PwC invited the analyst community to its office in London to meet with members of the company’s leadership team in the EMEA region, along with PwC clients and technology alliance partners, and provide an update on how PwC is helping clients innovate through transformation and execution. PwC opened the event highlighting how PwC’s community of solvers address clients’ pain points, such as training and retaining talent, improving customer experience, and meeting social and regulatory requirements with a sustainable point of view. The company then led a series of sessions covering PwC’s innovation strategy, managed services business and technology alliances. Client sessions with Vanquis, Inmarsat and a large energy provider presented a view of PwC in action.
PwC Is Taking a Human-led, Technology-powered Approach to Addressing Clients’ Challenges
The first session was about PwC’s innovation strategy. Rima Adas, partner and EMEA Industries leader, opened the session by outlining four key areas that the company planned pursue to address clients’ needs in EMEA starting July 1. The topic of transformation is high on clients’ agenda, and PwC is working to ramp up transformation activities around cloud, customer experience, finance, human resource management and operations. The company is also pursuing opportunities in three other areas: risk and regulation, specifically around cybersecurity; environmental, social and governance (ESG), specifically around sustainability; and deals advisory services, specifically around creating and preserving value.
Adas noted that PwC is also exploring future bets, such as mobility transformation, energy transition and the metaverse. Growth enablers for the company include PwC’s alliance network, managed services capabilities and delivery model across regions, rather than focusing on clients’ home countries. PwC’s emphasis on industry expertise, along with its broad geographic network and portfolio mix of advisory, tax and audit services, positions the company for success.
Paul Terrington, partner and EMEA & U.K. Consulting leader, explained that demand for transformation-related consulting support remains strong across the region and that clients are driven by an imperative that if they do not reinvent business models, their organizations will not be relevant and will not survive. While PwC is helping clients address challenges, speed is essential to implement clients’ transformation agendas. Key elements for PwC’s activities are platforms enabled by managed services, its broad range of alliance partners, and solutions designed for industry needs.
Andrea Poore, director, U.K. Retail Enterprise Transformation, noted that while PwC is utilizing its consulting expertise and proximity to clients to understand their needs, the company’s learning culture reinforces its success. For example, organizing lunch-and-learn events to discuss specific topics and highlight winning methodologies that PwC brings to engagements helps the company deepen its client relationships.
GenAI Has the Potential to Disrupt Clients’ and PwC’s Business Models, and PwC Is Ready to Capture the Wave of Opportunities
PwC is investing $1 billion over three years to expand the company’s capabilities and capture opportunities around generative AI (GenAI). As Adas explained, GenAI has the potential to disrupt the business of not only clients but also PwC. The company is building on its alliance with Microsoft (Nasdaq: MSFT), specifically around Azure OpenAI Service solutions; exploring opportunities with other technology partners; and upskilling employees to change the way clients operate and to improve PwC’s service delivery. According to Terrington, PwC is utilizing consulting with technology and data at the core to address clients’ needs, for example by using GenAI to boost productivity. Positioning topics such as trust, responsible AI and AI ethics at the center of its GenAI strategy will enable PwC to move at speed and capture opportunities in an area that is disruptive for businesses and, as Terrington explained, “plays well with PwC’s human-layered technology agenda.”
TBR analyzed PwC’s recent developments in GenAI in the Spring 2023 Management Consulting Benchmark Vendor Profile: PwC. According to the profile, “GenAI needs use cases, and PwC can be a compelling client zero … [PwC’s recent GenAI announcements in the U.S., Canada and the U.K.] emphasized three aspects of the investments. First, the investments will build on and extend PwC’s existing strengths and experiences deploying AI with clients, a reminder to the consulting and technology ecosystem that PwC is not just chasing the GenAI hype. Second, PwC will accelerate adoption of AI internally, both for its operations and for the delivery of its consulting engagements. Third, at least part of the investments will be spent on upskilling employees on AI to help them ‘work faster and smarter, help grow their careers, and advise clients on the benefits of AI as well as other transformative technology,’ according to the PwC US press release.”
Managed Services Represent a Growth Opportunity for PwC
PwC is also expanding its managed services activities, a capability that is “not new to PwC,” according to Jamie Houghton, partner and EMEA Managed Services leader. As clients go through transformations and struggle with technology debt and a lack of capacity, they increasingly request more capabilities from PwC, creating managed services opportunities. According to Kieragh Nelson, partner and U.K. Managed Services Operate leader, “Managed services are at heart of PwC; they are fully integrated and not sitting at the side but across all of what PwC does.” PwC is using an agile delivery system in managed services and has a managed services lab with skilled technologists and solution and commercial architects who are responsible for designing models, driving consistency and connectivity, and bringing best practices and technology assets to clients.
While managed services account for between 4% and 5% of PwC’s annual professional services revenue, in TBR’s estimates, it is a fast-growing business for three of the Big Four. EY’s managed services revenue share is similar to PwC’s, while Deloitte’s managed services account for between 8% and 10% of its professional services revenue, in TBR’s estimates. On the other hand, KPMG has the fewest managed services offerings in its portfolio compared to the rest of the Big Four. Managed services is an appealing market, especially in the current macroeconomic environment as more buyers are shifting from discretionary spend to run-the-business managed services awards, which could entice KPMG to explore this area further, thus pressuring its consulting value proposition.
According to TBR’s Spring 2023 Management Consulting Benchmark Vendor Profile: PwC, “Using managed services as a continuation of its strengths and existing capabilities with a few primary focus areas, the firm more naturally embeds the opportunity within client engagements. More specifically, PwC develops managed services that stretch across business needs to support business acceleration and deliver on outcomes by prioritizing its strategy, risk, cyber, tax and risk practices.”
A Unified and Connected Service Delivery Ecosystem and a Global Value Proposition Contribute to PwC’s Managed Services Expansion
Utilizing a connected service delivery ecosystem comprising onshore, nearshore and offshore resources improves PwC’s ability to deliver managed services with flexibility and at scale. During the event PwC called out its managed services delivery network in EMEA, which includes facilities in the U.K., Germany, Portugal, South Africa, Egypt, and multiple locations in India and Central and Eastern Europe, discussing features such as interconnection between locations, industry emphasis, and operational mindset and discipline at the core. The company identified the facility in Belfast, Northern Ireland, as a core service delivery location in EMEA.
Notably, in Belfast PwC invested in developing an operational infrastructure that enables employees to utilize standardized approaches and processes as well as technology assets and platforms for running services. PwC’s Belfast facility, which has approximately 4,000 employees, serves as a showcase office that enables clients and partners to experience success stories and increase confidence and trust with PwC. PwC has replicated this standardized approach across its geographies. The managed services business utilizes a global value proposition and go-to-market approach and has a common service architecture with delivery assets and global delivery centers as well as a common service catalog.
Understanding Industry Challenges and Addressing Them Through Managed Services Increase PwC’s Value Proposition
PwC works with client partners in its industry teams covering 30 sectors and seven industries and gains an understanding of industry-specific issues. Creating managed services solutions that align with specific use cases and technology assets enables PwC to establish a detailed and informed picture around what capabilities clients need and what domain expertise the company should provide. Such activities accelerate PwC’s manage services expansion and improve its go-to-market messaging around the pace and speed of service delivery.
Alliances With Technology Partners Are an Integral Part of PwC’s Go-to-market Approach
According to PwC’s session on innovation with technology alliances, a significant portion of its business has an attached alliance component that contributes to revenue growth. Alliances are an integral part of PwC’s New Equation global strategy and require a symbiotic relationship at the account level around how to curate solutions and bring industry solutions to life. PwC’s alliance relationships are industry-led and follow a customer-first approach to best address clients’ needs. Establishing partner ecosystems and pursuing one-to-many relationships by working with several alliances at the same time in a client engagement expand PwC’s offerings and resources, enabling it to scale delivery through repeatable assets and generate faster results.
PwC has established an EMEA Impact Center that works on solution generation, presales and sales to accelerate activities with alliance partners across regions. The company has nine strategic alliances, including with Google Cloud (Nasdaq: GOOGL), Amazon Web Services (Nasdaq: AMZN), SAP (NYSE: SAP), Oracle (NYSE: ORCL), Workday (Nasdaq: WDAY), Guidewire (NYSE: GWRE), Salesforce (NYSE: CRM), Adobe (Nasdaq: ADBE) and Microsoft; more than 40 micro alliances, such as with UiPath (NYSE: PATH), Palantir (NYSE: PLTR), Workiva (NYSE: WK) and Sage; and a growing resource base that delivers alliance-related services, up 25% year-to-year at the time of the event. PwC also noted that it increased alliance-related wins and intends to triple the number of wins by 2025.
PwC has an established position in its main areas of expertise: advisory, audit and tax services. Diversifying its portfolio by expanding its managed services capabilities improves the company’s value proposition and its ability to offset pressures on discretionary spending resulting from macroeconomic uncertainty. The company’s human-led, technology-powered approach will be a core lever for its success.
According to TBR’s 1Q23 IT Services Vendor Benchmark, “Even if the global economy continues to slow during the rest of 2023, TBR expects clients’ IT spending will remain, though with some tightening of discretionary budgets, as IT is a necessity that enables clients to establish new business models, grow revenues and create efficiencies. While buyers are focusing more on run-the-business awards and less on discretionary spend engagements, vendors that have balanced consulting and managed services portfolios will perform well. Vendors can find ways to use their positions in the technology and managed services space by bringing in consultants that can mine for additional opportunities. While this is an opposite model from the traditional consulting-led discussions, buyers’ budgets are also pivoting toward measurable outcomes enabled by technologies and are less focused on blue-sky new ideas.”
TBR attended PwC Analyst Day in Boston on Sept. 13-14, 2023. The topics and messages aligned across both events, such as the initiatives around business model reinvention. More analysis on PwC will follow in TBR’s special report on the Boston event.