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

Why AI Is Fundamentally Reshaping Enterprise Operations

Play Episode Pause Episode

Mute/Unmute Episode Rewind 10 Seconds 1x Fast Forward 30 seconds

00:00 / 00:48:52

Apple Podcasts Spotify

RSS Feed

Share

Link

Embed

In this episode of “TBR Talks,” Sid Nair, Cloud Growth lead at Accenture Americas, joins host Patrick Heffernan and TBR Principal Analyst Boz Hristov to discuss why AI is fundamentally reshaping enterprise operations, shifting from a technology initiative to a business-led transformation. They unpack the critical enablers of successful AI adoption — including data readiness, governance, talent and change management — and explore how buyers are navigating complex purchasing decisions across ecosystems of partners and platforms.
 
The conversation also examines the future of alliances, evolving commercial models, and how ecosystem-driven partnerships will redefine value creation in the AI era.
 
Episode highlights:

• The framework for successful AI adoption within enterprises
• How buyers are looking to purchase AI
• The role of AI and agentic AI in shifting the alliance ecosystem

“Those top 10 partners may evolve to a slightly different set moving forward, especially with the new data AI partnerships coming in. Because today, what we do with the Anthropics, the OpenAIs, the Metas of the world, it’s very, very small, right? In comparison to what we do with the SAPs, the AWSs of the world, right? So, I do believe that the penetration index will increase for us in terms of, we’ll do more with partners. But I think that mix of those partners in the top 10, it might definitely look a lot different by 2030,” said Nair.
 

Why AI Is Fundamentally Reshaping Enterprise Operations

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 challenges enterprises face in scaling AI and changes in the broader technology ecosystem with Sid Nair, Cloud Growth Lead at Accenture Americas.

AI & agentic process transformation will be business-led

All right, Sid, welcome very much. Welcome, welcome, welcome to TBR Talks. Very excited to have you joining us. And I’m here with Boz to have this conversation, really two conversations. The first one, I really want to talk to you about the long view of technology. This is sort of the theme for this season. I’m trying to talk to people who’ve been around for a while who have seen some changes because we spent last season and all of last year, it feels like, just talking about AI and talking about it in such a hyped way. Everything felt so new. Everything was so different. And I want to take a step back and say, okay, for people that have been around technology for a long time, is this really new? Is this really so groundbreaking and different? Maybe it is, maybe it isn’t, but I just wanted to get your thoughts on the longitudinal view of technology. So maybe- and then I’d like to talk to you about alliances, because this is something we’ve spent a lot of time talking about. And it is also something that’s changing and that we hear a lot about in the marketplace and what’s different. So, we’ll get to alliances second, but let’s start with that longitudinal view of technology and sort of the basic question that we have at the beginning of 2026, which is the hype around AI, is it legit? Is AI really going to be that sort of dramatic, transformational, generational change in enterprise, in technology, in business?

Sid Nair, Cloud Growth Lead at Accenture Americas: No, and this is a great start to a wonderful session today, and it’s good to see both of you, and thank you for having me. And I think the topics that you’ve chosen, at least the first one, is on everyone’s mind. I mean, on one hand, you have the markets today, you know, the stock markets are being defined by AI in a certain way, right? Every day, Claude comes out with a new model, the market takes a dip, or the SaaS companies go for a toss, or whatever you have it, right? So, from that perspective, AI is definitely having a much more impact globally from a macro perspective, more than cloud or more than anything else that happened in the past, say, 20/30 years, for sure, right? There’s no doubt about it. On the other hand, when you know, when we talk and you guys talk to clients and partners, we’re doing the same thing. I’ve been at a bunch of sessions with CEOs of large technology companies and everybody, right, including obviously our own CEO, it’s all about AI right now, and rightly so. And I’m not saying that just because everyone’s saying it’s- that’s the fact, but AI is truly defining the way in which businesses would have to operate in the future. And when I say future, that future is now, that future is today. And with some of the advancements that have come out, we all thought OpenAI, ChatGPT was the rock star and that was the gold standard. But over the last two and a half years, now you’ve seen I mean, there’s Anthropic is out there, and of course, NVIDIA’s building a lot of the infrastructure with the GPUs, but it’s not just about the GPUs, it’s about the models. It’s about the actual, you know, the models that Claude especially is just redefining so many different things.

Now, it’s also scary on one hand because- and I say it’s scary because a lot of our customers, our traditional customers, have really not been used to this kind of a change. I mean, whether you’re an airline, you’re hospital, a bank, you know, there’s so many new use cases that are popping up across the board to say, AI can do this, AI can do that. But these companies are still struggling to figure out, how does AI really help? You just can’t go sign a 100-seat license with Anthropic and say, oh, I’ve got the model now, but what do I do with that model?

So, on one hand, you have GSIs like Accenture, obviously, we do a lot of work with our traditional partners, like say an AWS, a Microsoft, a GCP, Salesforce, SAP, you name them. But all of those big software companies also have agentic AI built into the new delivery mechanisms, which they didn’t have a few years back. So, when you talk about, all right, on one hand, all our minds have investments in these big technology platforms. And now they’re getting inundated with, okay, this is what AI can do for you. This is what agentic can do for you. And a lot of that, it’s falling on the desk of the CIO traditionally, or it has in the past, because CIO’s got to decide, oh, there’s a technology issue, I’ve got to deal with it. But what we’ve realized is, and that’s part of the reinvention that customers would have to do to embrace AI, is that this is not just the CIO’s decision or the CDIO’s decision. Because for a client or for a company to actually truly embrace AI and agentic, it now goes down to so many different decision points in the firm. And I’m not saying the entire company has to decide, but the chief operating officer would now have to start thinking about, hey, how do I look at my supply chain and engineering? And what are the kind of models that I need to, kind of, bring in? And it’s not just about technology, it’s about those use cases around supply chain and around engineering. The CFO would have to start thinking about, hey, I have to do some kind of finance transformation to truly embrace AI. What are the use cases that I need to start thinking about?

So, it’s almost becoming a business-led AI agentic transformation where each of the business leaders now have to be more smarter, more educated on the applicability of AI and agentic into their function and not just outsource it to the CIO. Literally, it’s like within the organization, I want to outsource it to my CIO, and my CIO is now going to outsource it to another provider. But now each of these different, you know, I like say, for example, I’ve been a chief customer officer or a chief sales officer in multiple lives before. But if I was in the CSO role in a large company, I would now have to think about, okay, for customer service transformation, customer experience transformation, what are those use cases that I need to think about to actually bring in the power of agentic and AI, whether it’s through my call centers, whether it’s in terms of how I do marketing.

So, I think it’s- AI is kind of becoming all pervasive. In the past, I mean, at least the cloud hype cycle was, hey, move your stuff to the cloud and it’s going to cost you less and you can transform and it’ll save you a lot of money. You can work faster, cheaper, better. And it was all a technology transformation. But now this true business process transformation that’s going to, that, you know, it’s all pervasive, right? It’s kind of hitting every aspect of the organization. Even HR, I mean, the CHRO has now got to start thinking about how do I use agentic and AI to make my human resources processes, right? Whether it’s from recruiting, whether it’s performance management, whether it’s training. I mean, so I think it’s exciting. There’s so many opportunities. So, when Accenture talks about reinvention, we are obviously reinventing ourselves within the firm, but also for our customers. They have to start thinking about reinventing the way they work, because unless they do that, you really can’t change the way in which you service your customers. I know that was a long-winded answer, but I just wanted to kind of cover everything that’s been- that I’ve seen going on so far.

Patrick: Yeah, Sid, you touched on so much that we need to come back to. And I want to start first with, you mentioned cloud, and you mentioned that the sort of the transformation that cloud was hyped up to provide. That is, you know, you get to move from CapEx to OpEx, you get to change, you get to move faster. It’s funny you said, you know, it’ll be cheaper. It turns out cloud was actually more expensive. But anyway, we’ll set that aside for a minute. But at the time that cloud was being introduced and hyped, when there was the hype cycle around cloud, it was presented as a business change, not a technology change, and yet we now look back and say, okay, it was really a technology change. You don’t think we’re going to have that same conversation five years from now about AI, right? This is truly a business change.

Sid: I truly believe it’s a business change. And the reason I also say that is, at least in the past, the way that, you know, we’ve all sold cloud, I mean, I’ve sold a lot of cloud. You kind of position cloud, even all the hyperscalers position cloud as a business change, but it was primarily, you know, it was, you know, you’re moving your infrastructure, you know, to a different platform at the same time, you truly get the benefits if you modernize. But what happened was everyone did lift and shift. So, if you had modernized your applications before you moved it, then it would have been a true business change, but that never happened. It happened in a few cases. But out here in this world of agentic and AI, you don’t get any of those benefits unless there is some kind of business process redefinition, or you reinvent the way you work. And that’s why some of the use cases that I’ve just briefly mentioned, whether it’s finance or HR or talent or the customer side, you’ve got to look at those use cases, figure out with those use cases the applicability of that within your business, and only then can you start introducing those agents and LLMs to actually transform your business. It’s not about, oh, let me just move my data to this model, you know-

Patrick: Right.

Sid: -this agentic model and it’ll happen. No, it’s not going to happen on its own. You first have to embrace the change, agree to, this is going to be the new way that I’m going to run my business, and then the agents come in, then you use the right models to kind of transform the business, so.

The framework for successful AI adoption within enterprise

Patrick: Right, and change management ends up being so fundamentally important to AI adoption, and I want to ask a question, and then I’ll turn to Boz: when you think about- you mentioned a bunch of the different buyers, there’s a bunch of different people within the enterprise that have the opportunity to adopt AI, and we should all raise a glass to the poor chief human resource officers, because since the pandemic, they’ve had nothing but the world thrown at them between a pandemic, quiet quitting, then we had all these layoffs, and now they have to adjust to it. Anyway, that’s my own little sob story for them. But when we think about enterprise adoption of AI, one framework that I had, and I’d love to get your reaction to this, was for it to be successful, you need to have three different sets of people who are bought in. First is leadership. You can’t do it unless leaders believe you’re actually going to get transformation. The other is you need the masses. You need everybody sort of understanding what the opportunities are here. You need everyone having both that combination of excitement about the opportunity, but also maybe a little bit of fear of what the change could be, because fear can sometimes be a good motivating factor. And then you need the lab. That is, you need people who are truly dedicated to just being able to make sure that you’re not letting AI run amok. You’re not doing things that are going to be damaging to your enterprise long-term.

Sid: Yeah.

Patrick: And you need people who are super specialized. So, in your experience, when you’re working with clients, do you see those sort of those three groups of people within very successful AI adoption?

Sid: Yeah, absolutely, absolutely. In fact, I’ll just take it to a slightly different level as well, right, Patrick? So, when we actually talk to our clients, we talk about a couple of different things, everything that you spoke about, right? So, we start with responsible AI and governance. We say, hey, you’ve got to think through what is your commitment to responsible AI? Because trust is very essential to deriving value within the company and also the branding for the company. You don’t want AI to go amok, if you will, right? So that is something that we really pride on as a firm and we go and talk to clients about what is that model going to look like. And then your data readiness, right? Because what part of this, of your, I mean, a lot of clients, as you know, even back in the cloud days, I just said back in the cloud days, we’re still in the cloud days.

Both: *laughs*

Sid: But we used to move everything to the cloud, but a lot of times the core data platforms would still, the unstructured data, would still be sitting on-prem. So we’ve really got to build those scalable and secure platforms, data platforms, where the data- your enterprise data is secure because a lot of times you kind of, you don’t want to mix public data with your own enterprise data for an organization because that becomes very difficult.

Patrick: Right.

Sid: So, then that leads to, once you create that secure and scalable platform, then you start talking about data readiness and you’ve got to acknowledge that data readiness is actually the biggest challenge in my view, right? Because if we talk about, we wanted all these things, so like I said, unless you’ve got data readiness in place, it’s going to be really, really tough.

And then I would just talk, you spoke about talent and change management, so critical, right? It’s a significant barrier, honestly, because, I mean, we are scaling up big time. We’ve got about over 75,000+ people around data and AI, but now it’s not just data and AI, it’s agentic. Now, people may think, you just need agents. No, you still need people to create those agents, to run those agents. In fact, we also are going to be launching agentic, you know, like we talk about AMS and IMS. You need a managed services model to manage agents. So that’s one of the services that we’re going to start offering as well. One is you’ve got to build them, and then you’ve got to manage those agents. You just can’t let the agents run everything, right? So that’s kind of funny, right? Create agents and then have people manage those agents. So, but that’s going to be critical.

And then, within an organization, I mean, the talent gap within an organization, as you know, is huge. I’m not talking about service providers like us, but there’s a shortage of skill sets within companies, so we can train those people. They need to kind of understand how to use AI. I mean, you can put in all these great models, but if your employees don’t use AI, then what’s- it’s pointless, all the investments that you make. And then I would absolutely double down on what you said on organization adoption, right? The organization adoption, and I would also call out value realization kind of linked to that becomes super critical because each of those owners of the business, right, whether it’s, you’re the COO, the CFO, the CHRO, you know, the chief sales officer or what have you, they’ve identified a business need, they’ve identified how they want to implement this new change using agentic and AI, but they’ve also got to clearly figure out what is the value case, am I really getting the bang for the buck because it is still an investment, and once they prioritize the right use cases and all of that. So yeah, I think fully agree with what you said.

Patrick: Yeah, excellent. Boz.

How buyers are looking to buy AI

Boz: Yeah, great conversation so far. Fascinating just listening to you Sid, as always. Just thinking about, I mean, you spoke about, just a moment ago about developing agents, launching, like, managed services, the different opportunity areas, right, that companies like Accenture see in front of themselves, but also kind of the way the market is moving towards. I think earlier you mentioned how a lot of the reinvention services you’re also applying to yourself and as you’re bringing up those to the clients. So, all great use cases, thinking about how the market is evolving, but one area that I’m very curious, and we get a lot of questions as well is, how are buyers looking to buy AI? It’s kind of like the flip side of the question, how are companies, like Accenture, looking to sell, right? So, it’s kind of like a- but I’m trying to get your perspective because you interact with buyers on a daily basis, right? So very curious, what’s your sense? What’s your view? What’s the feedback from the clients you guys are getting? How do they feel comfortable? Because they’ve been conditioned to procure services on times and material basis for years now, right? We’ve seen some cases, fixed price models, you know, being introduced. Outcome-based services has become almost a dirty word, you know, kind of everybody talks about outcomes and nobody defines outcomes these days, right?

Sid: Yeah.

Boz: So, I’m very curious, what’s your perspective on, how do you think buyers want to buy AI now and in the future?

Sid: So, we’ve seen, you know, again, Accenture as a firm is so heavily focused on industries, right? So, we’ve got different stories that we take to different industries just because each industry buys slightly different, right? But having said that, you know, so the use cases that we- the AI kind of use cases that we’ve built are kind of very different for each of the industries because we feel that is where they can get the maximum bang for the buck to start off with. That’s on one side.

On the other side, we still are going to clients, and that goes back to the old way of doing business, and I don’t mean old in a bad way, which is, hey, you still need to move to the cloud, or you still need to get your data ready. You can’t have your data sitting in silos. You can’t have them sitting in 100 data lakes. You’ve got to get your data modernized. If your data is not modernized, there’s no point in figuring out how you’re going to use some of these agentic AI models. So, we still have a lot of data modernization that we are kind of selling as foundational elements for clients who really want to do agentic AI on an enterprise level.

And then, you know, the interesting part is while we’re trying to go in and set up, you know, AI/agentic COEs for clients and giving them a journey to say, hey, we can build, we call it the switchboard that we’ve now built. We allow customers now, if they kind of use us as their data COE partner, we give them the switchboard that they get a kind of access to playing with multiple LLMs, they get access to tool sets from all the big hyperscalers, and they get the secure environments that we build, and we give them different use cases. So, they can play around and see which use case with which partner or which LLM makes sense. And then we help them kind of score in between because no client is like diving in and saying, oh, this is what I want to do versus this because there are so many different use cases, so many different LLMs, hundreds of LLMs out there in the market. And then the hyperscalers also come with their own LLMs, right? And they allow you to play with. So, we’re kind of building these sandpits, if you will, different templates using the switchboard model where they can, it’s almost like you can plug and play and figure out which model suits you best. So, we’re giving them that opportunity.

But what’s also coming at us, from a lessee perspective almost, is a lot of clients are talking directly to OpenAI, directly to Anthropic, and they’re signing up for licenses. But now they’re like, okay, I’ve got this 100-user license, now, how do I use Claude, right? So, now we have our RDE services that we’ve launched, and we’re working directly with some of these big partners like OpenAI and Anthropic, and we are providing the engineering capability to help these big AI partners to actually go in and get their platforms used by clients. So, we’re actually hitting it across so many, so it’s not like this oh, in the past, you want to migrate to the cloud, okay, which cloud do you want to choose? *laughs*

Boz: Yeah. Yeah.

Sid: A straight play, and then we would say, you want to modernize or migrate, and then how do we run it? But today it’s quite complex in terms of, it goes right from, let’s modernize your data to whether you want to, play around with multiple LLMs using like the switchboard that Accenture brings to the table. Or then now, okay, you’ve already gone and bought a bunch of licenses, thinking like an easy play switch. They almost think about the, you know, ChatGPT kind of a model. Oh, I just have to buy it and AI starts working. But no, it’s not that simple. You know, public data and your private data is very different. Your private enterprise data has to be ready to actually start leveraging some of these tools, Boz. So that’s what we’re seeing today.

The revenue mix of the future

Boz: Yeah. That’s very helpful. I mean, just thinking what we hear in the market, and one word that is constant is, as it comes to AI and the way AI gets sold is around transparency, right? Clients do appreciate transparency. They want to know what they’re paying for, right? Exactly. What’s the benefit when they spend money on either a tool or service or a wrapper around it, right? So, we always kind of, we’re trying to kind of look a little bit, and Patrick asked questions about the history of technology, or maybe look into maybe the next five years. I’m not even going to go 15 or more, but more next five years. In your sense, what’s the right model for professional services companies from a revenue mix perspective? I think I’ve heard, you know, Julie speaking on one of the previous calls, I think she said about sometimes 60% fixed price, you know, the revenues, fixed price services for Accenture. But what’s the kind of the revenue mix for professional services organizations in the future, in the next five years or seven years, as we’re thinking about the transparency that buyers are also looking for as you are talking about AI?

Sid: Yes. So, I firmly believe that we still, so some of the contracts that we continue to sign- and it’s also, we continue to compete in the market with a bunch of competitors out there. So, I think that old traditional model of give me a hundred FTEs and give me P times Q, I think that’s gone. We still have some deals pop up.

Boz: Yeah.

Sid: There are some customers that are still all about the rate card. I don’t think those plans are thinking about the future in my humble opinion, because everyone else is kind of leapfrogged. But I do believe we’re seeing a lot more risk-reward kind of fixed price outcome models come up. I mean, we’ve been doing that in the past.

Boz: Yup.

Sid: But I think what’s interesting now is these are not these fixed price, you know, risk-reward outcome deals that are just based on, oh, yes, just take this book of business and run it. No. We are now being asked to, we do a lot of these, create a new platform for me, transform the way I run my business, and now kind of train my people and help me run my business in the new model. And we’ve done a bunch of those massive deals, massive transformations. There’s true transformation, right? So, while on one hand we talk about reinventing ourselves, reinventing our clients, now these deals are reinvention deals. You’re reinventing the way, you know, we’re reinventing commercial models with clients where, you know, we bring in a bunch of assets that we have built in. We’ve also got platforms. As you know, Accenture has, we have the Accenture platform and products team that there’s IP that we built, whether it’s our life insurance platform, we’ve got the media platform. So, there are many more things like that we will continue to build using AI with specific industry applicability, because like I said, we go each industry with a specific offering. So I do believe that gone are those days where, you know, if $100 of revenue that we earned was just based on, you know, 800,000 people, But I think moving forward, those $100 of revenue, the split would be, there would be a productized service. There would be a bunch of RDE services where you’re actually building agents and you’re actually- it’s not about the productivity of 100 FTE, but it’s the productivity of what 100 people are doing to build 1000 agents. So, I think those are models, I believe, we’re already seeing in play. So, I think it’s exciting times. The commercial models are changing. In fact, you’ve probably heard about some of the new things that we’ve launched. We’ve actually got a new chief commercial officer in the firm.

Boz: Yes.

Sid: And we never had that before. And the reason we have commercial officers, we’re talking about end-to-end right from the first conversation you have with the client to figuring out what is the best commercial model that fits in to what the client needs, whether it’s reasonable assets, whether it’s some of the platforms that we have, whether it’s some of the partner investments or some of the partner platforms that they want to kind of co-build with us. So, that’s one of the reasons that we’re excited that as we reinvent Accenture and as we try to reinvent our clients, some of these new commercial models are going to be be very critical.

Boz: Yeah, this is super helpful. Thank you, Patrick.

How partnering has changed over the last few years

Patrick: Sid, that’s a great transition into the alliance discussion because as you build those commercial models differently with your partners, you’re reflecting how much the ecosystem strategies and how much alliances have changed just in the last few years. I mean, you’ve been doing this for a while, so you’ve definitely got, again, that longitudinal view on what alliances have been like. But what, in addition to talking about commercial models differently, what are some of the other things that, in your view, have changed over the last few years with respect to how Accenture and really how all of the companies that the professional services space, IT services space, how they partner with technology companies differently than you used to?

Sid: You know, it’s just been amazing, Patrick, just looking at how some of these partnerships have evolved. I mean, in the past, you would work with, say, one CSP, and it’s like a one-way- I shouldn’t say one-way, it’s like a single-threaded kind of conversation around this is what the CSP offers. But today, as an example, if you’re working with AWS, and by the way, Accenture is the number one partner across the top platforms. I mean, and it’s not just me saying it, it’s, you know, the partners will say that too. Now- but now it is, it’s about, hey, we talked to AWS. It’s not just about AWS, but it’s about what does AWS do with NVIDIA? What does AWS do with Anthropic? What does AWS do with Salesforce? So, this conversation- what does AWS do with SAP, right?

So, we have partnerships with all of those firms that I spoke to you about. But at the same time, there are things that AWS as an example, or Microsoft as an example, they do with all these other partners as well. So, for us, previously, we would only think about, okay, here’s our go-to-market with AWS. But now we’ve got these other go-to-market motions, right? Like, you know, Microsoft Databricks, very, very, you know, the bunch of solutions that we actually take to the market together. I mean, even with NVIDIA and Dell, I mean, we actually announced something called AND, not the most innovative name, but it’s Accenture NVIDIA and Dell. *laughs*

Patrick: Right.

Sid: Right, So, it’s Dell hardware, NVIDIA chips, but- and we have our software stack, you know, our data management software stack that’s sitting on it. So, it’s so interesting that, previously it would be just taking one of these partners and go out there. So, it’s becoming a little more complex. At the same time, I think it’s exciting for the client because now the client’s also thinking about, I don’t have to really talk to three different partners, but if I go talk to an Accenture, who’s my lead GSI, they will bring in the best of, say, you know, okay, if they want to build up a private AI data center, they’ll bring in Dell, NVIDIA, they’re bring in the side, and I have one solution provider to go to and not talk to five different partners. So, I think that’s the true benefit that we’re seeing, and that’s where some of our go-to-market motions have changed as well.

The role of AI and agentic in shifting the alliance ecosystem

Patrick: Do you think the change happened because- well out of all the different factors that played a part in that, so part of it was clients demanding or clients asking for more multi-party alliances, more of you guys cooperating and bringing to the table the services, the software, the hardware, the platform all together. Part of it was the technology itself changing. I mean, just the nature of cloud, you know, became hybrid cloud, multi-cloud became, you know, an imperative, not just an idea. And then also the companies themselves, the leadership changes. Do you think, were there other factors that sort of contributed to how the ecosystem looks so different today. The alliances- by ecosystem, I mean how you individually partner differently with these other companies.

Sid: You know, four or five years back, we still had different- the traditional relationships where we would talk to the CSPs and say, hey, it’s all about migration and modernization, and we would just leave it at that. Then we would have these data conversations with, say, the Snowflakes, the Databricks, and figure out what we kind of do with them.

But soon we understood that, hey, a lot of the customers, if they really want the true value of agentic and AI, you can’t just do it on-prem because it’s going to be super expensive, especially with the cost of GPUs and the cost of compute and all of that. So then suddenly, the hyperscalers became a more important conversation to have, but then they did not have the stacks like, Snowflake and Databricks and Anthropics and, OpenAI. So now you had to bring the hyperscalers and these big data companies or the AI companies together because either of them could not exist on their own, right? And then you have NVIDIA sitting at the bottom saying, hey, my GPUs are expensive and I can’t just do compute if I don’t have a platform and if I don’t have a software stack, right? What are the use cases I’m building? You know, there’s nothing much I can do. And that’s what I think everyone saw the value of, you’ve got to, if we need to make this agentic AI model work, you know, we know the challenges. Compute’s going to be a massive challenge. Basic electricity is going to be a massive challenge. Everyone can’t go setting up their own data centers. And then you talk about the tech stack, and then you need a GSI who can kind of put all of this together. So, I don’t think, you know, that the GSIs were kind of, they kind of led in this conversation, meaning they didn’t bring all of them together, but I do, we’ve had so many conversations with all of these big partners. And we’ve told them, here are the challenges. And I do believe that someone had this wake-up call and they started talking to each other and they’re like, hey, you know what, this is the, we all have to work together. And now GSIs have to figure out the model to kind of stitch them together as well when we go to market. And we’ve been doing that over the last year or so pretty well.

Creating alignment in partnerships 

Patrick: Yeah, it’s amazing how much has changed just in the last couple of years. I’m going to let Boz come in with a question in a minute, but one thing I just want to run by you, when we talk to your counterparts, that is people running the alliances programs or alliances practices at the different GSIs and the consultancies, there are sort of two main challenges that come up again and again. The first one is they don’t know what we do. That is, our partners are not well enough versed in what we do to be able to distinguish between us and everybody else out there that’s like us. Of course, Sid, there’s nobody like you and there’s nobody like Accenture. But still, they say, how do we distinguish? And our partners don’t know us well enough to know the differences. The other thing that they often bring up is alignment around sales. And I don’t mean incentives necessarily, but like you have companies that are more focused on the relationship and companies that are more focused on the quarter by quarter, even month by month sales numbers. So how in your experience, how have you- are those two of your biggest problems and how have you tackled those problems?

Sid: Yeah. So, we do take pride at Accenture that we were one of the pioneers of creating the business groups way back in the day. I’m talking about 20/25 years back, way back before my time at Accenture. Where the business group as a concept, it was almost like a partnership where, and this is a partnership in a true sense where you would have like an SAP or an AWS on one side and then an Accenture team. Both companies would dedicate people on both sides just to work in that partnership. So, it’s not like a joint venture, but it’s a real partnership where you have a scorecard of accounts that you want to go work together. You have investments that you both make in terms of people, in terms of joint solutions, in terms of go-to-market capability. And then, I mean, there’s a bunch of top to top that happens. When I say top to top, the CEOs meet on a regular basis. They look at joint metrics to see what’s making sense, what’s not making sense. And those metrics then flow downwards to every business leader to say, hey, if these are our top 10 partnerships, and we have 10 business groups, if we say as an example, then each of the P&L leaders would have a metric that kind of go against those top 10 partnerships, right? So, if you have to do $100 of revenue, you’ve got to make sure at least 50% to 60% of that, as an example, comes from these top 10 partners. And each partner would have like a little target within that P&L leader’s view. So that’s how we’ve kind of successfully been running that whole book of business and that whole model all this while.

Now, at the same time, the BGs or the business groups have primarily focused on partnership development, partnership management, building joint offerings, and go-to-market strategies. But they worked very closely with the sales team to make sure that you had sellers aligned to the BGs. And in this case, we need to have sellers who understand AWS or SAP or Oracle. And then our sellers have to work hand in hand with sellers from an SAP, an Oracle, right? And then when we go to market together, the sales teams of the two companies, whether it’s the partner or whether it’s the GSI in our case, we’re kind of, we understand what the customer is trying to solve. And then that’s how we’ve been together a lot more. So, but when we started off way back in the day, we really didn’t have a dedicated sales structure that would kind of focus on each of these partner motions. We would have more the partnership and alliance management structure. But we’ve evolved quite a bit and we’ve got dedicated sellers for each of the platforms and that is making a big difference.

Patrick: Yeah, that’s super helpful, Boz.

Aligning on commercial models in go-to-market partnerships 

Boz: Yeah, I just want to expand on that last point about the sales structure and the sales element of your relationship with the key partners. Just going back to my ask earlier about the kind of the future commercial model, the revenue mix for the professional service organizations. One thing that we have heard in the market is around how professional services firms like Accenture, you know, you guys are talking about outcomes, talking about risk-reward, and kind of have that conversation with the clients, especially as it pertains to AI or agentic AI. Yet some of your key technology partners continue to measure and try to sell more on transaction-based, either SaaS-based, kind of subscription-based, or even license-based models. So, clients get caught in the middle, right? On one side, you sell outcomes, on the other side, you’ve still got to sell a transaction. I mean, how fast do you think technology partners are and how fast, I mean, how fast is that relationship evolving that, you know, what’s the happy medium, I guess? Because I understand that it will be very hard for either party to go as close to the other because you don’t want to also, as you said, to become a competition. It’s more like a co-petitive relationship in some cases. So, what’s the happy medium when it pertains to your alliance’s go-to-market commercial model so that the clients don’t feel like, okay, what are we paying for outcomes? Are we paying for licenses and kind of like, what’s the kind of conversation look like?

Sid: Yeah. So, I think, the focus that our sales team has and our go-to-market has always been outcome-based, right? Meaning, is it about modernizing a platform? Is it about migrating? Is it building a new business process service delivery model? That’s always been the way we do it. Now, how do we do it? Hey, you need a software stack, you need a hardware stack, you probably need a cloud partner. And then we don’t get into how each of our partners sell to the client, right? Because we know that, you know, the hardware seller is only going to focus on selling that hardware contract and then software seller is trying to get in there, and the cloud partners are trying to just get compute in there, which is perfectly fine. So, when we go in with the construct, we clearly, from a GSI perspective, we communicate to the client that you need these different things, right? This is the infrastructure, that basic infrastructure you need, whether it’s hardware, software, CSP, what have you. And then here are the services that we will kind of provide, but we also show them the outcome. So, we show them the collective outcome of what the customer is trying to do, and then so each of the partners, they go do their pitches right on their own, and many times the client will tell us, hey, can you help me choose which is the best partner on whether that’s software, hardware, what have you. And when they ask us, we then, we do have to give them that choice, right?

And we give them the choice based on best fit, because we’re partners with all of them. We do good work with everyone, but for each client, I mean, if a client is spending 80% of their budget with one partner, with one CSP, and they still have not- they have some unused credits, we’re like, why would you go choose another partner? You already have best pricing with this existing partner, and you still have commitments to meet. We can absolutely make those commitments meet because just by shifting to another partner, they’re not going to take you to the moon or Mars. You’re still going to have it.

Boz: Yup.

Sid: So that’s it, Boz, we’ve actually seen, we have actually seen, we don’t- the partners go in and do their pitches. At the same time, if we are working together on a deal, then they know what we are trying to do on that deal because we are trying to sell the client an end-to-end kind of deal to transform them. And the partner clearly understands that, hey, this is my role or my- what I’m trying to really pitch as part of your solution, and that’s one of the reasons why a lot of the partners kind of want to work with the firm like us, because they know that Accenture is not just going there and giving the client like, here’s 100 FTEs and do what you want. We are actually going in with an outcome-based solution and every partner wants their solution or their service to be part of what we’re trying to pitch.

Boz: Got it. That’s very helpful. I think you mentioned something how clients sometimes come to you and ask you for recommendations, they solicit feedback, which technology partner to go with. Do you see clients kind of moving in a direction where they’ll prefer to have a one vendor orchestrator or partner orchestrator where they’ll come to Accenture and be like, okay, you are managing the ecosystem stack, and we hold you accountable. Do you think that’s actually something that buyers are interested at all moving forward, looking at the whole stack evolving and consolidating and all that?

Sid: I think it’s evolving. So, you know, we also have a resale business. I know we’ve had some conversations with you in the past. So, I do believe we’ve got a bunch of clients who come in and say, hey, we’d like to use you for procurement as a service. And so, and that is an offering that we have. So, they say, hey, this is how much money that I’m spending across different partners. Number one, I’d like you to help me reduce my spend. Number two, help me optimize my spend. I mean, look at all the licenses that I have. In many cases, there are some licenses that we don’t use. So, help me cut those contracts. And number two, we may be having the same, we may be having three partners providing the same service. Why do I need three? I just need one. And then anything that’s coming up in renewals, they’ll ask us, you have the bigger purchasing power of Accenture. Can you help us, you know, with better pricing? So yeah, so that definitely is happening just in terms of procurement overall. Now, we also do a lot of technology strategy work for clients. So, when you’re the tech strategy provider, we do define the technology strategy for the client. That’s in terms of, hey, here’s the stack that you need, here’s what you probably need for whether it’s data AI, here’s what you need from a pure compute perspective. And then we get into all of that end to end. So yeah, we do have a lot of those conversations, and not just conversations, we do have a lot of those clients that we actually do that work. But that’s still not like 70, 80% of our work is still project-based, end-to-end outcome opportunities is still what we do the most.

Boz: Got it. Thank you. Patrick?

Looking forward at the next few years of partnerships

Patrick: Yeah, just to pull all this together then, so as we’re looking- so we looked back at the start, I want to sort of look forward now. And given all your experience, when you think about by 2030, what does creative alliance management look like at that point? If you were doing your job as creatively as possible four or five years from now, what would that look like? What would be different?

Sid: That’s a great question. You know, we’ve started, I’ll say a few things, right? We’ve started measuring an ecosystem penetration index. You guys are analysts, right? You like indexes a lot.

Patrick: Yes. Ecosystem penetration index?

Sid: Yes.

Patrick: I like that. Okay.

Sid: So that’s something that I termed, okay, I take full credit to this. *laughs*

Patrick: Okay.

Sid: So, but that’s something we’ve been circulating internally at the firm to talk about ecosystem penetration index now for each of our businesses. And I think this is public information, Julie’s probably mentioned this in one of the analyst meetings either last quarter or the quarter before, that 60% of Accenture’s business comes from ecosystem partners. Okay. And obviously, Julie, super, very clear with the street that our success moving forward is directly related to increasing that ecosystem penetration index. So, from 60%, we’ve got to go to 70% or 80% or what have you. So I think by 2030, in the next three to four years, I think that ecosystem penetration index at Accenture that we would have would probably go from 60% to maybe, I don’t know, 70% or 80%, but that’s still massive, meaning, because we are a $70 billion company, roughly. And imagine that even at 60%, you’re talking about $40 to $43 billion, coming through some of our big partnerships. And then when you break that down, our top 10 partners take the lion’s share, right? So, it’s not like, yeah, of course, we’ve got hundreds of partners, but our top 10, the top 10 ecosystem partners of that 60%, I’m not going to give exact numbers, but it’s a big portion, right?

Boz: Yup.

Sid: And so, what’s happening is- but that would change the, those top 10 partners may evolve to a slightly different set moving forward, especially with the new data AI partnerships coming in. Because today what we do with the Anthropics, the OpenAIs, the Metas of the world, it’s very, very small, right? In comparison to what we do with the SAPs, the AWSs of the world, right? So, I do believe that the penetration index will increase for us in terms of we’ll do more with partners. But I think that mix of those partners in the top 10, it might definitely look a lot different by 2030.

Patrick: Yeah. Excellent. And then when you think about like, so the business groups, you mentioned 25 years ago, that was kind of a new idea that Accenture came up with. Is there sort of the next new big idea in terms of how you actually creatively manage your relationships other than measuring them better and maybe measuring them with different partners? Is there another sort of big idea that’s sort of waiting to be launched?

Sid: I think we are- what we’re trying to do is the traditional 10 big partners that we’ve had that you all know about, I think the model was kind of the same model that we built many years back, but I do believe that with these new partnerships, right, especially on the data AI side, that’s going to look very different. We’re still forming them. I mean, we’ve created those relationships, but I think it’s going to look so, so different. The metrics are going to be very, very different. It cannot be the same traditional metrics that we’ve had before. So more to come on that, because like I said, that is still just a few months old right now. But I’m excited about the potential of how those relationships evolve and the impact that they have on how we manage a traditional relationship, because there’s a lot of synergies, right? What each of these new data AI relationships would bring to the existing top 10 relationships?

Reflections on entering the workforce and advice for new hires today

Patrick: Right. So, Sid, I got one last question, and it goes back to something you said at the very beginning. You mentioned AI is scary is the word you used, actually. So, right now, I have my youngest child is 22. And she’s going to be graduating from college soon. And for her, AI is pretty scary. And the workforce is a scary place to be going into. But I actually want to talk, I wanted to relate that to the longitudinal view on technology by saying, she’s 22. At 22, did you think you would be sitting in that chair talking to two guys like us about technology? Did you imagine that you would be in the role that you’re in today when you were a 22-year-old and coming out of university? Like, what did Sid Nair think Sid was going to be doing 50, well, not 50, sorry, Sid

Both: *laughs*

Patrick: However many years it’s been since you were 22. What was 22-year-old Sid Nair thinking?

Sid: You know, I was number one happy I had a job. *laughs* And I got into the tech space right away. And those days of technology, I’m talking about in the mid-90s, was just go sell a client basic stuff, right? It’s like a computer, right? And some basic software, right? I remember I used to sell Netscape browsers, though, back in the day. We were setting up enterprise servers, proxy servers, and the internet was still coming up. Never, ever did I ever imagine that we would be in this day and age where you have agents kind of doing so many things for you, where you could literally have these automated tasks and you could potentially have in the next year or so, you could have robots in your house for $5,000 or less, right? Thanks to Elon Musk. I mean, that was the space age. I mean, those are things that we watched in the movie, right? The flying cars and robotaxis and all of that, autonomous cars. I mean, we have Waymo now in Texas. Never, ever, I mean, those are things that we would watch in like Back of the Future or something.

So, and I do agree. I mean, I’ve got a 25-year-old and a 23-year-old- one’s just about, one’s already in the workforce and the younger guy is about to go into the workforce and working for a bank. I do believe it’s a little scary for them because the impact that AI has had on all of us, our generation, is slightly different because we’ve done so many different things and our roles are slightly different. But when you get into the workspace, if you’re in supply chain or in banking, and if each of your employers are doing this massive scale of agentic and AI, and an entry-level employee, if you’re coming in as, you know, to kind of do some research work for a bank in terms of M&A transactions, an agent could do all the research that you as a new employee can bring to the table.

Patrick: Right.

Sid: Same thing if you’re in the supply chain space, you’re managing logistics, the whole process of managing, let’s say, 200 logistics providers like my son’s doing at Dell. I’m sure Dell’s going to put in a huge agentic play where you can automate a lot of that and have agents kind of do that. So, I’m sure it’s super scary for entering the workforce, the traditional workforce, right, and traditional roles.

Patrick: Right.

Sid: But hey, if you come in as a cloud engineer or if you come in as an agentic expert, as someone who can look at a use case and build agents and manage those agents, I think you’ll be in a much better spot. So not much better spot, I think you’ll be less concerned about what the future holds for you. You know, the three of us, we’re probably not going to do this for the next 20 years.

Patrick: I’m definitely giving up this before 20 years goes by, no doubt.

Final thoughts

Although this is enormously fun. So, 20 years from now, I hope we can at least sit down and maybe over a dinner instead of just over a Teams call. So excellent. Sid, thank you so much for your time today. It’s been tremendous, Boz, thank you for helping out with this. Appreciate it. And we will definitely get ourselves out to Texas to see you soon.

Sid: Absolutely. And it’s so good to see both of you again. And thank you for your time. And yeah, the Texas dinner is due, all right.

Boz: Absolutely. Thank you, Sid. Good to see you as always. Thank you.

Patrick: Take care, Sid.

Sid: Appreciate it. Have a good one. Bye.

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.

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

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

AI Client Use Cases Done Right: Avoiding the Two Biggest Mistakes

Play Episode Pause Episode

Mute/Unmute Episode Rewind 10 Seconds 1x Fast Forward 30 seconds

00:00 / 00:28:20

Apple Podcasts Spotify

RSS Feed

Share

Link

Embed

In this episode of “TBR Talks,” Principal Analyst Boz Hristov joins Patrick to break down key insights from recent analyst events with Fujitsu, Infosys and PwC. They explore what companies are getting right — and wrong — in presenting client use cases, as well as why in-person engagement remains critical for understanding strategy, culture and execution.
 
The conversation also looks ahead to how analyst events may evolve over the next five years, from more practitioner-led discussions to the rise of AI-native companies hosting their own events.
 
Episode highlights:

• Client use case mistakes to avoid
• The value of being in-person at events
• Predictions for the next five years of analyst events

 
“I think there’s everyone from the GSI side, the services, professional services side, has been focused so much about reskilling and retraining their existing professional services, their delivery staff, which is, you know, the right approach. But I think given the nature of AI and agentic AI, and the need for selling more technology in a different way than traditional services, I think there’s an opportunity for companies to start talking about what they’re doing and how they’re actually training their personnel on selling the technology,” 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

‘TBR Talks’ on Demand — AI Client Use Cases Done Right: Avoiding the Two Biggest Mistakes

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 some recent travel with Fujitsu, Infosys, PwC and Salesforce with Boz Hristov, Principal Analyst for TBR’s Digital Transformation practice.

Toronto Fujitsu analyst event: discussions around partnerships

Patrick: Boz, welcome back to TBR Talks season five.

Bozhidar Hristov, TBR Principal Analyst: Wow, five seasons already?

Patrick: It’s kind of amazing. We’re on our fifth season of TBR Talks.

Boz: Wow.

Patrick: I think you might be the most frequent guest, but I’m not going to do the math, but that’s probably true.

I want to talk about travel and the events that we’ve been going to. This year has started off. We’ve each been to a few events. We got a lot more on our calendar coming up in next month and the month after and the month after, actually. A lot of stuff I’m looking forward to, but let’s take a few minutes today to do two things. Look at and talk about the events that we’ve been to, and then talk about some things that we see overall and what those reflect about the market that we’re covering. So, the professional services, IT services, digital transformation, AI market that we’re in.

We did both go to Fujitsu in Toronto, and we had a fantastic podcast you can listen to when we sat and interviewed Asif Poonja the day after. Absolutely fantastic discussion with him. So, I don’t think we need to go into that anymore, except I will say one quick thing about that I really enjoyed was how they brought everybody together in Toronto. And Toronto is not an obvious choice for an analyst event, even for Fujitsu, and I realized that, the Canadian and US business are important. I thought that choice of location was really important.

Boz: It was a great location, great event. I agree. Yeah, it wasn’t an obvious choice, especially in January in Toronto. Not everyone is fond of being, you know, of traveling in the middle of the winter to the Great North. But I think it worked out well, not just logistically, but also the content.

Yeah, Fujitsu was, like I said, the episode we recorded with the America’s CEO was great. But just the kind of overall take from the event, you know, it’s probably the, I’m probably going to miscount the times, probably the last 5th or 6th event, Fujitsu event in the last two and a half/three years that you and I have attended.

Patrick: True.

Boz: So, we kind of see the progression of the company’s efforts to expand its America’s business, which includes Canada and the US and obviously some Caribbean business, but those are the main two markets that they’re looking to. And they have a very deliberate strategy, that they know what they do well, they know where they play well, and they go really deep. And as they’re trying to expand that business, they are leaning on partners, both establishing new ones that are trying to help them to grow that business, you know, both on the industry vertical side, you know, as well as on the technology side. We know Fujitsu’s background in technology and networking, you know, has always been a strength for them. They’re coming from that position, thinking about how they are organizing their value proposition around AI. I think it’s an important element. We talked in the past about amalgamation of AI. I think that story continues to help them to navigate the hype around technology. It’s certainly, you know, there’s some aspirations as every company does, looking to the future, building up their consulting business, with the Wayfinders looking to do a little bit more with some of the technology partners, you know, and get into the use cases. They’re very transparent, which I certainly appreciate that, and they’re very humble in their own way, and really trying to do things the right way and they’re very upfront. So, which is, I’m not saying that others are not, but I think it comes through much sooner in the conversations, both during the presentations and, offline, with executives and the partners and the clients. So that’s definitely a huge help to understand the story better.

There’s a way to go for them, obviously. We spoke about how much, you know, relationships and the use cases around the likes with ServiceNow could be of help, you know, having ServiceNow executives in the past on stage alongside with Fujitsu is great. Having now executives and talking from some of the AI partners, that’s always of help. So that’s definitely, like I said, an evolving story, small, incremental, positive changes. I think it’s kind of the way to summarize Fujitsu. Like I said, the podcast we did and the event perspective we put together goes a little bit more in detail about that. But I would say that, you know, looking forward to the next one, you know, to hear more about some of the initiatives that they have embarked on, both in Canada as well in the US and really trying to see, you know, learn more about how much more Japan is supporting, you know, and see North America/Americas as a region that can actually change the perception of who Fujitsu is and how can actually be a competitive peer to some of its more, the larger, more unknown names here in the US and in Canada.

Infosys Analyst Day event: discussions around talent

Patrick: Right. You said a lot of things there. You probably saw me taking notes. I want to come back to a couple of those things, but let’s pivot real quickly to, maybe not real quickly, we’ll see, to the last event that you attended, which was Infosys down in New York City.

Boz: Right. Yeah. So, Infosys event just last week, you know, and Infosys- and I’ve been attending that event for the last several years as well. I can see Infosys does two kind of main events where analysts have a great exposure to executives, partners, and clients. One is the Infosys Analyst and Advisor Day springtime, and then the second one is the Confluence event, which is the larger client event where they also host analyst sessions that we have attended in the past and written about and discussed in the past.

I think what I saw from Infosys this time around that was nuanced and the evolution was about, of course, AI, AI enterprise, AI strategy was a big topic, right? That continues to be a narrative that everyone’s expanding on. I think there was a lot more discussion around domain, and they brought in the use cases for a lot more focus on the industry specific, kind of like going a little deeper. The panel discussions told the story. Less so being- we still had some of the executives presenting and updating, the traditional kind of analyst event, the strategy and whatnot, but the panel discussions told the story. The panel discussions were a mix of clients that were not just a traditional CIO client, but the CMOs, the business, the operations. So that was a good kind of a presentation of expansion into the enterprise and building trust with various personas. So, the domain discussion was definitely great and nuanced that, you know, it was, they’ve done in the past, but I felt like there was a little bit more like emphasis on the domain discussion.

The second piece that was, more of a culmination, I would say, it’s a topic around the talent. I think everyone talks about talent these days and there has always been, but even more these days with AI. Infosys outlined a very clear path about the career progression and the various parts of the pyramid, how they’re training them, how they’re actually trying to ensure that they’re- the people that are involved in development, deployment, management of any AI tools, you know, gets prepared to do that. Very clear, you know, we’ll go into details, I’ll be working on an event perspective shortly, so we’ll get into more details and clients can come to us and we have those conversations separately, but very clear path, which is important. I think there’s an opportunity for them to re-emphasize a little bit more the sales component of the talent pyramid, I would say.

And it’s not just Infosys. I think there’s everyone from the GSI side, the services- professional services side, has been focused so much about reskilling and retraining their existing professional services, their delivery staff, which is, you know, the right approach. But I think given the nature of AI and agentic AI and the need for selling more technology in a different way, than traditional services. I think there’s an opportunity for companies to start talking about what they’re doing and how they’re actually training their personnel on selling the technology. I think we may see that as kind of the next wave of focus and expansion and announcements from the companies about “AI sellers,” quote-unquote, just kind of to frame that. You know, what does that mean? You can argue that maybe the forward-deployed engineers is probably that model that’s kind of the bridge into that, maybe. Maybe AI sellers is too hard. Maybe you have to be managing the narrative with the technology partners so they don’t want to go too far into the selling AI for the AI sake. I get that part. But I think we, as analysts, would appreciate a little bit more transparency about what exactly companies are doing beyond the FTE label, put it this way, and how does that fit into the broader talent pyramid discussion.

Patrick: Right.

Boz: So, Infosys, going back to Infosys, more domain, more clear to clients, and a greater exposure to personas that are beyond just the CIO that were brought into stage, and partners. In previous events like that, they would bring in traditional partners like SAP, Microsoft, and Oracle. Now they had some AI partners that were on stage that actually are starting to talk about, you know, which is kind of like you can kind of gradually see that pivot into introducing the new personas, the new partners that are important for them from moving forward.

Patrick: Right. I’m curious, so when I went to the PwC Australia event, and at one point when the leaders were speaking, they outlined three or four challenges that they are facing or challenges to growth, things that they, in their own minds, they need to put down their strategy to how they’re going to tackle these things. And critical to how they were going to tackle them was talent. They came back to that a few times. And it’s sort of, I can picture in my notebook where I have a big star around the word talent, because I’m like huh, the problems that they’re identifying are ones that are going to be addressed by talent management. So, it sounds like Infosys maybe had a similar mindset.

Boz: Yeah, yes, I think, and I think we have heard from Infosys kind of the pieces have been put together over the last couple of years. They’ve talked about power programmers. They’ve talked about the various career paths for the engineers that are involved into developing the small language models that they have, or the agents that are attached to the people that are actually selling the outcome-based and the value-based services that they sell versus the traditional software engineers. So, we have heard some of those. I think it has come a little bit more, has crystallized the talent strategy and I think they kind of understand what needs to happen next as they have experienced and they tested some of those models over the last couple of years and they know exactly. And it’s- I think it will be easier when they’re looking to recruit new talent as well. Because if you are someone who wants to be involved in AI more than somebody else, you know what your career path is and you can kind of know what does that entail, what’s your day-to-day work going to look like. So, I think that’s- agents are great. You still need people.

Patrick: You still need people, yeah.

PwC Analyst Summit: discussions around client use cases

And I will say so, a couple things out of the PwC Australia trip, because you know PwC really well. You spent a lot of time with them yourself. One thing that really struck me, they managed to do two seemingly contradictory things at the same time. One was they had both, they had people there from PwC Global. I know they’re, you know, PwC member firm, but people that have a global role.

Boz: Yup.

Patrick: They had them there and they talked about in almost every client use case, they talked about bringing in assets and people or leveraging assets and people from around the world, from PwC Poland, PwC UK, PwC India, PwC US. So, there was that global, this is how we’re a global firm. At the same time, it was so heavily focused on Australia, New Zealand clients, the Australia, New Zealand delivery, the Australia, New Zealand problems in the market and how they’re helping solve them. So, they managed to be both very global, which is a challenge for any of the Big Four firms, and simultaneously very focused on Australia and New Zealand.

Boz: Yeah.

Patrick: Which I thought was kind of neat. I hadn’t seen it, I hadn’t felt it that much before, even when we were in Toronto with Fujitsu, you know, that was still always a challenge. I think we’ve seen it with PwC many times in the past.

The other thing that I thought was curious, and I’m going to try to pay attention to this at all the events we go forward. You know how we’ve sat there and we’ve heard client stories. And one of the first question is always, what did you actually do? But the second question is often, is this an established client or was this a new client?

Boz: Mmhm

Patrick: PwC had a good mix of the established clients, then what I would call sort of new clients that they earned through reputation, through whatever word of mouth order. And then the, I can’t think of a better term than the won clients, meaning there was an RFP that they actually competitively bid for. And they were, PwC was very good about explaining up front, like that’s what this type of client was as they launch into the use case. Overall, just an excellent event and a really good opportunity to see what PwC is doing well in Australia.

Client use case mistakes to avoid

But I want to now- so that was Fujitsu Infosys PwC. I want to talk about a couple things now, sort of use cases, client use cases, because they feature so prominently in these events that we go to. And I want to talk about the value of being in person.

Boz: Yes.

Patrick: That is after all, what these events are all about. And then I want to look out five years and say, what is our travel schedule and what are the things that we’re going to be doing in five years is going to look like. So, starting with client use cases, there’s two mistakes everybody makes, both at these events and in thought leadership that we read. I shouldn’t say everybody, because I’m to say they didn’t make- PwC didn’t make these mistakes. But the two most common mistakes are, you don’t know what the consultancy or the IT services company actually did. You hear a great story, but you’re like, so what did you do? The second common mistake is so much time gets spent on describing the client themselves, how big they are, what market they’re in, what challenges they face, all of which is important to know as context, but there’s a limit to context before context just becomes the entirety of the story.

So, PwC was extremely good about, it seems like they prepped their clients well to ensure that they talked about the PwC part of the story, and they didn’t spend too much time setting the stage.

Boz: Yup.

Patrick: I think they had a big advantage because, with the exception of two of us, all the analysts in the room were Australia and New Zealand analysts or local to the region analysts. And so, they knew those companies. They didn’t have to explain who those companies were. At one point, one of the Australian analysts, as a presentation started, reached over to me and showed me his notebook because he had written that the company was the equivalent of AAA.

Boz: Oh *laughs*

Patrick: So, what was funny is he didn’t write AAA. He wrote AA. But at that point, I knew it was an insurance company.

Boz: Yeah.

Patrick: And I’m like, I’m pretty sure we’re not talking about Alcoholics Anonymous here. I’m pretty sure this is AAA. So, he was giving me the context of the, not quite getting it right, but it was pretty funny. But I think that part, they solved both of those problems really well. I don’t know what your experience was at Infosys. Similar, where they had those challenges and they overcome them or no?

Boz: To a degree. I think a little bit of both. I would say there were some clients that were very explicit about how they work with Infosys, but not all. I think there’s room for improvement, I would say.

Patrick: Yeah.

Boz: And like you said in the beginning, it’s not a challenge just for Infosys. I think most clients, most companies that we attend at the events to is exactly clients come on stage and they start talking about the problems, but sometimes even they forget to mention the name of the vendor that is hosting them and actually they work with. And I understand partially because they don’t work with only one vendor.

Patrick: Correct.

Boz: So, they work with a vast majority and it’s kind of how they have to manage that carefully, right? But you are the vendor event and you’re hosted by that vendor. So please, if you guys are listening to us, do us a favor. Be very specific about, you work with company X and this is how they helped us. That’s very helpful because then it changes our way of thinking for questions and understanding a little bit more, amplifying the value of the company that you guys work with. Why did you choose them? Also, what went wrong, you know?

Patrick: Yeah.

Boz: How did the company overcome that? I know nobody wants to talk about what went wrong, but we know all projects, something goes wrong.

Patrick: Yup.

Boz: There’s not a perfect project ever, period. So, opportunity for having more of an enriched discussion about how you work with vendors, why did you choose them? How did you guys set up the next stage, the next phases of the project? So again, Infosys is starting to address some of those challenges through some of the presentations, but not all of them were.

Patrick: Yeah, fair enough. Very, very rare that it’s done extremely well.

The value of being in-person

How about sort of the in-person aspect of this? And I was reflecting on this on the way back from Australia, which is a long way and a lot of time to reflect. How things have changed a lot since the pandemic, and there’s an even higher expectation, I feel like, to be in person. And so, what is it that you get out of being in person? And I’ll jump ahead a little bit and say, you mentioned earlier that panel discussions told the story. I would argue that a panel discussion in person is 1000 times more valuable than a panel discussion virtually.

Boz: 100%

Patrick: So, in addition to panel discussions telling the story, what else do you get out of being a person?

Boz: I mean, self-serving: connections. *laughs*

Patrick: Yeah.

Boz: You know, just putting a face to the name and just having that, building new relationships and understanding. You know, nothing can substitute a sidebar conversation before or after the event, you know, either the cocktail hour or dinner or whatnot, or at the game as we were with Infosys, watching the Rangers and having the suite for select clients and partners and just making those connections. And so that’s, like I said before, I mean, agents are great, humans are always still in need, still in demand, and I think that cannot be substituted no matter what. So, I think it’s always about having those experiences, hearing firsthand people just like to talk to people. You know, and as much as we all appreciate the technology that can help us to make our everyday lives easier, there’s still parts of our brains that are getting a little bit more of that socialization aspect that we all crave for.

So, connection and socialization, really learning from the body language. That’s part of it. The unspoken part of it is equally important to the spoken one, that people discuss it on stage or otherwise, and you can kind of get that sense of who’s doing what and why, just getting into that. Also looking at our peers as well.

Patrick: Yup.

Boz: Learning from them, what are the questions that they’re asking as well and trying to think about the questions we’re getting from our clients as well. So that’s an element that, you know, we know there’s some people that really like to ask questions and it’s just great, so, that’s- we learn from those along the way. So that’s kind of some of the aspects that we’re always looking for. A great venue, doesn’t hurt.

Patrick: It’s always nice.

Boz: Always nice.

Patrick: It’s always nice. I think who stays in the room is really important too. I think for years now we’ve been looking at when somebody isn’t speaking and they’re- one of the executives or really one of the clients is always fascinating too. When they stay in the room and they still seem engaged in what’s going on, that tells you a lot about it.

At PwC Australia, they had a newly promoted manager. So not a senior manager, not a principal, not- just a newly appointed manager who kind of served as the MC all day. She spoke the- she spoke at the beginning, but then most importantly, she spoke right after the executives, the leadership of PwC Australia outlined their strategy and, you know, where the firm is and all that kind of stuff. And then she reflected on, okay, that’s what this feels like. Everything they said, that’s what it feels like down here at the manager level. That’s what it feels like working day to day in this firm. It brought the culture out so much. I mean, everyone talks about culture, but it’s sometimes it’s really hard to feel.

Boz: Yeah.

Patrick: And then all day long, she, either before or after a client session, she reflected on, I’ve worked with a similar client on a similar problem, or this is what that team really went. So that was enormously helpful. And I think being in person made all the difference there. I would also say to go back to Fujitsu for a moment, from what you were saying earlier, one of the things that you mentioned, we’ve been to so many events with them in the last two years or whatever it’s been. Being in person allows us to see the consistency of the message and the consistency of the strategy. And at the same time, the progress-

Boz: Yup.

Patrick: The sometimes incremental and sometimes a lot faster than incremental progress that they’re making. And I don’t think you get that if you’re not in person having those conversations again and again. So, let’s keep doing the in-person stuff.

Predictions for the next five years of analyst events

So now let’s look out five years. I think we can look out one year and say over 2026, we’re going to see a lot more- we’ve been asking for SAP and Microsoft and AWS to be at the table with the companies that we cover.

Boz: Yes.

Patrick: I think 2026, we’re going to see a whole lot of AI companies.

Boz: Yes, of course.

Patrick: We’re going to see Anthropic at the table. We’re going to see all of them brought in. Fair enough. Got that. But if you look out five years, what do you think going to analyst events or traveling to see our clients is going to look like five years from now. Keeping in mind, five years ago, we didn’t know if we were going to do anything in person because we were still in the throes of the pandemic. But what do you- and I’ll go first to give you a second to think about it since I gave you no warning. Generally usually do, but I’ll do it this time.

I think we’ll see more smaller focused events, events in quotation marks, because I think they won’t feel like the big 100 analyst events or the big 10,000 people events. I went to Salesforce in Australia as well.

Boz: Yeah.

Patrick: Massive event. I think the biggest- my biggest takeaway from that, and we will have a special report on that that’ll come out, everybody can read the rest of what I think. But one of the things that, the sort of epiphany I had sitting in a room with 10,000 people was how locked in Salesforce is to the seller. You were talking about salespeople-

Boz: Yeah.

Patrick: And sort of forward deployed sales engineers, maybe. Maybe we’re coming to forward deployed sales engineers. Salesforce has that market locked.

Boz: Yeah.

Patrick: And everything they do is focused on addressing the needs of and extracting dollars from salespeople within an organization. But that was a 10,000 person, big, huge event. I think we’re going to see a lot more smaller, focused, let’s gather. And PwC Australia was kind of a good example of that because there were- I don’t think there were two dozen analysts. It was pretty small.

Boz: Yup.

Patrick: And there was even a time at the Salesforce event where we had a sort of breakout with public sector focused analysts and Salesforce. And that was just a handful of people that all knew each other.

Boz: Sure.

Patrick: With the exception of me.

Boz: *laughs*

Patrick: I didn’t know any of them. And so, I think we’re going to see more of those kind of- because it’s just, it allows for just such a greater conversation. And I think as analyst relations teams get better at understanding what each analyst and each individual firm brings to the table, they’ll be able to cater the events to that. And then I think, I hope, knock on wood, literally, I want to see, I hope to see in five years, a return to the experience centers.

Boz: Yes.

Patrick: To use the PwC phrase. Being in an office is great.

Boz: Yup.

Patrick: Being in an event space is kind of not great. But being in those experience centers is just, it was tremendous when we used to go to those, because you see, again, you have the face-to-face, in-person, interaction with people who are delivering to clients all the time.

Boz: Yeah.

Patrick: You see the space that a client walks into, so you have a little bit of feel of what the clients are going through. And you also see the investment, the innovation, the forward-lookingness of the company that you’re there with. So, I’m hoping that we see more of that moving forward. But what about you?

Boz: Yeah, maybe using that last point about the experience centers and the kind of innovation spaces that we’ve attended in the past and kind of like gone through a small lull right now, but it’s more like the event spaces these days. But more of the practitioners led discussions, events. As you mentioned, PwC’s example, newly promoted manager, MC-ing and connecting that, I think hearing from practitioners, I mean, all due respect to the C-suite executives, you know, we would love to hear their story. But for us, it’s about understanding and connecting it to the everyday operations as well.

Patrick: Yeah.

Boz: So, it’s good to, and I know we’ve experienced some of that in the past with some events, but having a practitioner being involved. And I know those folks, those professionals get excited because they are rarely heard outside within the boundaries of the organization.

Patrick: True.

Boz: So, it’s an experience for them. And I think it just creates a different dynamic. And I think that’s, if we can hear more of that, if we had more of those practitioner let events and involved events, I think it will be great. I’ve been very curious and I don’t know if that’s going to happen. That’s going to be a signal to exactly how the market is changing- an Anthropic or a Palantir or OpenAI analyst event.

Patrick: Mmhm

Boz: Because there’s this narrative in the market about the disruption of all those companies disrupting, including our industry, analyst industry, right?

Patrick: Right.

Boz: If we see a Palantir, if we’re going to see an OpenAI or Anthropic, I do believe we will, because every cycle goes through a hype and every, you know, they have to look for where the new growth opportunity will be coming from. So, I think we were going to see that. Which we’re very curious to thinking about an in-person analyst event run by born on the AI companies, basically, right? Because you can- they can just do it with agents. Why do you need the analyst?

Patrick: Right.

Boz: So, my bet is that we’re going to see that in five years. We’re going to see those companies running analyst- they’re going to start developing their own analyst relations teams.

Patrick: Analyst relation- analyst relations agents, can’t even say it. Okay

Boz: So they’ll start doing that type of stuff.

Patrick: Excellent.

Boz: Perfect example, Nvidia, two dozen Nvidia needs, you know, any further promotion?

Patrick: Not really.

Boz: Not really. They do have a very strong analyst relations team.

Patrick: Exceptionally good analyst relations team.

Boz: So that’s an example of a company that is doing exceptionally well and still, you know, relies and leans on the analyst community as good as they are. So, yeah.

Final thoughts

Patrick: Excellent. Thank you, Boz, for coming in. Appreciate it very much.

Boz: Thanks for having me.

Patrick: Next week I’ll be speaking with Chris Antlitz about Mobile World Congress 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!

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

Memory Supply Worries Amid PC Market Refresh Initiatives

Play Episode Pause Episode

Mute/Unmute Episode Rewind 10 Seconds 1x Fast Forward 30 seconds

00:00 / 00:21:37

Apple Podcasts Spotify

RSS Feed

Share

Link

Embed

In this episode of “TBR Talks,” Principal Analyst Angela Lambert and Senior Analyst Ben Carbonneau discuss how supply chain dynamics are shaping the emerging AI PC market. They explore the reasons behind slower-than-expected AI PC adoption and the shift in memory production capacity.

Additionally, the pair looks at how specific companies, including Dell Technologies, HP Inc. and Lenovo, are adjusting to current market conditions and delves into the biggest supply chain unknowns for 2026. 
 
Episode highlights:

• The two major factors converging in the PC hardware space
• Memory capacity and supply chain disruption
• The ways specific companies are adjusting to current market conditions

 
“I think the big question is, what will happen next in that supply chain that the AI servers are consuming too much of, I guess. Will it be storage, for example, or other, just other components that, you know, a computer’s just a tiny server or vice versa, right? So, it’s a lot of the same suppliers and manufacturers. I think that while we’re grappling with memory now, I wouldn’t say that we’re going to go back to normal immediately after that. We’ll probably just be on the lookout for what’s the next domino to fall here is probably the most likely scenario,” said Lambert.

 
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’ on Demand — Memory Supply Worries Amid PC Market Refresh Initiatives

T

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 supply chain threatening the rise of AI PC with Angela Lambert, Principal Analyst for TBR’s IT Infrastructure Practice, and Ben Carbonneau, Senior Analyst for TBR’s IT Infrastructure Practice. 

Two major factors converging in the PC hardware space

Angela and Ben, welcome back to TBR Talks. And today we wanted to go into, dive deeper into a special report that you both co-authored recently, just published, about the supply chain, but really the state of the AI PC market. Angela, you want to sort of set it up? What was the special report all about?

Angela Lambert, TBR Principal Analyst: Sure, I’d love to. So, the special report we published is, it’s really, as you said, a combination of two major factors converging in the PC hardware space. And I think maybe it’ll help if I take us back in time about a year. So, over the past year, there was a lot of expectation and anticipation of large growth in the PC market. Microsoft is ending support for Windows 10. That’s supposed to urge a lot of commercial customers to refresh all of their PC fleets, drive a lot of growth. At the same time, there’s the concept of AI PC that entered the market. They have arguably more capability, more efficiency, and kind of new hardware that has yet to be fully understood and adopted. 

What we saw last year was that the PC market did grow fairly well for a very mature market, you know, in the lower mid-single digits. But it definitely was not up to the expectation of what the PC vendors and what other vendors like Microsoft, Intel, and AMD really probably wanted to see because they’ve really been investing significantly in the AI PC. But unfortunately, I think what we saw in engaging with the market is that the value proposition fell flat in concert with tariffs happening, which increased the prices people were paying. And the AI PC, it’s more sophisticated. There’s a more sophisticated hardware, the CPU, NPU in there, it costs more money. And vendors were really relying on the concept of future proofing. Not necessarily that people are ready to use AI today, but you should buy these devices because once they are ready, they’re going to need them. So that message did not really take off at the same time that all of these other kind of cost implications were coming into play. 

So that kind of leads us into 2026, where vendors have made significant investments in the next generation of AI PC. These investments have been going on over the last few years, really leading up to this, but they’ve been really working hard to make this a success. And I think in many ways, AI PC needs to be a success for them. But at the same time now, we saw tariffs last year. We’re seeing a really significant upheaval in the hardware market at large because of huge shifts in memory availability and pricing.

Patrick: Before we get to that supply chain part of it, the things that you described that prevented the surge that was expected in the PC market were things that are more of a delaying factor than a diminishing factor. So, the high price, the slower adoption of AI PC. Is your sense that while 2025 may not have been the banner year that was expected in PC sales, that maybe 2026 will be? Or are you about to tell me that all the supply chain problems mean that we’re looking to ’27, ’28, ’29 before we see that surge in growth around PC sales?

Angela: Yeah, I think for a few reasons, the surge in growth will be delayed. And there’s- yeah, part of it is the delay because of cost, but COVID changed so many behaviors and patterns in so many ways. And I think buying PCs is another thing that has changed. It really hasn’t come back to normal. Before COVID, it was so predictable, every 3 years, a company was going to refresh their hardware. They’re on a three-year four-year cadence. That’s kind of changed. People are not necessarily committed to that. Maybe they had huge inventories they were digesting, but it’s still just really not clear to the market at large when or if the kind of normal cycle that used to exist will ever come back.

Memory capacity and supply chain disruption

Patrick: Right, and so speaking of COVID, supply chains were also massively disrupted through the pandemic. And is that sort of now playing out again, Ben? And as we look at the chips side of this equation.

Ben Carbonneau, TBR Senior Analyst: I think so. I think during the pandemic, there was a significant tailwind, which was an increase in the total addressable market for PC. And I don’t see that falling. I think what happened there was that there just wound up being a lot more PCs per household because there’s so many people working and learning from home. So, I don’t think that number decreases. But to what Angela was saying, I think the rate at which those PCs refresh is the big thing that’s changed. And I think that’s due some to the cycle and delay of purchases, but also due to the hardware just becoming such that it doesn’t need to be replaced on that same three-year cycle that it needed to be before. 

So, with memory now, what I think I’m seeing or what we’re seeing in the market, I know Lenovo just reported earnings and they were saying that memory costs in the last quarter of 2025 increased 50% year-over-year. And I think that’s- those kind of huge increases are still occurring on a quarterly basis. And what’s happening there is really not a decrease in the manufacturing capacity for the memory that’s going into PCs. It’s more of a reallocation of new capacity. So if you’re a memory manufacturer, which the big three would be Micron, Samsung, and SK Hynix, instead of allocating more production capacity to PC memory, like they would in the past when there would be a PC cycle like this, they’re actually allocating that new production capacity to high bandwidth memory. And that’s going to support more of the AI infrastructure workloads. So that’s a really big, I think it’s a big thing to understand- I think, is that the supply of PC memory isn’t going down from where it was last year. It’s just not growing at the same rate that demand for PCs would be. And as a result, PC prices will go up. And we think that refreshes will be even further delayed.

Will AI PCs take over the market?

Patrick: And do you think sort of the AI PC is something that’s just going to simply take over the entire market that you’re not going to see a refresh of a, I mean, the equivalent of a dumb PC at this point, I mean?

Ben: I think- so I think at some point, the AI PC will take over the market. I think our forecast for the Windows AI PC market by 2030 looks something like a little over 80% of that Windows PCs sold in that period will be AI PCs. I think there’ll be certain markets that are slower to adopt AI PCs. I think we call a dumb PC a traditional PC, but more traditional PCs certainly in emerging markets.

Patrick: When you say markets, do you mean specific kinds of clients, enterprise versus small/ medium? Or do you mean geos or do you mean industries? What do you mean by markets?

Ben: So, I think it’s a little bit of both. I think we see that certain industries, I think it comes down to price sensitivity. So certain industries are more price sensitive than others. For example, retail is always going to be more price sensitive. They’ve always had a longer refresh cycle than a mature enterprise in, say, North America. And then in emerging markets, so Latin America, I think we see, and then outside of China and APAC, there is more price sensitivity. So, in those markets, I would see slower adoption of the AI PC. However, something that Angela was saying, we know that these silicon vendors are working on a third generation, at least for the x86 guys, so Intel and AMD, are working on their third generation AI PC chips. So, as the older generations of AI PC chips become older, they also become cheaper to manufacture, all else equal. And that makes those AI PCs based on those chips more accessible.

Patrick: That’s crazy that we can already be talking about the traditional, older, dumber versions of AI PCs. We haven’t even gotten to AI PCs in everybody’s hands. That’s nuts.

Ben: It is, yeah. I think adoption has really been- it hasn’t been what the OEMs wanted it to be, but it has been, I mean, fairly strong. I know Lenovo was talking about 30% of their unit sales being AI PCs in most of the quarters throughout 2025. So, we do see AI PCs being adopted. But I think, again, what Angela was saying, it’s less on the capabilities and the need for those features today and more about future-proofing your device fleet for what is to come.

How specific companies are adjusting in the current market

Patrick: Right, yeah, that makes a ton of sense. And so, you mentioned Lenovo a couple times. Angela, are there other companies, again, TBR, we look at the companies. So, are there other companies in the special report or more broadly in the space that you’re keeping an eye on for the changes that they may have to go through in order to adjust to what we’ve been talking about?

Angela: Absolutely. So, we, of course, look- the report does show a little bit of our data on the big three, right? So, Dell, HP Inc., and Lenovo. We also look at the chip vendors as well. So, Ben hinted at this when he said the X86 guys, but what he’s really saying there is, there’s more change even within the chip space here than there’s been in probably the whole time I’ve been covering the devices market. So, Qualcomm is a relatively new entrant in this space. They are long time servers of the smartphone chip market, but they’ve partnered with Microsoft to try to bring some new things into this space on an ARM architecture. So, there is, besides just the PC vendors trying to aggressively, you know, win and maintain share as they always do amongst each other. There’s also some changes in terms of the competition of what the longtime leader Intel has seen in this space, not just from AMD, who’s been their primary competition, but kind of a new category as well. And this is, it’s definitely a big time for Intel. They are taking on a new strategy of bringing their PC chip manufacturing to the US. And it’s really important for them for that new production to be successful. So, there’s a lot of dynamics at play behind the scenes here.

Patrick: So, a couple of years ago, Intel was definitely struggling. And were sort of the company that everyone will point to for how to go wrong in the chip space and the manufacturing space and just the tech space all the way around. Has it changed for them? I mean, are we looking, is Intel well positioned for the changes that you’re expecting across the market?

Ben: I think their strategy is well positioned. And I think the stock price kind of tells the story there and what we’ve seen in the change over the last year in the price. Where really Intel, I think, when they came out with their foundry business, which was essentially making chips for external customers, I think that didn’t accelerate in the way that they wanted it to. And it was really misses on certain process nodes and being delayed. But I think right now, we’ve kind of pivoted more back to, I wouldn’t say completely back to the old Intel ways, but more to kind of favoring the production of chips to be put in their own devices as a proof point to external customers. And I think that was a really strong move to what Angela was saying earlier. Their 18A process is what the compute node in their third generation AI PC processor will be based on. So, all that manufacturing coming to the US I think is really big. And I think that will draw in external customers. And I think that’s why you’ve seen kind of, they’ve iterated, they’ve called it IDM 1.0, IDM 2.0. They’ve talked about these strategies in their earnings calls. But I think this strategy is probably the strongest, kind of going back to Intel’s roots. being able to actually execute on the 18A process, which I think they’ve proved that they have. And I think this third generation of AI PC chip will further demonstrate that. So, I think it looks good for Intel.

The biggest supply chain unknowns

Patrick: That’s good. Well, that’s encouraging. And earlier you said that when talking about the supply side of things, it’s not like the physical supply is in trouble. It’s more the demand is shifting in terms of where it’s going. And then Angela, you mentioned tariffs as one of the complications in the supply chain discussion. Going forward in 2026, are there- is tariffs the biggest unknown when it comes to what can happen in the supply chain? Or are there other things that we should be anticipating? Whether it’s manufacturing in the US not standing up fast enough, whether it’s demand falling off a cliff, like what are the other things that might disrupt the supply chain? Or is tariffs sort of the biggest unknown at the moment?

Angela: I’d say tariffs, I think that buyers and companies have wrapped their heads around the tariffs to the extent that they can at this point. And it was a lot of uncertainty at this time last year within the PC space. Now, with the just skyrocketing price of memory, I think that’s the biggest thing we’ll be seeing over the next few months through this entire year. Maybe not better next year either. But I think what, to me, the question would be is, how will the AI server market continue to impact PC? Because really, this is all being driven by that insane demand for AI servers. So, memory is kind of the first major domino to fall here, where now, as Ben was saying, if the component pricing goes up 50% for Lenovo, that’s an expensive piece of the build. That makes very material increases to the end customer. I think the big question is, what will happen next in that supply chain that the AI servers are consuming too much of, I guess. Will it be like storage, for example, or other, just other components that, you know, a computer’s just a tiny server or vice versa, right?

Patrick: Right.

Angela: So, it’s a lot of the same suppliers and manufacturers. So, I think that while we’re grappling with memory now, I wouldn’t say that we’re going to go back to normal immediately after that. We’ll probably just be on the lookout for what’s the next domino to fall here is probably the most likely scenario.

The case for AI PC may come from security benefits

Patrick: Right. That’s not- and so as encouraging as what you said about Intel was, that’s the opposite of encouraging if we’re thinking about the dominoes that are going to fall. Just to wrap it up with something personal. So, are either of you using an AI-enabled PC right now? Have you tested some, played around with some? When do you think you are going to get your hands on one full-time?

Angela: Oh, boy. We have been lucky enough to see some really cool devices in our travels. We haven’t been lucky enough to receive them here at the office, but it has been very cool to see some of those devices. And yeah, I certainly look forward to it and getting that to myself.

Patrick: Is AI slowing down your current PC? Is that part of the way that you’ll get a faster refresh? Because in order to use all the AI tools that are out there, you actually need a PC that can handle it. I’m saying that’s a very loaded question because I know my own laptop is slowing down.

Angela: Right, we’re all we’re all hungry for the new laptop.

Patrick: Yes.

Angela: You know, it depends on your use case. Admittedly, a lot of what I do with AI today is cloud driven. I think that’s true for most people. But what the devices can also provide and what I think Ben and I feel is going to be the super strong AI PC use case is going to be security. It’s not necessarily going to be, you know, you could be a data scientist who has some models on your computer, you’re running your private AI-driven analysis that’s compute intensive. For most of us office workers, we’re going to see it in kind of behind the scenes performance enhancements, but security is such a big threat, just the unwitting incidents that happen with end users. That’s a huge threat to every company. I think we’re going to see over the next couple of years some really impressive use cases come out of that, where that, I think, might be the thing that turns the tides on selling companies. It’s not maybe going to be a crazy change in productivity. It’s going to be a really great advancement in protecting the company’s data.

Patrick: And so does sovereign AI and sovereign data come into this as well, where, because one of the things we’re seeing increasingly is this idea that data needs to stay in country, that data needs to stay particularly as to go back to tariffs, but almost all the companies we’ve been talking about are US companies. There’s a sense in Europe and even in Asia that they need to keep the data there and keep AI there. So, do AI PCs play into that as well, where that’s part of the equation, especially from the security standpoint?

Ben: I think AI PCs play into that a little bit. I think, though, what we’ve seen, at least with sovereign AI, or what I’ve seen, is that there’s been some impressive private cloud solutions that have been built for companies, and just by leveraging your private cloud server cluster, you’re gonna get a lot more compute out of that than you would from any NPU for on-device AI, so I think I guess the wrap would be that the AI PC, I see the NPU on the AI PC SoC really driving improvements kind of behind the scenes to what Angela was saying. Maybe some security integrations from Microsoft along the way that get pushed into operating system updates. But really more of a, right now, I think a battery life savings situation. And for sovereign AI and data privacy, I really see that mostly being driven by the architecture of private cloud solutions.

Final thoughts

Patrick: Excellent. So, let’s end with a prediction. How soon until the three of us are sitting here doing an episode of TBR Talks that you guys are looking at your AI PCs in your laps as we’re sitting here? How soon is that coming?

Angela: I’m going to optimistically say, let’s say six months from now.

Patrick: All right, mid 2026. Okay, Ben?

Ben: Mid 2026 would be nice. I don’t know. I guess it depends on the-

Angela: We’ll see how those prices go up.

Ben: Yeah, we’ll see the prices. We’ll see what our IT administrator does. I would love to be working on an AI PC right now.

Patrick: All right. Well, I’ll make sure he listens to the podcast. Excellent. Thank you, Angela. Thank you, Ben. It’s a lot of fun. Thanks. 

Angela: Thanks, Patrick. 

Ben: Thank you. 

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.

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

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

2026 Predictions: Federal IT Services

Play Episode Pause Episode

Mute/Unmute Episode Rewind 10 Seconds 1x Fast Forward 30 seconds

00:00 / 00:13:47

Apple Podcasts Spotify

RSS Feed

Share

Link

Embed

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.

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: 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!

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

2026 Predictions: Managed Services

Play Episode Pause Episode

Mute/Unmute Episode Rewind 10 Seconds 1x Fast Forward 30 seconds

00:00 / 00:14:10

Apple Podcasts Spotify

RSS Feed

Share

Link

Embed

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!