Key GenAI Use Cases in the Telecom Industry

Generative AI (GenAI) will be utilized in all major domains of communication service providers (CSPs), including in customer care, administrative functions, IT, sales, marketing and the network, with the bulk of outcomes pertaining to cost savings.

 

TBR’s research indicates the domains that will be the most disrupted by, and also yield the greatest ROI from, the use of GenAI are customer care, administrative functions and sales. For example, the cost of operating contact centers could be reduced by as much as 80% via the use of GenAI.

 

In addition to significant cost reduction, CSPs can expect to derive other benefits from GenAI, such as better customer outcomes and lower churn compared to more traditional, human agent-centric contact centers. GenAI chatbots are expected to behave like seasoned, top-rated human agents, able to guide customers and address their issues in a much more efficient manner.

Principal Analyst Chris Antlitz Discusses AI/GenAI Use Cases and Early Wins as well as Shortfalls of the Type of Return on the Heavy Investments in 5G and 6G — Click the Image to Watch the full video now!

 

Future Trends in GenAI for Telecom

Though CSPs may generate incremental revenue from GenAI in terms of revenue protection (e.g., using GenAI in contact centers to mitigate churn), upsell (e.g., using GenAI in contact centers to upsell customers), GPU as a Service (e.g., selling access to GPUs to CSPs’ end customers in data centers hosted by CSPs) and the resale of vendor solutions (e.g., CSPs reselling their partners’ GenAI-related solutions), the bulk of the benefit from GenAI will pertain to cost reduction.

 

Cost reduction encompasses making the workforce more productive (e.g., using GenAI to augment workers, enabling them to complete more tasks in a given time frame), optimizing the workforce (e.g., reducing headcount), and generating savings through non-labor-oriented means such as via energy optimization (e.g., leveraging GenAI to make more informed decisions about how to optimize network and IT systems, thereby reducing energy usage).

While macroeconomic uncertainty challenges year-to-year revenue growth in the IT services sector, the trajectory beyond 2024 appears promising, largely due to the resilience of managed services bookings. to read more vendor analysis from our recently published research. 

IT Managed Services and Revenue Growth Outlook

Trends in IT Consulting and Professional Services

Macroeconomic uncertainty will cause year-to-year IT services revenue growth to decelerate in 2024, according to the latest data in TBR’s IT Services Vendor Benchmark. However, IT services spending will continue as clients seek run-the-business managed services opportunities to operate in challenging market conditions characterized by inflation, foreign exchange rate fluctuations and political uncertainty.

 

While clients continue to pursue digital transformation, macroeconomic uncertainty is pressuring discretionary spending, as evidenced by softening benchmark performance for the fifth consecutive quarter within the consulting and systems integration segment in 4Q23.

 

The ongoing success of some vendors with large and long-term managed services deals suggests they are well positioned to navigate evolving buyer expectations. Maintaining trust with stakeholders through transparent messaging will be key, especially as managed services bookings take longer to convert into cash compared to consulting ones, a trend that could easily be misinterpreted.

 

Client retention is not an easy task as it requires maintaining service quality throughout the client engagement and delivery cycles. Focusing on client success rather than meeting internal financial targets will be key for vendors, as salespeople and leadership can often lose their focus on priorities, especially during economic downturns.
 

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Global IT Services Market Insights and Vendor Strategies

Vendors Shift Industry Mix

Vendors continue to experience growth pressures in the financial services and telecom sectors in regions including the U.S. and the U.K. & Ireland. Expanding portfolios and resources across a broader spectrum of verticals, for example by building capabilities in manufacturing, enables vendors to diversify revenue streams and alleviate revenue growth pressures.

GenAI Remains an Area of Investment

Generative AI (GenAI) has been an area of investment over the past year across multiple vendors tracked in the IT Services Vendor Benchmark. Vendors are focusing on GenAI for two reasons: to use GenAI internally to bolster productivity, and to provide GenAI-related services to clients to drive revenue streams. The success of GenAI depends on good data. Efforts to adopt GenAI-enhanced solutions will persistently run into data issues, opening the door for consultancies and consulting-led IT services vendors to assist with data orchestration.

Employee Attrition Is Decelerating

Resource management trends are shifting from spikes in hiring and employee attrition in 2022 to selective hiring for in-demand skills, reskilling and upskilling, and a deceleration in employee attrition in 2023. Productivity initiatives and steady employee utilization will enable vendors to stabilize cost structures and invest in skills development to support revenue growth.

Conclusion

While macroeconomic uncertainty challenges year-to-year revenue growth in the IT services sector, the trajectory beyond 2024 appears promising, largely due to the resilience of managed services bookings. Despite macroeconomic uncertainty the revenue growth trajectory beyond 2024 is promising, driven by the resilience of managed services bookings.

 

Vendors must adapt to strong demand by diversifying industry mixes, investing in emerging technologies like GenAI and prioritizing client success over internal financial targets. Moreover, as employee attrition decelerates and resource management trends evolve, vendors have opportunities to stabilize cost structures and invest in skills development, further positioning themselves for sustained revenue growth amid evolving market dynamics. Strategic adaptation and a focus on long-term client value will be essential for IT services vendors to thrive in the coming years.

 

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Competitive intelligence serves companies in three main areas: market knowledge, analysis, and activities, which includes technologies, products and services. Integrating these resources and data into strategy planning enables a company to view the full picture of its current positioning and composition as well as where it should be heading with investments and planning. In this blog we look at why strategy planning matters, how to strategize and how to successfully leverage CI in your strategy plan.

Introduction to Competitive Intelligence in Strategy Planning

As companies face new struggles across the market, affecting consumer interaction, portfolio management and composition, and resource structure, overall strategies need to be refreshed. The pandemic opened the door for companies to embed resiliency and flexibility across strategies and business operations. The increased adaptability equips companies to better shift their strategies and prepare for related changes.

 

Strategy planning involves bringing together pieces from across the business and defining a plan moving forward. With environmental, social and governance needs moving to the forefront of company activities, it becomes more important to properly budget for strategy planning and allow for essential changes to take effect.

 

With ongoing market changes, the importance of strategy planning increases as it dictates a company’s success. According to TBR’s definition, strategy consulting facilitates executive planning to define an organization’s vision, set goals and address the alignment of resources to achieve specific goals or results. It involves analytic methods, such as competitive analysis and market analysis, among other strategic plays, to achieve these objectives.

 

Demand for strategy consulting accelerated during 2022 as many companies looked to redefine objectives and transform their business orientation and offerings. However, with a shift toward generative AI (GenAI) and analytics, strategy consulting decelerated among TBR’s tracked management consulting firms.

 

While firms leverage different capabilities to facilitate strategy projects, a focus on technology consulting pressures strategy engagements as clients look to integrate GenAI and analytics solutions to drive changes across operations. With AI remaining a primary investment area, strategy planning becomes a necessity to properly analyze and identify adoption opportunities.
 

Strategize Strategy Planning

While strategy planning has its benefits, helping companies drive overall business growth and identify the right path forward, there are three caveats that can change the outcome.

• First, establishing and maintaining a successful cadence will enable the company to effectively capture opportunities. Engaging in strategy planning too frequently does not allow for thorough execution while engaging in it too infrequently could lead to overlooked items and missed signs, moving the company in the wrong direction.
• Second, identifying areas and inputs to pursue and measure that align with the company’s goals and thought leadership will help drive the company’s strategy Using a consistent set of inputs from trusted sources can underpin a shared set of facts and assumptions, preventing a company from swinging from one strategy to another. However, consistently relying on the same information, rather than considering new ideas and directions, can also put a company on the wrong course.
• Lastly, challenges can arise in translating a strategy plan into an operational one, hindering a company’s ability to scale its plans.

 

Engaging in thorough planning and ensuring that validated and relevant data are utilized can enable companies to better understand competitor and peer strategies as well as the areas that should be invested in and to what degree. Without analyzing external and internal factors, companies can experience slowed progress or end up heavily rooted in the wrong area, placing them far behind the competition.

 

With rapidly changing technologies and trends in the business landscape, identifying and pursuing opportunities that best align with a company’s goals and composition will dictate the success of the company’s expansion efforts. For example, the hype around the metaverse did not quite live up to expectations as vendors have made stronger bets and investments in other technologies, including AI, digital and cloud. While metaverse technology remains valuable and brings a different experience to users, it was not scaled as aggressively by vendors as other capabilities

How to Leverage Competitive Intelligence in Strategy Planning

While keeping in mind the three caveats outlined above that can alter the outcome of strategy planning, companies must also be aware of peers’ and competitors’ activities and investments. Taking into account this information can help a company determine its market position as well as which avenues it can utilize to successfully expand.

 

Competitive intelligence serves companies in three main areas: market knowledge, analysis, and activities, which includes technologies, products and services. Integrating these resources and data into strategy planning enables a company to view the full picture of its current positioning and composition as well as where it should be heading with investments and planning.

Conclusion

Strategy planning is an important piece of companies’ successes in the market and paths forward. Through strategic planning — provided it is executed at the right cadence and rooted in valid and relevant data — companies can determine the appropriate investment areas and where best to place their bets to keep pace with peers. With technology trends changing so rapidly, companies need to remain flexible and resilient through strategy planning, enabling them to pursue opportunities that best align with their goals and business composition. Additionally, through strategy planning, companies can improve their positioning through proper analysis of trends and business alignment.

Discover the critical questions device manufacturers consider when seeking ecosystem partners. Learn about evolving partnership dynamics, the impact of AI and GenAI, and strategies for differentiation in the tech industry.

Generative AI (GenAI) will make devices, especially PCs and smartphones, more powerful and easier to use, and that will drive business among device, platform, silicon and software vendors but will not change the structure of the ecosystem. New opportunities in software and services will present themselves, new companies will enter the market, and most new companies will ultimately be acquired.