In time of pandemic, IT services focuses on leadership, partnerships and automation
Following market leader Accenture (NYSE: ACN), IT services vendors will aggressively adopt automation tools to drive down their own costs, improve remote delivery and retain clients during the global economic downturn. Automation will help ensure standardized delivery, even as engagements, implementation cycles and large-scale integrations change amid more remotely managed IT environments. IT services vendors that have implemented automation at scale internally will most readily serve clients seeking the same.
Splintering acquisition strategies
Global economic conditions will allow some IT services vendors to acquire talent and IP at discounted prices, provided leadership at those vendors maintains control of cash flow and risk assessments. In contrast, those vendors ill-suited for work-from-home and remote delivery or struggling through corporate restructurings will miss the opportunity to soften organic declines with inorganic boosts. While on the surface this might not be significantly different from normal disparities in companies’ acquisition strategies, the current massive disruption will reveal weaknesses around leadership and organizational nimbleness that may see normally aggressive acquirers struggle and typically passive nonbuyers make bold moves. TBR expects M&A moves made within the first half of 2020 will substantially impact which vendors will be best positioned to grow during the expected late 2020/early 2021 recovery.
Every part of the economy, including the IT services market, will suffer serious disruption from the COVID-19 outbreak. While not predicting which of the many possible scenarios will be most likely to play out through 2020, TBR’s Professional Services, IT Services and Digital Transformation team anticipates three overarching themes will dominate, leading to six topics worth watching in detail. In the first theme, leadership at every level will not only reveal which IT services vendors and consultancies were best prepared for a pandemic disruption but also determine which will continue to succeed, relative to peers. Second, alliances between IT services vendors and their technology partners will be stressed by immediate economic pressures, talent constraints, and uncertainty surrounding 2020 and 2021 forecasts. And third, IT services vendors that invested in automation early and at scale will see their ability to standardize delivery and reduce costs become essential to retaining clients and meeting their own financial targets. Automation, already a priority for some, will become a mission-critical capability, and accelerated adoption will separate leaders and laggards.
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