Senior Analyst John Caucis and Analyst James Wichert explore how a turbulent 2025 — marked by budget uncertainty, a prolonged government shutdown and shifting federal priorities — is setting the stage for a more stable, but structurally different, federal IT market.

Learn why 2026 is likely to bring stabilization rather than a full rebound, with defense, intelligence and national security-related spending remaining resilient while civilian agencies take longer to normalize procurement cycles.

Additionally, the pair will look at what will matter most in 2026: accelerating partnership activity, deeper engagement with commercial technology providers, and AI-led modernization as a core differentiator for federal systems integrators

Episode highlights:

• The new normal, post-government shutdown

• Prioritizing defense over civilian or health opportunities

• TBR’s federal IT services portfolio focuses for 2026

“Well, it’s been a heck of a ride in 2025 to be sure. So, I think one of the easiest predictions is that things are going to stabilize finally. However, what we’re keeping an eye on is the timeline of that stabilization, especially now that we factor in the 43-day government shutdown that kicked off federal fiscal ‘26 in October. What we’re hearing, what we’re observing, the vendors that we track, what they’re saying is that some agencies may not get back to normal in terms of procurement, in terms of funding cycles, in terms of the cadence of funding until late March or even the second calendar quarter of next year. I think it’s going to be concentrated more in the civilian sector than the defense and intel,” said Caucis.

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Learn more about TBR at ⁠⁠⁠⁠⁠https://tbri.com/⁠⁠⁠⁠

TBR Talks is produced by Technology Business Research, Inc.

Edited by Haley Demers

Music by Burty Sounds via Pixabay

Art by Amanda Hamilton Sy

2026 Predictions: Federal IT Services

TBR Talks Host Patrick Heffernan: Welcome to TBR Talks: Decoding Strategies and Ecosystems of the Globe’s Top Tech Firms. Where we talk business model disruption in the broad technology ecosystem from management consultancies to systems integrators, hyperscalers to independent software vendors, telecom operators to network and infrastructure vendors, and chip manufacturers to value-added resellers. We’ll be answering some of the key intelligence questions we’ve heard from executives and business unit leaders among the leading professional IT services and telecom vendors. 

I’m Patrick Heffernan, Principal Analyst, and today we’ll be talking about our 2026 federal IT services predictions with John Caucis, Senior Analyst for TBR’s Federal IT Services Practice, and James Wichert, Analyst for TBR’s Federal IT Services Practice. 

Predictions: The new normal, post-government shutdown

I’m here with John and James to talk about the Federal IT Systems Integrators, the group of companies that they cover as part of their research here at TBR. So, what we want to talk about today, John and James, is what your prediction is for 2026. What do you see coming? We’ll cover that first, and then I’d really love to hear what you want to dive deep into. What are the trends? What particular company? What are you seeing in the market that you know in 2026 is going to take up a lot of your time? So, John, why don’t you go first? Give us a prediction for 2026.

John Caucis, TBR Senior Analyst: Well, it’s been a heck of a ride in 2025 to be sure. So, I think one of the easiest predictions is that things are going to stabilize finally. However, what we’re keeping an eye on is the timeline of that stabilization, especially now that we factor in the 43-day government shutdown that kicked off federal fiscal ’26 in October. What we’re hearing, what we’re observing, the vendors that we track, what they’re saying is that some agencies may not get back to normal in terms of procurement, in terms of funding cycles, in terms of the cadence of funding until late March or even the second calendar quarter of next year. I think it’s going to be concentrated more in the civilian sector than the defense and intel. 

And that kind of leads me to my next prediction, which is that defense, intel, and in the civil market, the overlap, the national security overlap in the civil market, border security, law enforcement, those sectors are going to remain robust. We’re seeing that as we tabulate the current data for the third calendar quarter benchmark, which will be out in a couple of weeks. I expect to see that happening in the fourth quarter as well as we then move into federal fiscal ’26. So, we’re keeping our eye on how long is it going to take before things return to normal and what’s that new normal going to look like.

Patrick: Right, but a new normal, but you’re anticipating it’s going to be a more stable kind of year for 2026 with respect to federal IT services spend and the rest?

John: Well, I don’t think it can be disrupted any more than it has been. So, things, what goes down, you know, must come up at some point.

Patrick: Yup.

John: However, what’s important to keep in mind is that the underlying demand for digital modernization remains intact. It has endured throughout this process. And the drivers of the disruption in the market in 2025 are actually pushing the market to accelerate AI-led digital transformation. And that’s what we expect to see. That’s going to be an area that we’re also keeping an eye on in 2026.

Prediction: Prioritizing defense over civilian or health opportunities

Patrick: All right, absolutely. And so, James, what do you think is going to happen next year?

James Wichert, TBR Analyst: So, I mean, looking back to 2025, there was a lot of disruption around the federal civilian market. And a lot of that entailed, you know, more programmatic work, more consulting-oriented engagements. And the Trump administration’s skinny budget proposal for federal fiscal year 2026 calls for non-defense spending to be slashed by, it’s like north of 20%. Simultaneously, defense spending, like John mentioned, it’s going to increase. It could be north of $1 trillion this year. And what I would say is we’re seeing- what we saw during 2025, and we’re going to keep seeing it happen in 2026, is more vendors expanding their portfolio into the defense base to capture those additional opportunities. So, for example, take Maximus. Maximus is a company that just historically has been more in the federal civilian space, working in federal health, but they’ve been appointing more leaders with defense backgrounds. And they’ve been finding ways to align their portfolio of cybersecurity and IT solutions with defense agencies’ needs rather than just purely civilian agencies. 

Patrick: Right.

James: And it’s been fairly successful thus far. They’ve gone from zero meaningful defense wins in like the last few years to all of a sudden just two in the last few months with the US Air Force that are genuinely interesting and could evolve into something more. Now in the same breath, you know, civilian spending is not going to go away. I just see vendors being more strategic, you know, jockeying for certain opportunities. So, you know, the Department of Government Efficiency may be gone as like a standalone entity in that wave of contract terminations. But elements of its mission still remain within the federal document, streamlining operations, combating fraud, waste, and abuse. So you wind up with vendors like GDIT or CGI developing solutions that can streamline those operations, increase productivity, leverage all these emerging technologies that are in demand, like AI, but you have to fully do that, there’s still a ton of work to be done.

Patrick: Right.

James: And yeah, they have a lot of outdated infrastructure that needs to be modernized. And with their headcounts being rapidly reduced during the next year or so, they need to invest in IT. So, there’s still plenty of opportunities for IT vendors.

Patrick: Right, and it’s fascinating that they would be- it’s not fascinating that the companies would be moving to where the money is. That totally makes sense. It seems to me though that if they already have two wins, just talking about Maximus. So, they’re introducing Maximus and others then a new competitiveness to the market that wasn’t maybe there yesterday or last year or the year before. So that’s a good thing, I would think, overall.

John: Yeah, I think to your point, there’s still going to be plenty of headroom for growth in the defense sector and national security, border security, and the intelligence space. And vendors like Maximus that we haven’t traditionally seen go after that market are looking at their portfolios. They’re seeing the differentiation there. And they’re looking for ways to repurpose. And this is kind of the opposite of what we’ve seen over the last few years, where the growth in the civil market prompted several of these integrators that we track to take a second look at their defense IT capabilities and find ways to repurpose them for civilian applications. We’re now seeing that have been flipped on its head. And competitors like Maximus and others, you know, what can we do? How can we take some of the technologies, the capabilities, the platforms that we built for the civilian space and reimagine them for use in the defense sector?

Federal IT services portfolio focuses for 2026

Patrick: All right, excellent. And let’s, and maybe that’s one of the trends, but let’s pivot now to what are you going to individually, personally, professionally dive deeper into in 2026? What’s one of the companies or the issues or the trends or the technology or whatever it might be that you’re looking forward to sinking your teeth into this coming year? James, we’ll go to you first.

James: Thanks. So, I would say during 2025, there was this significant ramp up in partnership activity. And that was something I was following with General Dynamics Information Technology. It was a company, a business segment that really didn’t announce that many partnerships. And then all of a sudden there was just this wave of them. They just kept coming one after another. And then eventually their leadership team disclosed this past summer that, this is all intentional, this is all part of their strategy to enhance the digital accelerators they’re working on and to align their portfolio with the Trump administration’s needs. 

Patrick: Right.

James: I think they’re kind of the perfect example in the market of what we’ve been seeing for all these vendors, where the most successful ones are ramping up their partnership activity. They’re increasingly leaning on commercial technology companies. We’ve even seen the federal government itself lean on commercial technology companies lately with Detachment 201 and the Genesis mission. So I think you’re going to keep seeing vendors that want to compete, that want to really make a difference and capture on all these like shifting priorities that the government’s looking to spend on, they’re going to ramp up their partnership activity and that’s going to continue into 2026.

Patrick: That’s perfect because that’s, I mean, as you know, our ecosystem intelligence reports have become the hottest selling thing we have. But really, truly, it has opened up a lot of opportunities for our clients to see their world in a slightly different way. And then that was being pushed by what was happening in the commercial sector. But hearing that it’s happening and going to be happening even more in the fed space is fantastic. John, what about you?

John: Well, I kind of have to dovetail on James’ point about partnerships, but then kind of drill down one level. The kinds of partnerships, the kinds of companies that we’ve observed the bulk of partnership activity over the last year, and that’s in the AI space, which is not surprising. I think AI-led modernization is really going to be the mantra in federal IT in the current fiscal year, which is fiscal ’26, as well as in fiscal ’27. We have seen a significant uptick in the amount of partnership activity, expanding existing collaborations with people like Palantir, Shield AI, and the like, as well as forging new collaborations with these companies. They’re out in front. While we don’t track the Palantirs of the world explicitly, we are kind of tracking them, softly tracking them based on their activity with companies like Booz Allen Hamilton, who vastly, they might have been the most active company during 2025 in terms of tying up, shoring up their collaboration with Palantir. But in the AI space, especially, and that’s something overall that we’re going to be keeping an eye on, and we’re going to be trying to inject more AI-focused research, TBR insights, TBR opinions around the AI topic as relates to the federal systems integrators in 2026.

Bets for most discussed company in 2026 

Patrick: Excellent. So, let’s wrap this up with, we’re going to be sitting here in a year. So, in December of 2026, give me the name of one company and maybe two reasons why you’ve talked about that company more than any other company over the course of 2026. So, I’m not saying who’s going to grow the most. I’m not saying who’s going to fall apart. I’m just saying what’s the company that in December of 2026, you need to look back and say, we couldn’t stop talking about, John.

John: Booz Alan Hamilton. The company that got hit hardest within the sphere that we track, the slice of the market that we’re following. Their civil business is expected to be down over 20% when their fiscal year wraps up on March 31st of ’26. We’re going to find out just how smart they are, whether they’re going to parlay all of that expertise. They’ve been in the market for over a century. As I just mentioned, they’ve gotten out in front of the AI wave by shoring up partnerships with Palantir and the like. They also have a very- they just tripled the funding that they’re allocating to Booz Allen Ventures, their internal joint venture C Capital Group. So, a year from now, they may not have recaptured those double-digit growth rates. They just came off of a three-year stretch of double-digit top-line growth. I was fully expecting to see their revenue hit at $11 or $12 billion. That’s not going to happen, unfortunately. But how quickly are they going to get back on track? I think underpinning that is going to be certainly how quickly can they affect a rebound in their civil business? Because their defense business is still strong and they do have the largest, as I understand it, over a billion or billion and a half in AI specific revenue coming from the defense sector. So, they’re one of the leaders there. That’s going to be a growth engine for them. But how are they going to rebound? And not just them specifically, but we’ve observed this, James can certainly talk about the impact of the civil slowdown on his companies, but how are companies going to recapture, get their mojo back in the civil space?

Patrick: Yeah, fantastic. And that’s such a- it’s always been a fascinating company and to hear where they are right now and to say this is a pivotal year for them. I love the way he framed it that, you know, we’re going to find out how smart they really are. So, all right, James, what do you got?

James: I kind of wanted to say Maximus, but I’ve already, like, talked about what they’ve been doing in the defense base. So, I’m just going to cave and give it to Peraton. I think Peraton’s just an interesting story. Recently, they secured the FAA’s north of $10 billion contract to be their main integrator. And Peraton had a strange year. It was a lot of difficulties. I thought they would go public initially, but then with all the leadership changes they were doing with Stu Shea out the door, I figured that was in the cards. And then, you know, that didn’t happen with the waves of just all of a sudden changes, the Department of Government efficiency, all that. It just didn’t happen. There was some disruptions to their business this year, but that went with the FAA. It’s very, very promising for them. And I’m curious to see where they go through 2026.

Patrick: So, do you think this will be the year they go public? Or do you think it will be December 2026, we’ll be saying so they didn’t do it again.

James: That’s a great question. 

Patrick: We’ll come back in December 2026. 

James: Yeah *laughs* I was so much more confident last year that they would go public and then everything else happened, just made it chaotic.

Final thoughts

Patrick: Excellent. All right. Thank you, gentlemen. Appreciate it. 

John: Thank you. 

James: Thank you.

Patrick: We’ll be taking a break over the winter, and we’ll be back with season 5 later in 2026. 

Don’t forget to send us your key intelligence questions on business strategy, ecosystems, and management consulting through the form in the show notes below. Visit tbri.com to learn how we help tech companies, large and small, answer these questions with the research, data, and analysis that my guests bring to this conversation every week. 

Once again, I’m your host, Patrick Heffernan, Principal Analyst at TBR. Thanks for joining us and see you next week.

TBR Talks: Decoding Strategies and Ecosystems of the Globe’s Top Tech Firms

Join TBR Principal Analyst Patrick Heffernan weekly for conversations on disruptions in the broader technology ecosystem and answers to key intelligence questions TBR analysts hear from executives and business unit leaders among top IT professional services firms, IT vendors, and telecom vendors and operators.

“TBR Talks” is available on all major podcast platforms. Subscribe today!

Digital Transformation Principal Analyst Bozhidar Hristov unpacks TBR’s predictions for the next three to five years of change in the IT services market. The conversation explores a fundamental shift underway in managed services: from a cost-optimization and labor-arbitrage model to a growth-oriented, insight-driven entry point for consulting, integration and modernization services. Boz explains why managed services are increasingly becoming a “door opener” rather than a back-end support function and examines why this pivot has been difficult for many consultancies to execute.

Boz concludes with a peek at TBR’s forward-looking research agenda for 2026 and beyond, covering changes to commercial models, the decline of time-and-materials pricing, evolving ecosystem dynamics, and how service providers must rethink partner strategies as digital labor becomes a core part of managed services delivery.

Episode highlights:

• Leading with managed services to drive other business

• Changing staffing pyramids

• Changing pricing models

“We’re starting to hear vendors starting to think about investments into the whole notion of agent-managed services as well, because, you can say, why do you care about managed services when agent, agentic AI will likely be substituting a lot of the human-enabled delivery? I think there’ll be parts of that, but I think there’ll be still the last mile of the support where it will be needed from a human perspective, and that human-in-the-loop kind of involvement will remain critical. And that’s why I think some of those vendors will use that as they try to pivot their business models; they try to adjust their business model moving forward because this is where the trust comes into place. Where you are able to answer the CFO’s questions, the chief system information [officer’s], the CISO questions and so forth. … I think 2026, we’re going to hear more examples of it, but I think this is the model of the future, at least for the next three to five years,” said Hristov.

Listen and learn with TBR Talks!

Submit your Key Intelligence Questions for Patrick and his guests

Connect with Patrick on LinkedIn

Learn more about TBR at ⁠⁠⁠⁠⁠https://tbri.com/⁠⁠⁠⁠

TBR Talks is produced by Technology Business Research, Inc.

Edited by Haley Demers

Music by Burty Sounds via Pixabay

Art by Amanda Hamilton Sy

2026 Predictions: Telecom

TBR Talks Host Patrick Heffernan: Welcome to TBR Talks: Decoding Strategies and Ecosystems of the Globe’s Top Tech Firms. Where we talk business model disruption in the broad technology ecosystem from management consultancies to systems integrators, hyperscalers to independent software vendors, telecom operators to network and infrastructure vendors, and chip manufacturers to value-added resellers. We’ll be answering some of the key intelligence questions we’ve heard from executives and business unit leaders among the leading professional IT services and telecom vendors. 

I’m Patrick Heffernan, Principal Analyst, and today we’ll be talking about our 2026 Managed Services Predictions with Boz Hristov, Principal Analyst for TBR’s Digital Transformation Practice. 

Leading with managed services to drive other business

I’m here with Boz Hristov, whose portfolio covers digital transformation, ecosystems, and professional services. So, we want to talk about 2026 in two different ways. First predictions and then what you are excited to be researching next year. So, let’s start with predictions first. Out of all the predictions that you were involved with coming up with this year, as we end 2025, what is the one that you’re most excited about, you’re most confident about? Maybe the one you’re afraid might actually come true in 2026.

Bozhidar Hristov, TBR Principal Analyst: *laughs* Yeah, predictions are a tricky one. Thanks for having me. So I think looking at the way the market has evolved in the last three years, and maybe what’s coming, not just in 26, but maybe looking even beyond that kind of a one year, but maybe into the three-year horizon as well, because I feel like we are starting to make some pivots into the next three-year, three to five year kind of a change in the marketplace. I think the biggest shift that’s going to start kind of paving the way for the next three years is the role of managed services and how the companies that have been investing in managed services position it. As historically we know the outsourcing, labor arbitrage has been enabled, a lot of the low-cost providers to drive a significant amount of business, but it’s been a support mechanism for the large enterprises, has enabled some businesses to come around and to make a name for themselves. And it has been, again, being kind of like, okay, a cost driver, cost optimization driver. 

I think what we’re going to start seeing is how companies are looking at and considering managed services and the capabilities that they have been investing in both the skills and the tools in the last three years to use them as a business growth driver and be not just kind of essentially pivoting from the low-cost delivery model and factory model to more of a business growth model for those organizations. And looking in to understand how supporting the client’s environments will provide them with the insights that are needed for potentially new consulting opportunities, for better process improvement opportunities, and just trying to think about how they can service the clients better. I mean, one can argue and say, well, that’s essentially managed services what it has been, right? But I think the change here is that vendors will look into managed services as a door opener, not as a door closer, essentially. So, it’s in a way, they will lead with managed services to drive consulting. They will lead with the discussion around process optimization, which essentially, in a way, it’s almost like a Trojan horse for them, it allows them to increase that stickiness, to learn the client environments. I think some of the vendors like the India-based outsourcing companies have a very strong foothold and a starting point. We’ve seen some of the consultancies like Deloitte and Accenture trying to go in that direction and kind of change the paradigm. We know others like, you know, some of the other- the rest of the Big Four also have been investing in managed services. I don’t think they’re going to go that far that way to lead with managed services, but I think the investment profile suggests that they’ll try to definitely lean more heavily than they have in the past. 

So, I think this is kind of the big change, is kind of changing the paradigm and lead with managed services to drive consulting, lead with managed services to drive integration services, modernization services, and so forth. That on itself is not going to be an overnight phenomenon. I think we are in a transition year that we’re going to start seeing that model evolve and be a version of it potentially in the next three years, five years. 

We’re starting to hear vendors starting to think about investments into the whole notion of agent-managed services as well, because, you can say, why do you care about managed services when agent, agentic AI will likely be substituting a lot of the human-enabled delivery? I think there’ll be parts of that, but I think there’ll be still the last mile of the support where it will be needed from a human perspective, and that human-in-the-loop kind of involvement will remain critical. And that’s why I think some of those vendors will use that as they try to pivot their business models, they try to adjust their business model moving forward because this is where the trust comes into place. Where you are able to answer the CFO’s questions, the Chief System Information, the CISO questions and so forth. So, this is, I think that’s what we’re going to- we’re starting to hear about it right now. I think 2026, we’re going to hear more examples of it, but I think this is the model of the future, at least for the next three to five years.

Patrick: So, two quick questions and an observation. So, the two questions, quick questions. When you talk about managed services and growth, you’re seeing the managed services revenue growth continue up. And then what you’re talking about is sort of a sliver or a piece of it directly tied- a piece of consulting revenue directly tied to those managed services opportunities that’s going to grow alongside it and faster, yes?

Boz: Yes. It’s exactly- it’s both, actually. I think it’s, you know, managed services, yes, will continue to grow, but it’s exactly that. It will create opportunities for the management consultancies to drive up and to expand, you know, what has been a struggling market in the last couple of years for consultancies. And it’s a way of them to deliver value, to deliver outcomes, you know, and to be a little bit more tangible in their offerings because we know consulting and outcomes can be sometimes a little bit like up for interpretation. And when the consultants and the services providers talk about outcomes, in this case, I think we’ll require them to be a little bit more concrete as a way to demonstrate the value rather than just saying, you are going to be getting some kind of an outcome, but very kind of a wishy-washy.

Why hasn’t this model happened before?

Patrick: Right, so, then a quick question on that, and sort of maybe you’re answering it right there, but it makes so much sense for managed services to be an entree to consulting. Why hasn’t it happened? Or more importantly, what are the things that will prevent some companies from being able to- some IT services companies and consultancies from being able to execute on that model?

Boz: Yeah, I’ll probably start with a second here. I think what’s going to prevent is a lot of it is going to boil down to internal challenges, because especially consulting firms, they are known for, that’s their brand is to lead with consulting, right? So, it’s very hard for take BCG or anybody else like, you know, has been known to start with managed services, even some of the Big Four firms, as much as they’ve been investing in managed services, it’s going to be much harder for them to, say, we are now managed service providers first then consultants.

Patrick: So, BCG starts with consulting, so it’ll be hard for them to start with managed services.

Boz: To make that change. It’s a branding headwind. It is an internal kind of a stakeholder change, you know, change management headwind. And I think that has been probably one of the key reasons why it has not happened. I think the other part is that it will be hard for those companies, some of those companies, to convince buyers that they actually are good at managed services, or they have the right price point for managed services.

Patrick: Right.

Boz: I think that’s part of it as well. Just like it’s hard for those companies to convince buyers that they can develop and sell software, which we know it’s-

Patrick: We know that story really well.

Boz: We know that story well, and we know it’s coming around again now with GenAI, agentic AI. So, I think this is kind of like the, it’s- we’re kind of circling right back to what we’ve been saying for years. It’s staying within your own swim lane probably is your best strategy. And when you need to partner first rather than trying to build yourself. Not even, I’ll say partner, build, buy, try to maybe change that kind of the sequence of those things. But yeah, that’s how I see it.

Topics of interest for 2026 portfolio: The changing staffing pyramids and pricing models

Patrick: So, what you just said leads to an observation for me that I think is part of the next question, the big question I have for you. And what I think you’ve been saying is that the last couple of years have been just so disruptive with GenAI first and then agentic AI. And just we’ve had two or three years where the change is happening so fast. But now we’re about to go into a three to five year stretch where change is going to happen more slowly and some of the more strategic decisions and some of the more, the decisions like around how you change to a managed service led business model are going to play out in a longer horizon. 

Boz: Yup.

Patrick: So if that’s the case and you said, right, so I’m going to take it as it is, what are, when you look out next year, 2026, but even three years, what are some of the issues that you’re looking forward to diving into deeper. Where do you want to go deeper with some of the research?

Boz: Yeah, I think if we start looking into that horizon of the managed services led, kind of a business services, business model, essentially, for most of the companies, there’s a couple of things that will certainly, for us, will be on the horizon from a research perspective and going deeper immediately. I would say understanding the changes of the staffing model of the companies. Understanding the mix of the staffing model between humans and digital FTEs, understanding how that’s going to impact the P&L of the companies that we track closely. I mean, we know those companies’ P&L fairly well. We understand the ins and outs of the P&L in terms of hiring, understand the cost of services structure, and whatnot. Now when you start adding the digital FTE, I think that’s going to be a big element of change because when it comes to managed services, you’re also trying to, at the same time, trying to introduce new technology as an enabling to those managed services, how do you account for that as part of your talent pyramid? How do you account for that as part of your pricing model? How do you account for that when it comes to your profitability levels and predictability levels? So, I think these are some of the questions we’ll be going after to better understand the implications and what are the variables that are shaping in a digital FTE build out. I mean, you know, we know what a human costs, you know, it looks like, right? 

Patrick: Right.

Boz: Salary, benefits, insurance. But then we think about digital FTE, like what are some of the variables that need to be accounted for and how do you blend that with the humans? And then most importantly, how do you monetize that? How do you price it to the client so that client understands what they’re paying for? Because that’s another thing that clients are increasingly looking for, enterprises are increasingly looking for is transparency. So, I think for us, that will keep us definitely very busy understanding the changes of the staffing pyramid to account for the inclusion of digital FTE. That’s going to be a big factor. Changes in the commercial models of the organizations we track closely now will be another factor for us to, from a research perspective, understanding who’s really making a pivot in there. Because if we look at the times and materials being kind of the predominant commercial model today, probably it’s fair to say that in the next five to seven years, that times and materials, there’ll be probably a fraction. Maybe if we’re at 90% today, probably going to be less than 10% in the next five or seven years. 

Patrick: Right.

Boz: And that’s understanding those incremental changes, that’s going to require to make those companies who certainly will keep us busy. And then last but not least is also, all these changes cannot occur in a vacuum. They occur in the ecosystem, right? So, understand the implications of your partners and communication and setting up the right strategy as you’re going to market. I mean, those digital FTEs, as I mentioned, they can be viewed as a piece of software, they are a piece of software, but your partners may see them as being a threat to their business model as well. So how do you then build that in a way that your partners understand the value proposition of a digital FT versus not being seen as a threat to their core business? Those agents, it’s a very fluid word, agents, right? 

Patrick: Right.

Boz: So, I think you have to be very careful how you message your evolving value proposition within your partner ecosystem as well.

Patrick: That’s fantastic, and in a minimum guaranteed, we’re going to see sometime in the next year to three years where the benchmark, one of the benchmarks you work on, the Global Delivery Benchmark, will have to become the Global and Digital Delivery Benchmark, right?

Boz: Very likely. I mean, understanding the changes in the composition, it’s going to be a big part of it. Understanding those, like I said, digital FTEs are becoming an element. We are keeping an ear out, essentially, we have some anecdotal examples at this moment, but again, it’s more of a time horizon. It’s not an overnight change, but it’s beginning to kind of like everyone’s accounting for those changes.

Final thoughts

Patrick: Excellent. Thanks, Boz.

Boz: Thank you.

Patrick: Next week, I’ll be speaking with Ben Carbonneau and Angela Lambert about 2026 Devices and Infrastructure predictions. 

Don’t forget to send us your key intelligence questions on business strategy, ecosystems, and management consulting through the form in the show notes below. Visit tbri.com to learn how we help tech companies, large and small, answer these questions with the research, data, and analysis that my guests bring to this conversation every week. 

Once again, I’m your host, Patrick Heffernan, Principal Analyst at TBR. Thanks for joining us, and see you next week.

TBR Talks: Decoding Strategies and Ecosystems of the Globe’s Top Tech Firms

Join TBR Principal Analyst Patrick Heffernan weekly for conversations on disruptions in the broader technology ecosystem and answers to key intelligence questions TBR analysts hear from executives and business unit leaders among top IT professional services firms, IT vendors, and telecom vendors and operators.

“TBR Talks” is available on all major podcast platforms. Subscribe today!

Are we approaching the end of traditional SaaS as AI-native architectures and agentic platforms take center stage?

TBR Cloud & Software Senior Analyst Alex Demeule discusses which SaaS incumbents are best positioned to execute a true hard pivot toward AI, highlighting how workforce restructuring, sales realignment and platform modernization at vendors like Salesforce, SAP and Microsoft reveal early signs of strategic transformation. Additionally, this conversation explores the growing tension between general-purpose large language models and specialized small language models, digging into the economics, power constraints, and architectural trade-offs that will define enterprise-grade AI applications.

Episode highlights:

• Which vendors are positioned well for the pivot from traditional SaaS to AI strategies

• The partial displacement of large language models

• Key expectations for SAP, Microsoft and Salesforce

“We’re seeing these partnerships form where you’re bringing in domain expertise from the outside and then working on building niche models. And these niche models are going to be specialized. And they’re not going to be as capable from a general-purpose standpoint, but when you focus the training data and you focus how you’re building these models around the workflow, you’re able to get use-case-level capability that is on par with the largest models out there,” said Demeule.

Listen and learn with TBR Talks!

Submit your Key Intelligence Questions for Patrick and his guests

Connect with Patrick on LinkedIn

Learn more about TBR at ⁠⁠⁠⁠⁠https://tbri.com/⁠⁠⁠⁠

TBR Talks is produced by Technology Business Research, Inc.

Edited by Haley Demers

Music by Burty Sounds via Pixabay

Art by Amanda Hamilton Sy

2026 Predictions: Cloud & Software

TBR Talks Host Patrick Heffernan: Welcome to TBR Talks: Decoding Strategies and Ecosystems of the Globe’s Top Tech Firms. Where we talk business model disruption in the broad technology ecosystem from management consultancies to systems integrators, hyperscalers to independent software vendors, telecom operators to network and infrastructure vendors, and chip manufacturers to value-added resellers. We’ll be answering some of the key intelligence questions we’ve heard from executives and business unit leaders among the leading professional IT services and telecom vendors. 

I’m Patrick Heffernan, Principal Analyst, and today we’ll be talking about 2026 SaaS predictions with Alex Demeule, Senior Analyst for TBR’s Cloud and Software Practice. 

Who is positioned well for a hard pivot from traditional SaaS to AI strategies

Alex, thanks very much for coming in today, and you have the predictions document out there. There’s a lot in it. Congratulations. You were able to do 3 full predictions. In the services side, we only came up with two. 

Alex Demeule, TBR Senior Analyst: *laughs*

Patrick: So, you’re ahead of us on that to start. But I want to pull out a couple of things, and I had to write them down when I was reading it because it’s really, you get deep very quickly. The overall concept was, are we at the death of software as a service. That was the overall concept. But you don’t have to answer that question necessarily, but one thing you did write was about a hard pivot from traditional SaaS to AI strategies. And that would be the companies that are traditionally been in that space making that hard pivot. So, it immediately made me curious, like which of the companies that you cover are well positioned to do a hard pivot because hard pivots are by definition hard.

Alex: Yeah, absolutely. And you know, the topic that we went after with this report is such a fun one. And it’s one that we’ve been asked so many times this year because everyone’s trying to get a lay of the land on where are we today? What does this look like? You know, we can see these sort of threads kind of coming through that, these threads that are disrupting the SaaS model and making the whole idea of a UI and an application seem like, you know, how many years in the future does that still exist? Like if we are able to continue on this path of innovation where agents get better, how does that role diminish, and what does that timeline look like? And that’s one of those questions that I think everybody is scratching their head wondering, because we live in this gray world right now where we’re kind of at the precipice of the possibility, but we’re not there yet. And we’re kind of watching what these innovative model developers and the software leaders and the technology leaders, rather, that are leading this charge, watching what they’re doing. And obviously, they’re always going to be marketing with their best foot forward. And so, getting it to terms of what that timeline looks like, it’s a real challenge. And I don’t think there’s a person out there that can give you the perfect answer. And so, with this document, we really just tried to be practical and try to look at, where are we today? What are the challenges that the AI market is facing? And what are the sort of solutions that are on the horizon for those solutions? And that’ll probably ultimately give us an idea of sort of where this whole thing is going. 

You asked about the hard pivot, and obviously the hard pivot, like you said, is something that not a lot of vendors can do. I think that when we look at the SaaS incumbents, it’s something that we’ve seen in a bunch of different places. We went through this whole workforce rationalization for a lot of the vendors that I cover, SAP, Salesforce, where we saw headcount declining, large 10% of workforce layoffs. And then on the tail end of that, we saw rehiring come in right away. And all that rehiring was going into AI sales, AI product. 

Patrick: Right.

Alex: And so, we really have seen a pretty big workforce transformation for a lot of these software incumbents. Salesforce and SAP are the two that jump off the page for me, given just they’re software pure plays. Microsoft, obviously, you have that massive infrastructure, so we didn’t really see that sort of headcount recalibration. 

Patrick: Right.

Alex: We still see some, but it wasn’t necessarily as pronounced as it was when you looked at the numbers for SAP and Salesforce. So, a lot of these big players are looking at their headcount and at their resources and saying, okay, this is what it looked like. We’re going towards AI and that has to be a strategic priority. What do we have to do within our resource base to be prepared to go after that? And that’s something that has been, you know, to different degrees, kind of ubiquitous. 

Patrick: Okay.

Alex: SAP and Salesforce, they really went all in on it. And Salesforce just had their earnings call last night. One of the things that they did was they declined their sales headcount dramatically just two years ago, going through an operational efficiency program, but now it’s up 20% year to year. And so, we’ve seen their sales force go from being cut dramatically. And at that time, some people were talking about like, oh, they’re going to try to lean on their own AI capabilities to sort of augment that massive decline in sales headcount. But that just was not what played out. What we really saw was them getting rid of a lot of sales headcount that were trained and sort of focused on the more traditional software lines, but then hiring back dramatically in the AI sphere and to focus on AI.

Patrick: Right, so when you talk about a hard pivot coming, in some ways it’s the companies that have already begun that pivot that are best positioned to be able to do that. And I understand the struggle, or I understand where the question’s coming from about when will the software as a service model sort of fade away is partly because you don’t want to be caught still using that commercial model, still using that business model when the rest of the world has moved on to something else. 

Alex: Mmhm

Patrick: And being able to predict that, of course, is, as you kind of noted, kind of impossible. 

Partial displacement of large language models

So, one thing I also want to bring up another thing from what you wrote, that was about proprietary models will become critical differentiators for enterprise-grade AI applications. I read that, and I think you’re talking about displacing large language models. If proprietary models will become critical differentiators for enterprise-grade AI apps, is that displacement?

Alex: So, in my eyes, it is partially displacement. I don’t want to undersell the role of LLMs in the long-term AI opportunity. But one of the things that I think has gotten lost too often in this conversation is the role of diversified architectures when it comes to language models and AI models. You need to look, and we all need to look at some serious constraints that the AI market has. The two that jump off the page to me, cost and power need. 

Patrick: Yeah.

Alex: And the cost and the power need is directly related to the number of parameter counts that a model has. And so, as we push general purpose large language models with hundreds and hundreds of billions of parameters, we’re setting ourselves up into a position where you have really a master of none that is extremely expensive to run. 

Patrick: Right.

Alex: And so, the way around that, and something that, this isn’t- in SLM strategy, it’s not new. Like, we’re talking about stuff that’s been sort of in the works for Salesforce, Microsoft, for years now. And it’s been sort of quieter. We hear so much about their partnerships with OpenAI and Anthropic because obviously those firms are sort of pushing the bleeding edge of general-purpose large language models. But Microsoft, they launched their Phi-3 family of SLMs over a year ago. And ever since that launch, they have been adding and adding new partners that they’re developing specific industry SLMs with on top of that. 

Patrick: Right.

Alex: Salesforce, they released their xLAM, which they’re calling large action models, over a year ago. They’re working with Workday to be able to sort of build around that foundation for an HR type model. And so, we’re seeing these partnerships form where you’re bringing in domain expertise from the outside and then working on building niche models. And these niche models are going to be specialized. And they’re not going to be as capable from a general-purpose standpoint, but when you focus the training data, and you focus how you’re building these models around the workflow, you’re able to get use case level capability that is on par with the largest models out there. So, it’s about focusing on specific use cases. The flip side of that is that it’s a much more fragmented development. Like each- instead of focusing on building one model, it’s just something that has to happen across a multitude of engagements, each getting that SLM to a production quality AI model. So, there is a time disadvantage in some ways. In other ways, it requires a lot of partnership from Microsoft and Salesforce to bring in data that they might not necessarily have. When I think of Salesforce, they were great and have access to CRM data, but they’re really positioning themselves to be more than just a CRM agentic platform. They’re kind of trying to butt up against Microsoft specifically as being sort of an overarching agentic platform where it’s capable of dealing and working with HR and ERP and other software areas in addition to where their domain expertise is. But that’s all areas that they have to go out and partner with. 

So, to me, in my eyes, the long term will incorporate large language models and small language models. And when I’ve talked to CTOs too, from software vendors, this is kind of the general architecture that they’re sort of looking for in the future, where an LLM is sort of sitting at the top of like the orchestration layer of an agentic platform, but that large language model is handing off specific tasks to SLM backed. So it’s the orchestration being handled by the powerful generalist model, but then the specific tasks, the work is being done at the SLM layer.

Patrick: Okay.

Alex: And so, the software vendors have been kind of the most forthcoming with that sort of SLM development, and it’s an area that I think that is going to create a lot of value, really be very important to lowering the cost of running these models, and a big part of them sort of cementing themselves within this AI opportunity.

Strong PaaS portfolios and credible SLM roadmaps: SAP, Microsoft and Salesforce

Patrick: And that’s a perfect segue to another question that I had, again, based on what you wrote. And this time I couldn’t even write it in my notebook, it’s too long. But I have to read it out loud because it’s super important. Platform services, data clouds, and integration layers have become the entry point for AI adoption. And this reorientation favors vendors with strong PaaS portfolios and credible SLM roadmaps, which you just touched on. So again, the first question that comes to my mind, because at TBR, we always come back to the specific companies, which are those vendors that have a strong PaaS portfolio and credible SLM roadmaps.

Alex: Well, I mentioned one already, Salesforce. You know, they’re a vendor that I would say that their past portfolio, it’s been improving over the years. I still think that they’re a little bit more immature relative to an SAP or a Microsoft, of course. Microsoft and what they’ve done with Fabric, I view as a pretty big move for them, and they’ve done a really great job of scaling that very quickly. Salesforce, we do see that traction early on. You’re foreseeing triple digit year-to-year increases for Data Cloud and Agentforce. And that’s great signs, but it’s kind of off of a small base. And so, Salesforce has done a lot of work in sort of improving that portfolio and that customer traction is starting. But I would still put them at a, sort of an immature positioning, but something that I think that they’ve shown early strength and that I think that they can get to that point. 

SAP is a vendor that I think has been doing this well for a really long time, going all the way back to BTP and the attach rates that they saw with BTP on RISE migrations and S/4HANA cloud migrations, and being able to leverage that success into Signavio and LeanIX into sort of building these process automation integration workflows that are bringing their SaaS applications together and enabling sort of the groundwork for an agentic system that you can layer on top of that. I think SAP has done a great job at the PaaS layer. I would say that on the AI side of things, SAP has been a little bit weaker than Salesforce. You know, we’ve seen a lot of talk around Joule, but when we talk to customers around how valuable it is, that’s still an area where the jury is still out. When we talk to the, sort of the channel on Salesforce, I tend to hear a lot more bullish sentiment around what they’re doing with Agentforce relative to what SAP is doing with Joule and their other AI capabilities.

Partnership positioning: Microsoft, Salesforce and SAP

Patrick: Yeah. And then, because I’m always interested in the ecosystem play on this, are there certain companies that you cover that you think are probably better positioned to take advantage of all the changes that you’ve been talking about because of their strengths in partnering and their ability to partner better across the ecosystem.

Alex: Yeah, I mean, we cover- when I look at my coverage, it’s the biggest software vendors in the market. And by virtue of being the biggest, you’re also going to have- you’re going to present the most opportunity to partners, and that opportunity is going to drive partner engagement. Microsoft, I mentioned before, they have been tacking on new partners for their Phi family of industry models very consistently ever since they announced that initiative. And so the engagement has been great there. Salesforce has seen great engagement around partners building on Agentforce. SAP obviously has great partner engagement, especially when it comes to migrating to the cloud. As far as partner engagement on AI, again, this kind of comes back to sort of what we’ve heard on the ground level. It’s just less pronounced than what I’ve been seeing from Salesforce and Microsoft. But it’s still kind of a case where they’re preoccupied with getting to the cloud, where making this shift towards AI almost feels harder because they’re focused on that broader modernization story still. I think that they’re gonna- they’re kind of forced based on the market into sort of promoting their AI a lot and we continue to hear more and see them doing stuff. And so, they’re certainly working towards having a mature AI strategy, but that’s still something that I think that relative to Microsoft and Salesforce, I would put them at a little bit of a weakness. But again, we’re talking about the largest vendors, and there’s going to be partner engagement for a lot of these, or all these agentic platforms that are coming out.

Patrick: Right. And I think you touched on something there, maybe inadvertently, but the boom in marketing budgets, because everybody has to talk about how great they are at AI now. So, if you’re not marketing yourself around AI, you’re out of a job. 

Looking at next year’s Cloud & Software portfolio

So last question, as we go into 2026, and you think about the companies that you cover, and you think about the portfolio, the Cloud and Software portfolio more broadly, are there certain issues you think you’re going to be tackling in the coming year, whether that’s new coverage or maybe more importantly, what are some of the- this is a question I want to really go sink my teeth into?

Alex: I mean, the big challenge for me right now is starting to quantify what’s happening within the finance- so right now we get loose estimates around revenue generation related to AI from all these vendors. 

Patrick: Right.

Alex: But it’s never a clear view. And so, being able to dig into, okay, what is the monetization success? That’s something that is going to be on my mind in 2026. You know, Salesforce, they just had a good quarter in terms of their guidance going forward, and so they’re kind of at that point where they’re saying AI revenue is on the horizon now, and so does that come through? Is that real? And being able to put numbers to that, that’s going to be a big challenge in 2026.

Patrick: And that’ll be super important because we’ve heard now for a couple of years, just the massive numbers around, we’re investing a billion, 2 billion, 3 billion, 5 billion in AI. So now we need to see where’s the revenue that’s going to come out the other side.

Alex: Yeah. And that’s a massive question. I mean, it’s a whole other topic to go into sort of the investment cycle and especially on the hyperscaler side, which we’re talking about cloud software today so, outside the scope. But yeah, we got to see the money now. It’s very important.

Patrick: All right. We got to see the money now. That’s a great way to put it. And we will come back in season five and we’ll talk about exactly that question. Alex, thank you so much.

Alex: Appreciate it. Thank you.

Final thoughts 

Patrick: Next week, I’ll be speaking with Allan Krans and Angela Lambert about our 2026 Alliances predictions. 

Don’t forget to send us your key intelligence questions on business strategy, ecosystems, and management consulting through the form in the show notes below. Visit tbri.com to learn how we help tech companies, large and small, answer these questions with the research, data, and analysis that my guests bring to this conversation every week. 

Once again, I’m your host, Patrick Heffernan, Principal Analyst at TBR. Thanks for joining us, and see you next week.

T

TBR Talks: Decoding Strategies and Ecosystems of the Globe’s Top Tech Firms

Join TBR Principal Analyst Patrick Heffernan weekly for conversations on disruptions in the broader technology ecosystem and answers to key intelligence questions TBR analysts hear from executives and business unit leaders among top IT professional services firms, IT vendors, and telecom vendors and operators.

“TBR Talks” is available on all major podcast platforms. Subscribe today!

As we close out 2025, “TBR Talks” host Patrick Heffernan and producer and TBR Marketing Coordinator & Account Executive Haley Demers sit down for a candid, end-of-year retrospective and a sneak peek at what listeners can expect in the new year. Additionally, the pair unpack the podcast’s growth, with nearly half of this season’s conversations featuring voices from outside TBR, and share a behind-the-scenes view of the show. They also discuss how those external perspectives have broadened the scope of the dialogue; how the show has evolved as listeners began to proactively reach out, asking to participate; and the unexpected value that emerged when technology-focused discussions turned personal.

Episode highlights:

• Memorable conversations about the intersection of humanity and technology

• Surprising conversations about career paths and entry points

• Bringing new ideas and ways of thinking to the table

• Bringing in more generational views and company-centric views in 2026

Listen and learn with TBR Talks!

Submit your Key Intelligence Questions for Patrick and his guests

Connect with Patrick on LinkedIn

Learn more about TBR at ⁠⁠⁠⁠⁠https://tbri.com/⁠⁠⁠⁠

TBR Talks is produced by Technology Business Research, Inc.

Edited by Haley Demers

Music by Burty Sounds via Pixabay

Art by Amanda Hamilton Sy

‘TBR Talks’ Retrospective: What We Learned in 2025

Haley Demers, Marketing Coordinator and TBR Talks Producer: Hello, Patrick.

Patrick: Hello Haley.

Haley: It’s fun to be on this side of the computer, of the podcast today. We’re sitting here because as you know, we’re approaching the end of the year. It’s time for planning and reflecting and we’re not exempt from that here at TBR Talks.

Patrick: Absolutely, yeah. We’ve spent a lot of time doing predictions and stuff, and now it’s time to do a little retrospective, a little thinking back.

Haley: Yes, for sure. So, you know, cut to us being here today, looking back, reflecting on the past few years, specifically a really cool aspect of our most recent season. We’ve had a lot of guests over the four seasons we’ve been doing TBR Talks, and we’ve had the most guests in an individual season this season, season four. So thought it’d be fun to sit down and talk with you about what that’s really been like.

Patrick: I also think on the subject of the guests that we’ve had, my math is probably wrong because math is hard, but I think we’ve had at least as many, if not more, folks from outside of TBR on than we have from inside of TBR. And I’m not counting like Angela twice, you know, she counts as once, for example, or Boz, but I think we’ve had more people from outside the firm, which is kind of cool.

Haley: Yeah, so on that track, I’ve got some data for you.

Patrick: Great

Haley: Since we are an analyst firm. So, since the start of 2024, we’ve produced 56 full episodes so far, four4onus episodes. This is going to be our 57th episode. And we’ve had 30 different guests total on the podcast.

Patrick: Wow, alright.

Haley: Eleven of those have been from outside of TBR. And do you want to guess how many have been this season?

Patrick: At least six, I think.

Haley: Six, yeah, you’re right on the money there. Did you expect it to be that many?

Patrick: No, and I think we’ve been lucky because people have been listening to it and then coming to us and saying, hey, we’d love to be on the podcast. And that’s been a surprise for me. And it’s been fantastic because the conversations we had this season four have been certainly more far-reaching, broader, wider than we’ve had in the past three seasons, I think.

Haley: Yeah, it’s been extremely cool to see folks who we talk with in our everyday, day-to-day, as well as folks who are listeners who come in and say, hey, I’ve got something to say, I think we’d be a good fit. Can we have a conversation and see where it takes us? That’s been a- it’s been a really cool feature of this past season.

Patrick: It’s been really fun. *laughs*

Memorable conversations about humanity and technology intersections

Haley: *laughs* So, I guess to kind of bring the retrospective here, I’ve got some, kind of, superlative questions for you.

Patrick: Sure.

Haley: So, in your role as Principal Analyst here at TBR, you talk to a lot of people. I’d say talking and writing are the two main features of your role.

Patrick: *laughs* Yes.

Haley: And you’re excellent at both of them. And here on TBR Talks, you’re talking to a lot of folks as well. So, I want to start with asking you what conversation was the most memorable from this batch of conversations this season?

Patrick: Yeah, I think one that we did midway through, and it was memorable for a couple of reasons. It was two people. It was Batia and Chris from EY’s Mobility Practice. I met them in the spring in Barcelona and spent time with them there and really got to know what EY was doing around people advisory services even deeper than I did before I got to Barcelona and had such a connection with them that I said, come on the podcast, let’s have a chat.

What I didn’t sort of realize was how what they’re doing at EY, and it came out during the podcast, it’s so personal. Like we talk about technology so much, and even in services, which is a people business, we talk about technology nonstop. And sometimes we forget that it’s the people part of it that actually is the hardest part, but it’s also probably the most rewarding part. And so to me, I sort of went back, listened to that conversation again and realized like, okay, part of why I think they were such a great two people to have on and also why I connected with them when we met in person was just how much they bring the personal experience into what they’re doing. And it’s beyond just the technology, it’s actually the people that they’re focused on. And mobility in particular and sort of living overseas, being assigned overseas and immigration and all that, were issues that I, you know, go back 30 plus years for me professionally. So, to be talking about immigration issues and to be talking about being assigned overseas and stuff like that. I can’t even do the math from 1995, when I was first posted overseas, to come back to that in 2025, that math actually should be pretty easy. But anyway, it was really, really cool. It was memorable for that because it was a really personal kind of discussion and it went beyond just technology, which was great.

Haley: Yeah, that was a great conversation to listen through and it was really, really cool how they were able to articulate the humanity parts of their role and how the technology intersects with the humanity, and how the humanity intersects with the technology. And neither of those parts would exist without the other.

Patrick: Right. And I’m glad you said the word humanity, that’s a better way to put it than just people. But yeah, absolutely.

Surprising conversations about career paths and entry points

Haley: Yeah. Wonderful. So what conversation was the most surprising for you?

Patrick: One that jumps out and there’s a few that were surprising, definitely. There’s one in my mind that I definitely want to get to by the end, but really surprising was talking to Kelly See. from Ericsson. And what was surprising about it was how she came into her role where she is now as a librarian. And that was her actual background, which she studied library sciences. Sort of, I don’t want to say she found the job in the newspaper or something, but it almost sounded a bit like that. She just sort of came into Ericsson as a librarian and grew up inside of that, had her professional career develop inside of that company. And I don’t think about the companies that we cover needing library skills, and yet she’s done so much at being there.

And Elizabeth too, and so her colleague Elizabeth Roberts at Ericsson as well, we had a conversation with her. And what was surprising there was, here’s somebody I’ve known since I got to TBR in 2013. So, I’ve known her over a decade. And there were just things about her background and things about what she’s doing now and how much her role has changed that I didn’t anticipate when we- because I met with them in Texas, and we said, hey, come on the podcast, it’ll be fun. And I had no idea what Kelly’s background was. And I had no idea how much Elizabeth’s job had changed in the, just in the last couple of years, really. So that was surprising.

Haley: Yeah, it’s fascinating listening to all of the conversations that we have, both with folks inside TBR who come on the show and folks outside of TBR, hearing about their paths, hearing about the way that they got to the role that they’re at, hearing about the different roles they’ve had in their organizations and in the various organizations to bring them to the point in their careers where we get to talk with them here is fascinating. I’m a few years out of school and something that I was always ravenous for was how people progressed through their careers, what twists and turns people took. And so, whenever we would have the chance to have a guest speaker be able to really dig into somebody’s career path and how they got to where they are, that was something that I always really valued, having the chance to connect with folks on. So that’s been a really cool aspect of being here and being able to do this show.

Patrick: Yeah, and it’s great, because it’s sort of, in a way, it’s aspirational that you can say, okay, things- people can do things you don’t expect, and people can have careers you don’t expect. And for you, just a couple of years out of college, it’s a chance to say, okay, there’s a lot of opportunity there. You’re not locked into one thing. And for me, it’s just fascinating to hear the stories.

Haley: For sure. Especially when you know and you interact with somebody in a day-to-day way, in the ways that your two roles intersect, and you don’t really get to see a bird’s eye view of what the rest of their world looks like when they’re at work. That’s been really fascinating.

Patrick: It has been. It’s been a lot of fun.

Bringing new ideas and new ways of thinking to the table

Haley: My next question is, what conversation brought the most new ideas to the table for you?

Patrick: Yeah, I was going to sort of save this one for the end, but it’s perfect now. So, we spoke with David Martínez at BCG’s Henderson Institute. That episode alone was perhaps my favorite of the whole season. I’ll go ahead and say that. And for a lot of reasons, one, it was one of those things where they reached out to us and said, hey, we want to be on the podcast. So that was kind of cool. The second, we covered just an incredible range, a tour de horizon of everything happening in consulting and technology and AI. I mean, it was just, it was the broadest conversation imaginable, in part because the guy is literally a PhD in political philosophy. He’s a philosopher. Never had a conversation with a philosopher and talking about technology at the same time. But the thing that, because your question was, what was the sort of the most, not surprising, what was it?

Haley: The most new ideas to the table.

Patrick: The most new ideas. This is- so the challenge, one of the challenges in this job as an analyst is you do the research, you do the thinking. Once you present, once you bring forth whatever it is, whether it’s through the writing or speaking with somebody, an idea, if it resonates, it tends to stick. So, you tend to- you get- I fall into the same habit of sort of repeating or saying the same ideas again and again because it resonates. So, like, okay, this must be true because when I say it, people nod and say, oh yeah, that makes complete sense or I hadn’t thought about it before. So, for years now, we’ve had a saying within the firm, or at least within my practice, that the technology is never the problem, it’s always the people. So, technology always works. Technology just does whatever you tell it to do. The people are always the reasons why technology isn’t adopted, why change management is harder, why things go off the rails, why expectations are met. And so, in some ways, that’s just been a mantra for us. The technology isn’t the problem, the people are. And when I mentioned that to David, he just took the philosopher’s view of that and sort of turned it around on me to say, you know, the technology itself, you can’t really even look at that as the yes, no, the problem, not the problem. That’s looking at the wrong way. It’s the intent that people put into the technology. So, it’s not that people are inherently the problem. It’s the intent that they’re bringing to the technology that is or isn’t the problem. So, for years, I’ve been thinking about this as very binary and very sort of black and white. And he was basically saying, you’re missing the gray. You’re not even thinking about the right way to think about this problem. And the problem is real. The problem is, you know, people eventually have to use technology, and if they don’t use it right, then that’s what causes the problem, and he was saying it’s all about intent, and I hadn’t thought of it that way. It was just such a better, cleaner, smarter, deeper way to think about this framework that we use all the time, and so I think going forward, if I catch myself saying, we say around here that technology isn’t the problem. I’m going to stop myself and say, nope, I’ve been corrected by a philosopher. That is not the right way to think about it. So that was just, it was a fun conversation. It was an amazing conversation. He dropped some Latin phrases in, which has only happened once so far. So set the bar very high for 2026.

Haley: Yeah, some challenges for some other Latin phrases to get dropped on the pod there. Yeah, the intent is such an interesting way of looking at human interaction and technology because you have the intent in creating the technology, and you also have the intent in using the technology. So that kind of disseminates the gray area even further than we perhaps originally were kind of considering.

Patrick: Yeah. Absolutely.

Bringing in more generational views and company-centric views in 2026

Haley: My last question for you today, Patrick, is what kind of guests or what kind of conversations would you love to have on the podcast for a season five? What are you kind of hoping we get in the studio, we get coming through the door? What are you excited to potentially talk about next season?

Patrick: Yeah, two things. And I’ll reflect on the people we spoke to this season as a way of sort of framing it. One, we spoke with Eric Müller from Work & Co. And he’s a guy who’s about as old as I am, or I hate to say this, perhaps older. He had a generational view of technology, of change, of marketing, of creativity, that I think sometimes I forget to tap into. It’s really easy to talk to people who are at the very cutting edge, that are new in their profession, or they’re new into technology, and sort of forget that. Because we used to, you remember Ezra used to be here, and even Ramunas before him, and Geoff Woollacott, we had people at the firm. I think I’m actually the oldest person at the firm now, which is a little frightening, but it’s also a reminder, like, look, the generational stuff is kind of important. So, I think next year it would be good to go out and find some people that can give us the longitudinal view of some of the changes that have happened in technology because there’s so much hype, there’s so much that seems to be changing all the time. And in fact, maybe things aren’t changing quite the way we think they are. So that’s probably terrible marketing for TBR Talks because I’m saying I don’t want to talk about the hype and the new stuff, but I do, I just want to put it in the context of generational changes across technology.

Haley: Yeah, and I think we have the ability to kind of dive into some of the nuance in all of the hype and big scary headlines that may be coming out. We have the opportunity here to sit and kind of dissect it a little bit more.

Patrick: Right, and I think, I mean, I just think about the people that are in this firm with us, most of them have been here a minimum of five years, and in some cases, 10 years or more. And so, we do have people in the building that we can tap into to give that generational view of technology.

The other thing I’ll bring up is I was recently with some friends of ours and a guy who’s in technology, and he said, hey, I was looking on LinkedIn, I saw you have a podcast. And so, I listened to it, and he said he listened to the NVIDIA episode and the Lenovo episode, both of those with Ben and Angela. And here’s a guy who’s in tech himself, and wanted to just hear a little bit more about those two companies. And he’s like, absolutely loved it. It was the right length, like 20 minutes.

Haley: Yeah.

Patrick: Like not too long. But it was coming at those two companies in a way that isn’t constantly reported in the news. It was a perspective that he wasn’t getting from his other news and information feeds. And so I think that’s something I want to really try to do more of in 2026 and season five, is find a way to look at the companies we cover, look at the technology and the issues that we cover in a way that really is separate from what’s out there in the news. It’s not enough to just reflect on what are the earnings. It’s not enough to reflect on what are the sort of big trends that are happening, but really bring that truly different TBR perspective to the companies that we’re looking at. And it was really encouraging to have somebody who really hadn’t listened to any of the episodes before immediately say, hey, you know, especially the NVIDIA one, he’s like, learned so much more about that company, things I hadn’t been hearing in the news. I’m like, that’s perfect. That’s what we’re trying to do here.

Haley: Yeah.

Patrick: So, it was really cool. So hopefully more longitudinal view in 2026 and more perspectives on the companies and the issues that we cover that folks don’t get from just the daily rush of information.

Haley: Yeah, love to hear it. That’s a great goal for next season.

Final thoughts

And I know you love adding in a kind of bonus question.

Patrick: *laughs* I can’t help it.

Haley: To our guests

Patrick: And I knew this was coming. I just don’t know what the question is.

Haley: Well, so you’ve been asking most guests for season four a similar question, and I don’t think you answered it. So, I’m going to turn it back around on you. So, the question is, in the age of AI, there’s a lot of thought of AI potentially taking jobs away, taking tasks away and so if you had your 10,000 hours to get really good at something specific, what would it be? What would be the skill that you would love to master, kind of at the drop of a hat?

Patrick: Well, at the drop of a hat or over 10,000 hours. 

Haley: *laughs* Take it or leave it, you know?

Patrick: From a very realistic, very personal perspective, I have a guitar from my father. I would love to actually learn how to play it.

Haley: Yeah.

Patrick: I played the bass guitar when I was in a band in high school. I played the drums through college. The whole rest of my family is very musical. I have that thing I need to learn how to play. I need to take the 10,000 hours and dedicate to that. But from a more work perspective, I do, the magical power I wish I could have is just to stop time long enough to think and to write down everything that I’m thinking. Because I find so many times, we say this in conversations and in calls with our clients, where we say, we can’t write down everything that we want to on paper. So, call us so we can talk. To some degree, what we’re saying there really is, if we had more time, we would have written this better, more concise, and more directly. And we would have been able to say what we’re really trying to say. And instead, we just, we put it out there and now we have to tell you what we really mean. I would love to just get better at saying what do we really mean.

Haley: Yeah.

Patrick: And saying it in a way so much different than this answer, which is concise and direct and people can understand right away and walk away with. So that would be my professional side. Personal side, 2026, I gotta learn how to play guitar. I got it. I gotta learn how to play it.

Haley: Love it. Can always add a little bit of music into your life.

Patrick: Yeah, well, I could record a- that should be the real goal is to record the intro and outro music for it.

Haley: That’d be really cool. Awesome. Thank you, Patrick.

Patrick: Thank you, Haley. This is a lot of fun. We’ll do it again at the end of season five.

Haley: This was great, see you then.

Patrick: Next week, I’ll be speaking with Chris Antlitz about his 2026 Telecom predictions.

Don’t forget to send us your key intelligence questions on business strategy, ecosystems, and management consulting through the form in the show notes below. Visit tbri.com to learn how we help tech companies, large and small, answer these questions with the research, data, and analysis that my guests bring to this conversation every week.

Once again, I’m your host, Patrick Heffernan, Principal Analyst at TBR. Thanks for joining us and see you next week.

TBR Talks: Decoding Strategies and Ecosystems of the Globe’s Top Tech Firms

Join TBR Principal Analyst Patrick Heffernan weekly for conversations on disruptions in the broader technology ecosystem and answers to key intelligence questions TBR analysts hear from executives and business unit leaders among top IT professional services firms, IT vendors, and telecom vendors and operators.

“TBR Talks” is available on all major podcast platforms. Subscribe today!

In this episode, Batia Stein, managing partner at EY Law and partner at EY People Advisory Services, and Chris Gordon, Canada region leader at EY People Advisory Services Tax, join “TBR Talks” host Patrick Heffernan for a discussion on EY’s AI strategy for its People Advisory Services practice. Stein and Gordon detail EY’s approach to automation in the tax and audit divisions within EY, and the trio also shares their thoughts on immigration, cybersecurity, data privacy and data sovereignty, as well as tax, HR and what the future may hold.

Episode highlights:

• The next trends in people advisory services

• Navigating uncertainty, AI developments and human behavior changes

• Data access challenges and changes

• How EY PAS and Tax are using AI and what gets applied to EY broadly

Listen and learn with TBR Talks!

Submit your Key Intelligence Questions for Patrick and his guests

Connect with Patrick on LinkedIn

Learn more about TBR at ⁠⁠⁠⁠⁠https://tbri.com/⁠⁠⁠⁠

TBR Talks is produced by Technology Business Research, Inc.

Edited by Haley Demers

Music by Burty Sounds via Pixabay

Art by Amanda Hamilton Sy

EY’s AI Strategy for People Advisory Services: Managing Partners and Regional Leaders at EY Share AI Insights

TBR Talks Host Patrick Heffernan: Welcome to TBR Talks: Decoding Strategies and Ecosystems of the Globe’s Top Tech Firms. Where we talk business model disruption in the broad technology ecosystem from management consultancies to systems integrators, hyperscalers to independent software vendors, telecom operators to network and infrastructure vendors, and chip manufacturers to value-added resellers. We’ll be answering some of the key intelligence questions we’ve heard from executives and business unit leaders among the leading professional IT services and telecom vendors. 

I’m Patrick Heffernan, Principal Analyst, and today we’ll be talking about people advisory services with Batia Stein, Managing Partner at EY Law and a Partner within EY’s People Advisory Services practice, and Chris Gordon, Canada Region Leader at EY People Advisory Services Tax. 

Meet Batia and Chris from EY People Advisory Services

Chris and Batia, thank you so much for joining the podcast, really appreciate this. We’re in season four now, which is crazy to me. And we’ve had just such a wide range of guests this season in particular. So, it’s been an enormous amount of fun. But from what I can recall, this is the first time we’ve had anybody from People Advisory Services, from Tax on this program at all over four seasons. So, this is really, it’s exciting. This is something new, something different for us. And so, I would love if you could just introduce yourselves and give us a little bit of background and sort of explain where you’re coming from. I know we met in Barcelona, we had a great time there. Got to chat quite a bit. But if you could just let our folks know who you are and what you’re doing at EY, that’d be great.

Batia Stein, Managing Partner at EY Law and Partner at EY People Advisory Services: Great. I’ll jump right in. Well, first of all, thanks, Patrick, for having us. And it’s great to know that we are the first from PAS, from People Advisory Services Practice. So, my name is Batia Stein, and I lead EY Canada’s immigration practice. We provide Canadian, US, and global immigration services to our clients through EY’s global immigration network, which is in about 140 countries today. I am a Canadian lawyer. I’m a US attorney by profession, and I’ve been with EY for quarter of a century or so now, just over 25 years. And through that time, I’ve helped build our immigration practice very proudly. And that includes everything from service delivery model, how we work with clients, and the technology suite, which I know that you have some interest in, so we’ll talk a little bit about that in a minute. And primarily what I do is I work with my clients to provide strategic advice and thought leadership, creativity to help them navigate the uncertainty. And frankly, we find ourselves in one of the most uncertain times geopolitically. And so that’s really what I help clients with. Chris?

Patrick: Excellent.

Christopher Gordon, Canada Region Leader at EY People Advisory Services Tax: Yeah, so again, thanks, Patrick, for having us on. This is fantastic. The first nod for EY PAS. So really, really privileged to be on this podcast and sharing with you and your listeners. My name is, as you said, Chris Gordon. I am a partner here in Toronto, Canada. I’ve been with the firm, gosh, 22 years now. I’ve been in mobility for 25 years. In a prior life, I was with another firm. I think you and I, Patrick, share that firm in our history. 

Patrick: *laughs* Not to be named, okay. 

Chris: I started my career as a tax associate doing sort of US-UK cross-border tax for expats. Then I moved into broader assignment service, strategy, program design, development, helping clients manage their outsourced function for mobility. Then I moved about 17, 18 years ago into immigration, building, helping to build, working with Batia and others from London, starting from London, England, to build our global immigration business around the world. At the time, we were probably in about 30 countries. Now we’re in about 140+ countries around the world. So that was where I started my career. And then most recently, I’ve stepped into the role as the national and super region leader for Canada, for People Advisory Services. So, it’s kind of a full circle moment where I’ve gone in through all the areas of then human capital and what we call now people advisory service. And now I have the privilege of working with our team here in Canada and our leaders across the globe to set strategy for our business.

The next trends in people advisory services: Communication, connectivity and insight

Patrick: Excellent, excellent. And thank you guys for coming on. And Batia, I want to maybe ask a question because you’ve worked in immigration so long. You mentioned this is a tumultuous time in terms of what’s happening globally. But I’m curious to take maybe a bit of a giant step back. And when we think about the whole role of human resource management, people advisory services and all that, the last five years now have been tumultuous. You know, we had the pandemic, we had the quiet quitting, we had a lot of staff reductions across the technology space, which spilled into professional services. And I have to say one thing I was struck when we met in Barcelona was how closely knit a community the people were that were there. It seemed like they were all sort of relying on each other to get through. So, when you think about what some of those big trends have been over the last few years, are there things that are happening now that you think are sort of beyond just the geopolitics that are sort of building up the next few trends across immigration, across broader people advisory services?

Batia: Sure, absolutely. The one that sort of pops to mind, Patrick, immediately is really, I would call it generally speaking, communication and connectivity and insight. And all of that is really supported through technology. You know, our clients, our corporate clients really want to understand their employee populations, you know, firstly, so that they can keep up with the change. You know, if there’s a, you know, unfortunately, if there’s some kind of geopolitical incident or there’s some kind of legal change that requires them to know where their people are, what their status is, who’s impacted, they need that data and that information instantly. You know, that can happen on a weekend and they need to know it that day, right? We just had a weekend like that not too long ago. And we also want to enhance employee experience. There’s a real lens on making sure that- you know, immigration has become quite challenging for individuals. It creates a lot of uncertainty. It is something that can create anxiety. And so, employers really want to make sure that their employees have that high touch and level of insight into where they are in their process. When will their kids be able to start school? When will they be able to settle? All of those kinds of questions. And so that’s really driven by understanding the data, using technology to do that, and to create an elevated experience for both the employer and the employee. So, I think that’s the first trend and probably a primary trend that I would highlight.

Patrick: That’s fascinating. I think of the Big Four firms as having a cybersecurity team that has to react on the weekend when something goes really wrong, but it never occurred to me to think, oh, right, and the immigration folks, the people advisory folks as well.

Batia: Oh yeah. Just a few weekends ago. No jokes at all, but that happens to us quite often. Just a couple of weekends ago when the presidential proclamation was announced that around H-1Bs and the changes to the H-1B program, there was a lot of uncertainty on day one as to who that would impact and how it would impact people. Could people, for example, who were in H-1B status outside the country be allowed to come back in? 

Patrick: Right.

Batia: And so, we spent the weekend analyzing the proclamation, advising our clients, re-advising when clarification came, and helping people to manage their employee populations of hundreds and sometimes thousands of people.

Patrick: Right, and that gets, I mean, there’s probably nothing more about the employee experience, especially in immigration, than your visa and what’s your visa status and what’s your residency status. 

Batia: Absolutely.

Patrick: I’m curious too, because you mentioned employee experience. It’s one of those areas that at the beginning of the pandemic, and I know that goes back five years, but there was such an intense focus on, are our people safe? Are our people healthy? Are they happy? Do they have what they need? And then I feel like we went through a period where employee experience maybe got pushed aside. You know, we didn’t- we stopped thinking about employee experience broadly, but for you guys, it’s something that’s sort of every day. And so, I’m curious, how have you seen employee experience sort of rise up and down, if it does, at your clients in terms of, you know, is it a boardroom issue? Is it a C-suite issue? Is it something that’s just sort of pushed down lower in the organization? Or does it rise to the top again and again?

Chris: Yeah, I think if you- if we think about the pandemic, as you mentioned, as almost like a milestone, right? There’s been a change in expectation around what the employer and the obligation of the employer for the employee. And so, what we’ve seen with many companies is a heightened, especially within the HR organization. So, whether at the board room, they’re not necessarily talking about it in the same way, but certainly within the HR organization, employee experience is one of their top priorities. We are seeing definitely a shift in how organizations are functioning around that, whether that’s how they design their mobility program, how they design their HR program, the way that they communicate with their employees, the touch that they want to put on their employees in terms of both, as Batia mentioned, communication, but also this idea of surveying and making sure that everything that’s happening with the employee to their expectation. 

If we think about the shift in expectation and the immediacy in data expectations, right? People want to be able to put their finger on a button and find out their status. And so that all is part of the employee experience. As soon as an employee goes into the HR system, there is an expectation that this firm now has me, not just from a delivering my comp and my salary perspective and delivering the right opportunities, but keeping me aware of everything and anything that may affect me, that may affect my employment, that may affect the organization and the company, and even into the social space, right? 

Patrick: Right.

Chris: I want our company and our organization to support the things that I support, the causes that I support. So, it’s a much bigger issue that HR is grappling with and functioning and dealing with. A lot of organizations, like I said are restructuring how they deliver messaging. A lot of self-service tools are being implemented within organizations so that employees can actually have their finger on the pulse of what’s going on within the organization or within their mobility program or whatever it is that they’re interested in. So, there is definitely a shift that we’re seeing. Yeah, as I said, employee experience is something that we’re hearing a lot more around and certainly something that we’re helping clients address.

Patrick: You mentioned- 

Batia: I’ll just add, Chris-

Patrick: Sorry, go ahead.

Batia: Sorry, Patrick. I was just going to add that, you know, immigration is a deeply personal experience. And so, it really does impact the C-suite. It does impact board members. You know, we are regularly helping C-suite cross borders and board members. And so, there’s nothing that grabs the attention more quickly than somebody quite senior, you know, having a challenging time at the border or being stopped. And so definitely it permeates the entire organization.

Patrick: Right.

Chris: Yeah. And when you think about mobility as a connected service, tax, you want to make sure your taxes are right. You’re filing the right taxes. You’re not paying more than you need to pay. Your immigration’s correct. Your payroll’s being delivered. All of those things now are converging and integrating, and the employee is looking at all of those as a single stream of support. They’re not thinking about whether you may have a different vendor for each or the same vendor for each. They want the same experience regardless.

Patrick: Right. And I mean, tax and immigration, those are so deeply personal. I mean, that’s a really, it’s an important point to think about, like how your employees are going to feel that more than they’re going to feel their technology. 

Adopting new technology solutions at EY People Advisory Services

But let’s talk about technology for a second, because I know you guys are building some of those solutions you talked about, some of the platforms working with Microsoft and probably others. Have you seen, I guess the big question for me is the technology- in our world, the technology always works. It’s the people that mess things up. It’s the humans that screw up the technology, not the other way around. But when it comes to some of the tools that you’re developing for your clients and tools that you’re using internally within EY, are you seeing the adoption maybe happening a little faster now? Are you seeing people, and is that part of just a better designed tool, a better designed, I know one of the ones is built right into Teams. Or is it more a function of people have just gotten better and more adept at adopting technologies quicker? And just your broad experience in that regard. Chris, maybe if you want to go first on that?

Chris: Yeah, I think about our technology journey. Right, when I started, God 20 something years ago, it was an e-mail and no one expected a response to that e-mail for five days or a week or whatever, right? As expectation shifted and became more immediate, then the need for technology to really address that became critical. And if I think about then, sort of, you know, societally, there is this, everybody’s on an app, right? Like, apps have become the way forward, so the user experience, the expectation of easy, frictionless access to data, to information, is something that people are taking from their experience in life and bringing that to their experience in the work environment, in the services that their employer provides to them, and mobility being one of them. And so, as we’re seeing sort of technology really advancing super quickly, right? A system that we developed five years ago is now today an obsolete system. And so, we’re constantly evolving. 

And so through our relationship and our alliance with Microsoft, we have developed an EYMP, which is EY Mobility Pathway, which is a dynamic system that tracks, reports, allows clients through dashboarding to have their finger on the pulse. Both clients at the administrative mobility function level and also the employee, to have their finger on the pulse of their tax services, their immigration services, you know, if they’re business travelers, there’s business travel elements to that. It really is this idea of data being democratized. People being able to have access to the data anytime they want 24/7 and being able to play back and forth with that data to provide information, to pull information in a very secure way. I think you mentioned, you mentioned risk, right? Threat, cybersecurity. 

Patrick: Yeah.

Chris: So, ensuring that data is transited no more through e-mail, but through systems that are secure and immediate, real time. And it is a challenge as you said, you know, humans are still part of the process. However, with AI and generative AI, there is much more ability to reduce error, to mitigate that human error element to it, where now AI is implemented in systems. But again, there is still a tension there, right? Some organizations don’t want that implemented, there’s still a fear there. So, we have to tread carefully with that, move the industry along, whilst also respecting that there are also- that there’s expertise that still delivers support to our clients. But definitely, the technology journey is apace, and it is a race. Let’s be clear about that. It is a race to really- I don’t think there is an endpoint to this race. I think it’s going to constantly keep building as we move forward. I don’t know, Batia, if you have any other thoughts.

Batia: I was just going to say, I think that coming back to your question, Patrick, I think that data privacy, data integrity is what’s driving adoption and employee experience. Right. So, I think employees want the experience. They want to make sure that their information is secure as do our clients, our employers. And so, I think that is really something that’s driving adoption. And I’ll just say on a personal note that being part of EY, you know, you told us that you used to be part of a advisory practice as well, a consulting practice. We’re in a wonderful position. It really, it makes me- I get excited by the idea that we are an immigration practice embedded in this broader, much larger organization with advisory, with this alliance with Microsoft, with, quite frankly, with the ability to develop technology at a pace to really lead the race, using Chris’s words. That’s the piece that excites me, because this is really something that is going to sustain the future of our practice. And so being in a position where we are really surrounded, I think, with the right environment for the development is super exciting for me.

Patrick: Yeah, and I think the multidisciplinary model works so well for you and for the others in the Big Four, just because you bring so much to the table and every client might do one piece of their business really well, but they are- they do have needs across, you know, every enterprise client has needs across all of the things that EY brings to the table. 

Data access challenges and changes

I want to ask a very specific question that you may not want to answer, but I’ll have to ask it anyway. And it’s about data, because we hear about data all the time, and we hear about how that’s the piece that is preventing faster adoption of agentic AI or generative AI. It’s the piece that’s always most difficult. Everybody tells us that enterprise clients just don’t have their data in shape. They can’t accelerate. They can’t move from pilots to scale, blah, blah, blah. What we’ve heard recently that I think is fascinating is this idea that even with clients that you’ve been working with for a decade, getting sustained useful data from the clients is still a challenge. And I’m curious, we’re hearing different things about where, you know, EY fits on that spectrum of the ability to work very closely with their clients and access their data. And Chris, I know you’re laughing ’cause you’re like, you can’t believe I’m asking this question. But I’m just curious, in your more than two decades of experience, data has always been part of the equation for you. How has that changed maybe in recent years where that ability to get sustained access to the data that you need out of your clients has improved or has maybe been a roadblock.

Chris: Yeah, no, that’s a- you know how to ask those questions.

All: *laughs*

Batia: I’m glad it’s yours.

Chris: If you think about sort of the journey that we’ve been on over the last decade, let’s call it, There was this desire to protect data in a way that denied access. Right. 

Patrick: Right.

Chris: So, there were lots of layers of access controls and systems in place to limit the amount of information that was available to a provider like EY or even to HR within the organization. They don’t have access to all the individual’s data and information. With the demand for more information now coming from the employee in the organization, those systems of how they constructed and architected their data security have to now shift as well. And so, we’ve got this tension between the demand for information and demand for immediacy of information that then can drive strategic decisions with an institution of data management and data control within the tech and security organization that now needs to be reconciled. And so that’s probably part of what you’re seeing, right?

The consistent access to data, some of those controls need to be reassessed and reviewed. There has to be trust in the system. And so, as we think about the best cases where we have that access to data and those two-way data flows with our clients, those are the clients where there is a trust system that’s set up. And that means the client organization reviews all of our systems, checks out and is comfortable that they can now have a secure flow back and forth. And so those barriers, let’s call them those controls, those gates, to a degree are then lessened or removed so that we do have that consistent access and flow of data. Now, that does require trust. It also requires a different way of contracting. I can tell you, for example, if we think about the construct of contracts that were made probably 5-10 years ago even, right? Let’s say 10 years ago. And even 5 years ago, those contracts were, “you cannot use our data for any other purpose other than,” right? 

Patrick: Right.

Chris: And so, if you now want that data for insights and you as an organization want EY to now do benchmarking for you, for example, right? Your contract doesn’t allow us to do that. So again, there has to be a full reconciliation of the data systems and the data control that the organization has as their policy, and then a reconciliation of what their demand is in terms of data consumption. That’s kind of my answer to the question. I’m not sure it’s answered your question fully, but that’s where I do see the change.

Patrick: No, it’s super helpful. And I think the way you laid that out in particular to talk about trust is a perfect segue into the next thing we want to talk about, which is AI. 

Batia’s law background and EY’s Law Firm

So, let’s talk about, well, I want to talk about AI, but actually before we get to that, Batia, you said something at the very beginning that you’re an attorney. And I just have to ask how many other attorneys are there within EY? Is it a firm full of lawyers that we didn’t know about? Like, is it the secret, you know, subculture of lawyers at EY?

Batia: *laughs* That’s a good question. So, within our EY Law firm, our practice in Canada provides those three areas of law, as I said. So, it’s Canadian, US, and global outbound. We have around 300 people onshore in Canada. We’re also supported by our Global Delivery Services Center in India, by another 300 or so. So, it’s a large practice. And then of those 300 or so in Canada, we have just over 100, 120-140 lawyers and attorneys, mostly US attorneys.

Patrick: Okay, yeah. 

Batia: So, it is a- I don’t know how you would classify it. Is it a subculture? I’m not sure. But yes, we have a very strong law firm practice.

Patrick: Excellent. And then so I’m just really curious on this one particular point, like how did you end- you didn’t go to law school to work for EY, so how did you end up?

Batia: *laughs*

Patrick: Right?

Batia: I did not. So surprisingly, I’ll share my story, but surprisingly, it’s not that unusual. We have a few people with similar profiles. So I went- I actually did my undergraduate degree in cultural anthropology.

Patrick: Okay.

Batia: And decided that I needed to do something that was practical. So decided to go to law school in my third year of my anthropology degree. And went to law school so that I could work with refugees, so that I could help asylum seekers and refugees. And after graduation, I articled, interned at a boutique large immigration law firm in Canada, and then opened my own immigration practice for about two years where I did just that. I worked with refugees, worked with humanitarian cases. And at the time, EY was starting an immigration practice, piqued my interest. I saw that immigration in particular was- in Canada was following the path of U.S. immigration into the corporate world. And so, I approached the folks and joined the firm.

Patrick: That’s fascinating.

Batia: And now I do exclusively corporate law.

Patrick: It’s absolutely fascinating. And I have to say, earlier this season, we spoke with a guy who is with BCG who got his PhD in philosophy. 

Batia: There you go.

Patrick: And I thought, okay, well, that’s the first time we’ve ever had a philosopher. You actually might be the first attorney that we’ve had on the podcast. So, we’re checking off a lot of boxes today. It’s great. 

Batia: *laughs*

How EY PAS and Tax are using AI and what gets applied to EY broadly

Patrick: I do want to ask about AI, because it’s something that we talked about in Barcelona. It comes up relentlessly now. And it occurred to me when you were talking about immigration earlier, in my distant, distant past, I actually stamped visas at the embassy in Cairo, US Embassy in Cairo. 

Batia: Oh wow.

Patrick: Yeah, I did immigration visas, I did visitor visas, all that kind of stuff. And I just think about the application- 

Chris: Very cool.

Patrick: Well, yeah, it was, yeah, we could have a beer and talk about how cool that job was. 

Batia and Chris: *laughs*

Patrick: But anyway, I think now about if somebody could have filled out that form using AI, you know, how different that would have been. And the same for your own services that you’re providing to enterprise clients when it comes to literally filling out applications or forms and stuff like that. How much is the firm starting to use AI to do some of that work? And do you ever see it sort of being a huge part of the work that you’re doing?

Batia: Yeah, yeah. It’s an excellent question, and I think we’re on the journey, right? So, we definitely are using AI in cool ways and are looking at using it in even more ways and better ways. And part of the driver really is that things have become so much more complex. The only thing that is certain in the world right now for us in immigration is uncertainty. And so, we need to make sure that our best minds, greatest thinkers are focused on that, focused on client service, focused on strategy, focused on understanding the changes. And as you said, the filling out of the forms and the analyzing of the data, of which we have a lot, right? I mean, there’s a lot of data that we hold. So, analyzing that data that we hold, analyzing the data that is publicly available to enhance our decision making and our clients’ decision making around strategy is what we need to be doing. And so, we are using some tools to do that already. So, we do have some technology, as you know, in play that we are able to automate some of that process for sure, and looking to automate even more of it using AI.

Patrick: And how much do you share what you’re doing within immigration and then more broadly within People Advisory Services with the rest of the firm? I mean, how much are you getting from the rest of the firm? How much are you sharing back? And by how much, I’m really thinking like more around the innovative side, like this is a way of thinking about the data that we have. And because your firm as a whole, of course, has a massive amount of data on all your clients. But how you manage that, how you orchestrate that, what you can and can’t use, all of those things, you’re going through it individually in your practice, how much does that get shared? How easily does that get shared across the firm?

Batia: Yeah, so that’s a great question. We are, at the end of the day, in Canada, at least a law firm. And we are an immigration practice. And so, we are very careful with how much we share from a privacy perspective, from a regulatory perspective, we wouldn’t share without clients explicit consent to do that. Having said that, I like the way you phrased the question because it’s not just about the data we hold, but it’s about the way we are developing and using technology. And so, from a technology perspective and how we use technology, that for sure is, you know, we are working in this much bigger and broader environment. We are learning from our, as I said earlier, from our consulting practice, from our technology folks, and they are learning from us in terms of how we are building and what we need to do. But from a data perspective, to be very clear, that is held privately and confidentially for sure for our clients.

Patrick: Right, and then Chris, on the Tax side and the People Advisory broadly, how are you guys using AI these days? And maybe also, what do you see coming next? Like what’s the next evolution? We’ve gone from AI to GenAI to agentic AI. What’s next?

Chris: Yeah, no, if I think about sort of a tax return, for example, providing a tax return used to be, you know, a client would have to fill in, you know, an employee would have to fill in all their information on what we call an organizer, right? Now we have information in systems. The client has information in their systems. There are systems that are on apps, maybe in an employee’s phone that when they travel, if they switch that app on, their calendar gets updated for where they are in the world. That then gets pulled into this form. So now when they have the organizer format that appears in front of them saying, fill out your organizer, actually, it’s playing back information that’s already in the system. Now they just need to verify. We’re using technology, AI, APIs, connecting systems in ways that are accelerating the process of preparing tax returns, also delivering, again, on that employee experience, right? I have this data, I’ve given you this data before, how come, you know, it’s in my calendar, why is it not in my form, right? And so, we’re able to now do that. 

In terms of sort of the next level, the next stage of experience, it really is going to be around, and we’re looking and playing with and piloting certain agentic pieces of that, where actually systems are now going to be doing some of that conversational response based on data in the system. So, someone can call up in the system and say, what’s happening with my tax return? And rather than it just being, you know, a box with information, there’s actually a conversational piece to that. That’s what we’re exploring right now. How do we put agents into the system that can enhance the user and employee experience? And we’re beginning to pilot that. 

The future is endless, right? And again, it really goes back to that trust piece. How much information do you want in the hands of an individual to have a conversation with? Or how much of that, because if you want to have a conversation with an individual, you’re going to have to book a meeting time and it’s got to go do the scheduling and all those other things, right? But if it’s in the hands of agentic AI, then that can be more immediate in terms of your information request and receipt. So again, it’s really building that trust with our clients, piloting with clients that want to push the boundaries of this and then using that as a use case to demonstrate to other clients the benefits of that, and also the opportunities for improvement. So that’s kind of where we are right now across People Advisory Services. 

And if I think about Canada in that context, Canada is one of ten super regions. So earlier this year, EY, we restructured our organization into ten super regions. Canada is one of those ten super regions. And being a super region allows us to pilot some things, share that with the rest of the globe, the other nine super regions, lead in some of those innovations, and really sort of drive some of that prototyping. And we’ve seen some of that already. And it’s beginning to, as I said, it’s beginning to- it’s evolving in ways I think that, you know, the imaginations of our people are really helping us sort of push the boundaries of what’s possible. It’s really, really interesting. And as Batia said, it’s very exciting. It’s very exciting. 

Patrick: Well, you just- 

Batia: Yeah.

Patrick: Sorry, go ahead, Batia.

Batia: Oh, I was just going to add, Patrick, you know, where our clients and their employees are, allow us to- you know, one of the deep values of coming to a firm like EY is that we can use this information in- entry once and multiple use, right? 

Patrick: Right.

Batia: So, we do that for our clients, for sure, both on the immigration and tax side. Employees don’t want to have to give their information more than once. And if they allow us to share it, we absolutely do and will.

Patrick: Well, and employees don’t want to give their information more than once, because we all have so much experience of having to log into that streaming service again. We’re like, wait a minute, you already have my credentials, why am I logging into the streaming service again another time? 

Batia: Yeah.

Patrick: And you actually, Chris, you said something that I think combined with Batia earlier; you mentioned sort of immigration as such a personal thing. When we’ve been thinking about AI, we’ve been thinking about in terms of what firms like EY bring to their clients, it’s the opportunity to cut costs or increasingly to increase revenues. So, it’s cost cutting and it’s revenue growth. You two have added the employee experience to it as well. Like there is a true employee experience benefit to AI, which I think most of the time we think about AI in the broader sense of being, you know, taking away jobs, eliminating jobs, but actually you’re positioning it more, this is how AI can make not only folks at EY’s job better, but even the employees of your enterprise customers, they get the employee experience benefit of it too, right?

Chris: Yeah, as we went down this journey, probably about, I don’t know, seven or eight years ago, as we were thinking about what was going to happen within HR and the evolving landscape ahead of us. And this was pre-COVID. We came up with a tagline: humans at center. And so, everything that we do, whether that’s technology, whether it’s how we build our systems, whether that’s how we scope our services, we do that with a mind of keeping humans at the center. So whether that’s the employee of our clients, or, and when I say the employee, the traveling employee, or the administrative employee, the person that now governs the programs that we deliver, or our own people, our intent is to put humans at the center. We do believe strongly that human connection is what people crave. We are designed for connection. And so, to the extent that we can have systems do a lot of the hard, heavy work, then actually humans have more time. And as you mentioned, cost, scale, and experience, right? Humans connecting with humans definitely brings about the best outcome. And so you get the machines to do the heavy lifting piece, you get them to deal with the non-critical pieces of the process, and then you can have humans now better connected for the things that were more critical and more human-centric, dealing with a lot of that tension and the emotion that comes with, again, immigration, tax is very personal, very sensitive. So, it allows and frees up our people to now engage in a different way with our clients.

Patrick: And Batia, as the cultural anthropologist in this chat, I think you must agree with the idea that we all want to have that personal relationship and all that, right?

Batia: Absolutely, absolutely. *laughs* I will say that it’s also for our- I can talk from the perspective of our people who are working with our clients that, as I said, and I’ll say it again, the complexity around us. I mean, being an immigration lawyer when I started 20+ years ago is very different to being an immigration lawyer or an immigration service provider today. The complexity is extreme. And so really giving our people the space and the opportunity to really think about the complexity and connect with our clients around that and support them in that through the use of AI and through the use of technology is really what we need to be doing and what we are doing.

Naming the unknows: Navigating uncertainty, AI developments and human behavior changes

Patrick: Yeah, excellent, excellent. So, I have two questions left, both of them sort of big picture stuff. One is, what are the, in each of your respective spaces, what are sort of your biggest unknowns, the things that you wish you kind of had the answer to. And I’ll give you an example from our- from my perspective, one of our biggest unknowns right now is what’s going to happen to the labor pyramid within all the services companies that we follow. It’s traditionally a pyramid. You guys have an up and out model like everybody does. You have an apprenticeship model. How much is that going to change over the next few years? That for us is important to understand because it has such a huge impact on the way that you run your businesses and the success of them. But within your spaces, what is that sort of, that unknown that you wish you really had an answer to, or you think you’re going to be working to get an answer to over the next couple of years? Batia, you want to go first?

Batia: Tough questions, Patrick. I was sitting here thinking, the biggest unknown for me is the is the unknown, if that makes sense, the change that’s all around us. But in a way, that’s actually known. The one thing that is certain for us is that there’s going to be uncertainty going forward. I don’t think we’ve had a time period where there’s been as much uncertainty just around immigration requirements and geopolitics and all of that is unknown. 

The unknown really for me, and this is the exciting piece, because it’s unknown just because we’re in development still is really how we’re going to use AI and technology to support our clients and operate differently and better, to be honest. We know we’re going to do it. We’ve started on the journey, but the degree to which we are going to be able to leverage AI and technology is an exciting unknown for me because it’s just something we haven’t fully discovered yet. So, I think those would be my two answers.

Patrick: Yeah. That AI one is so true, because so much has already changed just in the last couple of years, so it really is an unknown in terms of what’s coming. So, yeah, Chris, how about you?

Chris: Yeah, again, it’s a really good question. This caused me to go into sort of pensive, thoughtful mode. But if I sort of take a step back, the one thing that sort of, and it doesn’t keep me up at night, but certainly you’d like to have maybe a crystal ball so you can kind of see into the future is how is human behavior and human expectation going to change with time? Because as we adopt technology, right, we adopt the telephone and then we adopted e-mail, the expectation was that much more immediate. What’s the new expectation going to be once we embed AI in all these things? And then how do we as an organization start to plan for that, right? That’s kind of, and so there’s the exciting pieces Batia mentioned with AI and new technology, for me is then what does that mean for human behavior? What does that mean for the new skill sets and talents, adaptability, we talk about the ability to adapt, right? We got to get people with the ability to adapt. And what are we adapting to, right? That’s the unknown piece that Batia mentioned. And so how does that change our business? How does that change our business model? How does that change our people? How does that change the makeup of the people that we attract or we’re looking to attract? Like all of those things are what I sort of think about. And now you’ve really started that wheel going in my head, I’m going to have to start to write things down now. Patrick, thank you.

Patrick: So, now overlay a generational change on top of that as well. 

Chris: Yes.

Patrick: So- because the way that I adapt to technology is very different than the way that my colleague Haley sitting next to me adapts to technology. So that’s, and then it depends on what industry. Yeah, it’s fascinating. 

Final thoughts

All right, last question. I promise we’ll wrap this up. I’ve been asking everybody this question so far this season because it kind of, it ties to AI, the sort of, again, the common story, the conventional wisdom out there is that AI is going to replace a whole bunch of jobs. So, if your job had to go away, if you could say, all right, I’m going to spend 10,000 hours now and I’m just going to, I’m going to gain a skill. There are some things that AI won’t take away. Batia, you mentioned creativity and creative thinking earlier. But if there was something you could sit down now and just say, I’m going to spend 10,000 hours and I’m going to develop an irreplaceable and- a skill that could not be replaced by AI. And it could be speaking multiple languages, although that could be replaced by AI. It could be playing the guitar. It could be turning yourself invisible, I don’t know. Pick some sort of thing that you wish you could do, some sort of skill that if you could say, I’m going to spend 10,000 hours and just perfect it, what would that skill be? Chris, you have to go first this time.

Chris: Yeah. Oh, wow. Man, you really know how to put these questions out there. These are like deep, philosophical, life altering questions. No, if I were to sort of spend 10,000 hours on something now, it would probably be, and I kind of do some of it now, but it’d be mentorship, like strengthening my chops with mentorship. Yeah, sort of, yeah, mentorship, life coaching or something like that. Because again, as the world changes, the ability for people to adjust to that change can be quite burdensome and quite taxing. And so, helping people navigate the change, which is kind of what we do every day in our roles, help sort of vision a future and bring everybody along. But sort of helping people make the change would be something. If I had nothing else to do, then I’d probably go into life coaching or something like that.

Patrick: It’s fascinating. And that’s so dependent upon trust too, the whole trusted relationship. 

Chris: Yes, sir.

Patrick: Yeah, excellent. Batia, how about you?

Batia: I’ll build on that a little bit because I love the answer. I’m going to say that focused specifically on mentoring people and building, continuing to build my own skill around interaction. Human interaction, client service, understanding, you know, empathy, understanding where people are coming from, where our clients, what’s driving our clients, because I think that’s the key to client service. I think it really is around understanding people’s positions and what’s important to them to really build that lasting relationship.

Patrick: Well, I got to say, you two are, you’re absolutely reinforcing the humans at the center message of the firm. So that’s fantastic. Excellent. Thank you both so much for coming on. This has been an enormous pleasure. I’ve really enjoyed this.

Batia: Thank you, Patrick. It’s been great.

Chris: Thank you, Patrick. It’s been a fantastic conversation.

Patrick: Tune in next week for another episode of TBR Talks. Don’t forget to send us your key intelligence questions on business strategy, ecosystems, and management consulting through the form in the show notes below. Visit tbri.com to learn how we help tech companies, large and small, answer these questions with the research, data, and analysis that my guests bring to this conversation every week. 

Once again, I’m your host, Patrick Heffernan, Principal Analyst at TBR. Thanks for joining us and see you next week.

TBR Talks: Decoding Strategies and Ecosystems of the Globe’s Top Tech Firms

Join TBR Principal Analyst Patrick Heffernan weekly for conversations on disruptions in the broader technology ecosystem and answers to key intelligence questions TBR analysts hear from executives and business unit leaders among top IT professional services firms, IT vendors, and telecom vendors and operators.

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