization” ― to drive joint opportunities around data center optimization and consolidation for clients using Cisco’s Unified Computing System and targeting clients looking to modernize their ERP stack around SAP and Oracle applications. (The two companies announced a similar business group in 2009.)

 

Hyperproof

Accenture’s partnership with Hyperproof will enhance its governance, risk and compliance offerings, with Accenture relying on Hyperproof’s platform and taking a tech-enabled approach to client discussions about developing streamlined control management for testing automation tools.

 

Google Cloud

Accenture (through Accenture Federal Services [AFS]) and Google Cloud expanded their relationship and announced the opening of a Data and AI Center of Excellence focused on supporting federal agencies. The launch is not surprising, given AFS’ recent appointment of Denise Zheng as its first-ever chief AI officer and Accenture’s appetite for innovation and strong growth prospects within the public sector.

 

Mandiant

Accenture deepened its collaboration with Mandiant to deliver cyber resiliency services leveraging the Mandiant Threat Intelligence solution.

 

Oracle

Accenture deepened its collaboration with Oracle to focus on using OCI GenAI solutions to pursue opportunities within finance transformation across industries.

 

Palo Alto Networks

Accenture and Palo Alto will collaborate using Palo Alto’s Precision AI platform to pursue AI security opportunities. Accenture will provide AI diagnostic services enabled by Palo Alto Networks’ Prisma Cloud AI Security Management solution.

NVIDIA 2Q24 Earnings Recap: Capitalizing on AI Infrastructure Demand and Strategic Ecosystem Collaborations

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The NVIDIA vendor analysis report is new to TBR’s research stream. The report looks at corporate strategies, tactics, SWOT analysis, financials, go-to-market strategies and resource strategies. The inaugural edition today with a free trial of TBR Insight Center™!

Assessment: NVIDIA Earnings 2Q24

Robust AI infrastructure demand from cloud service providers (CSPs), enterprises and consumer internet companies drove a fifth consecutive quarter of triple-digit year-to-year revenue growth in 2Q24. During the company’s recent earnings call, NVIDIA CFO Colette Kress highlighted the strong momentum behind NVIDIA AI Enterprise while expressing the company’s expectation of generating approximately $2 billion from the sale of software and support in the current fiscal year.

 

CEO Jensen Huang harped on two platform transitions happening simultaneously: general-purpose computing shifting to accelerated computing, and human-engineered software moving to generative AI (GenAI) software. To align with these shifting market paradigms and to support NVIDIA’s expanding software revenue base, the company will continue to devote resources to innovating internally and strengthening its partner ecosystem, which includes a rich variety of ISVs, systems integrators, OEMs and ODMs.

Gain insights from TBR’s Devices Benchmark, explore the demand for AI PCs, and understand the competitive landscape among Intel, AMD and Qualcomm in the evolving Copilot+ PC segment in the below Devices TBR Insights Live session

NVIDIA Leverages Unique Capabilities of Its Diverse Partner Ecosystem to Drive Growth and Go-to-market Synergies

Strategic Collaboration with Ecosystem Partners for Scalable AI Integration

During NVIDIA’s 2Q24 earnings call, when asked about vertical integration, Huang said he was proud of the disintegrated nature of the company’s supply chain, further conveying NVIDIA’s strategy of swimming in its own lane and leveraging ecosystem partners for systems integration. While NVIDIA is unique with respect to its full stack of AI factory components, including CPUs, GPUs, networking equipment and software, leveraging ODMs and the company’s global integrator supply chain better enables its worldwide scale as well as the custom integration of the company’s components to support clients’ specific requirements.

 

For example, NVIDIA-branded systems, such as the upcoming GB200 NV72 rack-scale system, are designed and architected by NVIDIA as a rack but sold in disaggregated components. ODMs and other integration partners receive these components and are then able to build the systems closer to their final destinations, which reduces logistical complexities.

 

Similarly, NVIDIA’s MGX platform enables OEMs and ODMs to build more than 100 different modular server variations with increased flexibility compared to the company’s HGX platform, allowing for multigenerational compatibility with NVIDIA products. While these platforms benefit NVIDIA’s ODM and OEM partners by reducing the cost of integrating new components, they are also critical to NVIDIA’s go-to-market strategy as they enable faster time to market of new components.

 

Strengthening Ties with ISVs and LLM Providers

NVIDIA continues to expand and deepen its relationships with ISVs and large language model (LLM) providers to strengthen its developer ecosystem and NVIDIA AI Enterprise platform offering. For example, in 2Q24 NVIDIA announced a new AI Foundry service that leverages Meta’s Llama 3.1 to allow companies to develop customized AI applications using the capabilities of an open-source frontier-level model. Notably, Accenture was first to adopt the new service, which it plans to lean on to create custom Llama 3.1 models for both its internal use and for customers’ applications.

 

Enhancing AI Workloads

In March NVIDIA introduced a storage validation program for NVIDIA OVX computing systems, similar to its existing storage validation program for NVIDIA DGX BasePOD. In contrast to the company’s DGX systems, which are based on Hopper and Blackwell GPUs, OVX systems leverage NVIDIA’s L40S GPUs, which consume less power than Hopper and Blackwell GPUs and are best suited for training smaller LLMs, like Llama 2 7B, and graphics-intensive workloads, such as running industrial metaverse applications.

 

With the introduction of its OVX storage validation program, NVIDIA is able to verify the efficacy of storage solutions from partners, including Dell Technologies, NetApp and Pure Storage, in combination with OVX servers to ensure enterprise-grade performance, manageability, security and scalability for AI workloads. This helps enterprises pair the right storage solution with their NVIDIA-certified OVX servers, which are available from partners such as Hewlett Packard Enterprise, Lenovo and Supermicro.