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The pandemic’s lasting impact on IT services: Who’s leading through 2022 and beyond

Join Practice Manager Patrick Heffernan, Principal Analyst Boz Hristov, Senior Analyst Elitsa Bakalova, Senior Analyst Kelly Lesiczka and Analyst John Croll for a discussion on which vendors have fared best in IT services, consulting and digital transformation amid the global pandemic. The team will evaluate the strategies and investments made by different vendors, including in alliances, M&A, talent and portfolio transformations, that improved or hindered their position in the market.

 

In this FREE webinar you’ll learn:

  • Key investments driving revenue growth acceleration for some benchmarked vendors
  • Automation as the clear, successful path forward as vendors’ HR strategies have reached an inflection point
  • How consultancies are enabling hybrid cloud while bolstering on-premises enhancements to flourish

 

Mark your calendars for Thursday, June 9, 2022, at 1 p.m. EDT,
and REGISTER to reserve your space.

 

 

Related content:

  1. Digital transformation, cybersecurity and cryptocurrency: How the war in Ukraine will change technology forever

 

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SAP use case reveals big things for PwC

Started with a simple SAP use case

In early 2022 PwC shared a few use cases on its website. One in particular, A mid-cycle SAP upgrade creates efficiency and unlocks strategy for a tech company, drew TBR’s attention, particularly its assertion that “PwC and SAP co-developed a process to allow clients to migrate to SAP’s Group Reporting module at any point in the year.”

 

While that may sound relatively vanilla and nondescript to some, the possibilities around co-development of software, ownership of the IP, and whether this new process was something PwC could package up with SAP and sell to more of their shared clients piqued TBR’s interest. TBR’s questions led to a discussion in April with PwC’s Chip Sherrill, a partner in the firm’s Consulting practice who worked on the specific engagement. The following reflects both the discussion with Sherrill and TBR’s ongoing analysis of PwC, SAP, and the broader consulting and digital transformation space.

Examining every ecosystem angle

Like any ecosystem play, it’s best to look at the use case through at least three lenses (with a bonus fourth based on TBR’s view of the world): PwC and the client; PwC, the client and SAP; PwC and SAP; and solely PwC.

 

A few things about PwC’s relationship with the client proved critical to understanding how and why this engagement succeeded. First, PwC had been working with the client on other issues, and the client understood the firm’s expertise around finance transformation, tax and governance. Second, and possibly due to that established relationship, PwC understood the client wanted a reporting solution integrated on top of its existing IT and ERP infrastructure, rather than a stand-alone piece of software or bespoke platform. Third, PwC was able to make the business case that it could help solve the client’s problem without breaking budgets or creating future problems.

 

Adding SAP into the mix, Chip noted that the client had a different vendor on-site assisting with the client’s migration to SAP S/4 HANA, which surprised TBR given the following details from the published use case: “a delay meant five more months of waiting, expenses, scheduling issues with key personnel and a potential loss of executive sponsorship. And, as both PwC and the tech company understood that SAP’s Group Reporting module would eventually become part of a larger move to the entire SAP S/4HANA suite, PwC helped the company look beyond its immediate needs to discover how the current project dovetailed with its long-term digital transformation goals.”

 

Critically, in TBR’s view, PwC was able to show the client and SAP that in solving the specific problem with an accelerated solution, PwC would be advancing the client’s move to S/4 HANA even though PwC was not responsible for that migration. How? On the specific issues of data integrity and risks, the client considered SAP’s default answers inadequate. Additionally, the client needed fewer months of parallel processing. As a result — and this goes back to knowing the client and being able to map out the business value — PwC proposed an alternative time frame to what SAP suggested and SAP’s standard practice. The client got a “40% reduction in expected implementation time” and a “75% decrease in time required for tax consolidation, compared to before the migration,” according to PwC.

 

Work with this client gave PwC a proven method for accelerating one aspect of SAP’s vast ERP universe, leading TBR to ask: Who owns the intellectual property, and will PwC go to market with SAP and this new solution?

 

Fully aware of PwC’s recent evolution of PwC Products & Technology and the firm’s willingness to sell software “as a Service,” TBR anticipated IP ownership would stay fully with PwC. As for co-marketing with SAP, PwC would be bringing the solution to SAP clients, with the potential to expand beyond existing PwC clients in the near term.

Technology as the firm’s fertilizer

At TBR, we’re always starting with the vendor itself, understanding how an individual firm’s or company’s strategies and performance reflect its place in the market and the challenges, opportunities and trends it can expect in the near term.

 

With this use case and with TBR’s long-running analysis of PwC, three points stood out. First, PwC securing SAP work with a client despite not being the lead vendor on the client’s migration to S/4 HANA underscores the firm’s sustained success in relationship building and expanding its footprint with key accounts. Second, PwC’s The New Equation strategy provided the framework to bring in tax expertise on consulting and technology engagement, allowing the firm to “bring all [of PwC’s] messages together … doing a better job now across the firm explaining what [PwC does] well.” And, third, PwC has better technology capabilities than many of its competitors realize, which will become even better known as this solution scales across the large market for this capability.

 

TBR does not expect PwC will become a software giant or a competitive threat to SAP and others, but the firm’s persistence in underpinning consulting, tax and even audit engagements with proprietary, tested and well-managed technology will help it grow ahead of peers in the next few years.

Expanding into consulting: Huawei’s next strategic step

Clients’ technology uncertainties lead Huawei to expand consulting services

In discussing clients and their shifting needs and demands, Huawei leaders told TBR that while previous conversations typically started with a client’s immediate plans and end goals, Huawei’s clients now come to it with uncertainty around technologies, business changes and digital transformations. This shifting client mindset has compelled Huawei to invest more aggressively in consulting-oriented skills.

For Huawei, consulting includes helping customers transform their IT organizations and define their own values around digital transformation, with Huawei providing the foundational technology. In TBR’s view, this more technology-centric approach to consulting fits Huawei’s traditional strengths and does not require brand permission around strategy or high-level business consulting. Huawei’s leaders also noted to TBR that they believe digital transformation encompasses both business and technology changes, but the exact mix depends entirely on each client’s specific needs. By continually circling back to the vendor’s emphasis on individual clients, Huawei’s leaders reinforced their overall messaging on value, including consulting as value definition, implementation as value creation and operations as value optimization.

Previously, during TBR’s in-person visits to Shenzhen, China, and virtual meetings over the last two years, Huawei made passing mention of training, rarely singling out consulting and digital skills, except in the context of the vendor’s overall human resource management strategy.

During this year’s summit and in the follow-on discussions with TBR, Huawei’s leaders emphasized the criticality of training around digital transformation, including formal mentoring programs, enhanced client interactions, and what Huawei describes as “the Digital 9” — nine roles identified in nearly every engagement that increasingly need elevation from traditional IT to digital transformation.

Training at Huawei, like many of its technology-centric peers, includes both upskilling employees internally and certifying partners on its technology solutions. In TBR’s view, every leading vendor in the IT services space has adopted a similar ecosystemwide perspective on training. This means Huawei is aligned with prevailing industry trends, which is a critical step for a vendor with more than 30,000 reselling partners worldwide and 6,200 certified service and solutions partners that are capable of implementing solutions, according to Huawei leaders who spoke with TBR.

Huawei seeks growth outside China, even as its home country remains paramount

According to information shared during the event, Huawei’s Digitization and Technical Services revenue increased by 20% over 2021 as the vendor expanded “consulting services and vertical industry services.” In addition, the vendor noted, “Significant demand is coming from government and financial services and insurance markets, typically for supercomputing and modular data center scenarios. [Huawei’s] value proposition is based around our ability to plan, design and build data centers with low energy consumption, IT integration, data replication and disaster recovery, as well as our strong operation and maintenance capabilities.”

In discussing plans for 2022 and beyond, Huawei’s leaders explained to TBR that the vendor anticipates new growth opportunities in Eastern Europe, Southeast Asia, the Middle East and South America. As an example of the latter, Huawei’s leaders described engagements with electricity utilities outside of China. Huawei has developed expertise around digitalizing utilities’ operations, including generation, distribution and consumption, and during the summit the vendor described the Intelligent Electric Power offering as tightly interwoven with consulting partners, including Deloitte, PwC and Accenture. Notably, in June 2020, a Chinese state-owned enterprise, State Grid International Development Limited, bought one of the top four electricity distribution companies in Chile. In TBR’s view, Huawei adeptly leverages its home country’s strategic investments to further the vendor’s success abroad.

Smart Ports provide a test bed for Huawei and a massive opportunity for growth

During the summit, one particular use case stood out for TBR: Huawei’s Smart Ports solution. The Huawei executive presenting the solution noted that reducing on-site manpower demands through increased automation has proved to be both popular with clients and challenging to implement. Crane operators face long days in harsh and cramped environments, which can lead to long-term health problems. The Huawei solution, already in use in Shanghai, includes deploying remote-controlled cranes, with operators as much as 100 kilometers away from the port and, presumably, sitting in more comfortable surroundings.

Trucks, according to Huawei, present additional problems: Drivers do not get adequate rest and the work can be monotonous and boring, leading some drivers to leave for more exciting and lucrative opportunities. Working with various Chinese ports, Huawei developed an intelligent dispatching system and autonomous trucks, which stay within a port’s confines. As the first live test case, Huawei operates over 70 autonomous trucks in Shenzhen’s port. Lastly, Huawei leaders noted that port planning can also prove critical to reducing operational costs and enhancing overall port safety, leading the vendor to develop a cloud-based AI tool for planning and optimizing traffic within the port. Reduced planning time, according to Huawei, equals reduced operations costs.

TBR has tracked smart ports for years with the appreciation that these facilities can serve as test beds for integrating emerging technologies, such as 5G, IoT, edge compute and AI, while forcing IT and digital solutions to work seamlessly with real-world physical challenges, such as moving containers and ensuring ships do not collide. With China boasting four of the world’s five largest ports — and two of those currently serving as use cases for Huawei’s new solutions — Huawei will likely continue to be a leader in this field. In TBR’s view, supply chain challenges over the last two years have only heightened the need for highly integrated smart port solutions, and vendors that are able to capture the full breadth of ports’ needs will see an explosion of opportunity over the next few years. Huawei should be well positioned to take full advantage of this growth.

Sustained investment in building Huawei’s consulting capabilities presents a strategic challenge

The Huawei Global Analyst Summit reinforced many of the vendor’s strengths, including its ability to test and prove solutions in China, the advantages it gains from employing a technology-centric approach backed by hardware and software solutions, and its sheer scale. A new emphasis on consulting — if it is matched with sustained investments in training, selective hiring and concurrent upskilling around digital transformation — could enhance Huawei’s competitive advantages for engagements that extend beyond essential technology needs. Currently, TBR observes consultancies solidifying their relationships with the C-Suite, IT services vendors seeking deeper partnerships and technology vendors building professional services capabilities. Huawei can be part of all three of those trends, and the vendor’s near-term success may depend on how skillfully leadership manages any expansion into consulting.

Playing to its strengths, Infosys has a clear path forward to deliver business outcomes through Infosys Cobalt

In the company’s first event since the Infosys Leadership Forum in Americas in 2021, Infosys once again hosted clients, analysts and partners for in-person and virtual sessions during its one-day Infosys Cobalt World Tour, which was held at Madison Square Garden. With Infosys Cobalt increasingly becoming the backbone of the company’s performance and go-to-market efforts, the themes of the event were well aligned with Infosys’ goal of becoming a digital transformation partner known for its strong execution capabilities.

 

TBR left the Infosys Cobalt World Tour event with three takeaways that will guide our continuing analysis of Infosys’ cloud capabilities and performance:

  • Infosys embraces a business-outcomes mindset, and Infosys Cobalt will enable the transformation.
  • Infosys is obsessed with customer centricity, which we believe will be critical as the company scales “as a Service” sales and as renewal cycles shrink.
  • Partners, talent and leadership culture strategies are mixing well at the moment, enabling Infosys to enhance results.

Infosys Cobalt becomes the de facto framework for accelerating performance in both legacy and new technology areas

With revenues from Digital reaching 59.2% of Infosys’ (Nasdaq: INFY) total sales in 1Q22, up from 51.5% a year ago, the company is demonstrating its ability to capitalize on its investments in portfolio, talent and alliance partners, all necessary ingredients for expanding client wallet share. Infosys defines its Digital services as being “comprised of service and solution offerings of the company that enable our clients to transform their businesses. These include offerings that enhance customer experience, leverage AI-based analytics and big data, engineer digital products and IoT, modernize legacy technology systems, migrate to cloud applications and implement advanced cyber security systems.”

 

Infosys wrapped up FY22 on a high note as the company registered its largest growth in over a decade, increasing revenues 20.3% on an annual basis to $16.3 billion. Infosys added $2.75 billion in net-new revenue in FY22, which was higher than the combined $2.62 billion in revenue from the three previous years. Infosys’ success was largely enabled by Infosys Cobalt as the company has been able to up- and cross-sell Cobalt to clients seeking to modernize and optimize IT architectures and business processes through adoption of cloud-ready services and solutions while lowering total cost of ownership. Infosys launched Infosys Cobalt, a suite of platforms, solutions and services, in August 2020.

 

Today Infosys Cobalt taps into the company’s catalog of over 35,000 assets, 300 cloud solutions blueprints, and a developer community of startups as well as public and private providers. While Infosys Cobalt has its own global leadership structure and P&L, Infosys’ decision to not set it up as a stand-alone unit but rather as a go-to-market framework that pulls assets from within Infosys and its broader ecosystem enables Infosys Cobalt to better support the company’s cloud performance. (TBR’s estimates of Infosys’ cloud revenue and growth can be found in TBR’s Cloud Professional Services Market Forecast).

Zooming in on client-centric support throughout the customer life cycle paves the way for ‘as a Service’ sales at scale

During the event, Infosys let clients tell the company’s story rather than having leadership lead the presentations, an approach that in TBR’s view was different than how peers usually run similar forums. The experiences and use cases they all shared further solidified Infosys’ cloud expertise including not only traditional lift-and-shift migration support but also its ability to engage in security-wrapped outcome-based business discussions rooted in Infosys’ technology execution prowess. Infosys’ clear vision around its cloud value proposition takes into account important aspects of enterprises’ business and digital transformation programs, including culture, talent and deepening clients’ trust.

 

In addition to facing challenges around culture and talent — issues that all vendors are grappling with industrywide — Infosys must also focus on deepening clients’ trust, particularly as it seeks to adopt “as a Service” pricing models at scale. Managing client relationships beyond the initial point of sale is key, and we believe Infosys will accelerate its efforts to adopt a beyond-the-contract type of mentality to ensure renewal rate goals are met, especially as cloud contracts pivot from traditional large, five-plus-year outsourcing setups to shorter-term subscription-based contracts where clients have an opportunity to switch between providers, further compelling Infosys to stay on top of relationships.

 

Though Infosys continues to hire in bulk, sales and support staff declined 50 basis points as a percentage of the total workforce to 5.1% to 16,156 in FY22, up from 14,582 in FY21, reflecting the company’s focus on its delivery staff as Infosys’ sales strategy succeeds in the market. Additionally, automation enables Infosys to standardize processes in service delivery, which we believe will be critical as Infosys scales “as a Service” sales. “Operation remains very core to us, [helping with] cost optimization every year. We’ve taken out between 3,000 to 4,000 people, automating and putting in bots, and this is fourth quarter.” — Nilanjan Roy, CFO, Infosys, 1Q22 earnings call

 

With business services pivoting from noncore to core, Infosys must also account for the twofold implication of scaling “as a Service” sales at scale. Monetizing both the development and management of cloud applications through a consumption-based commercial model carries risks and rewards for Infosys, a paradigm many systems integrators face. For example, Infosys needs to bear the cost of staffing its bench with engineers to develop the applications far in advance, often without knowing how long it will take to monetize the SaaS offering. Infosys has tried to pursue SaaS sales at scale in the past, but we believe the company now has a clearer vision, expectation and path forward on how to approach the opportunity. The incremental approach Infosys takes to scale its cloud-related sales is centered around Infosys Cobalt’s ability to deliver value-wrapped proprietary and partner assets in a services-oriented architecture, which solidifies Infosys’ value proposition within the ecosystem. Such a strategy allows Infosys to stay within its swim lane while also helping it demonstrate the company is willing to share risk without jeopardizing performance by attempting to sell stand-alone software solutions.

 

While Infosys’ Products and Platform offerings are available on both a license and subscription basis, the company still largely uses many of these assets to drive services engagements. As it relates to Infosys cloud sales, the Infosys Cobalt store provides an access point for clients to explore catalog offerings, with the underlying goal of driving services engagements for Infosys. The additional value of Infosys Cobalt offerings also comes from the company’s ability to wrap an industry layer on top of the technical functionality of these assets, such as the launch of the Infosys Cobalt Financial Services Cloud offering. The solution will support Infosys’ efforts to accelerate performance within its largest industry vertical and address client pain points around areas such as anti-money laundering, transaction reconciliation, open banking, consumer lending and mortgages. Such an offering enables Infosys to build trust with business unit leaders and expand the company’s addressable market especially as clients seek to monetize their user data generated through B2B and B2C interactions with cloud enabling the speed of access.

Balancing relationships within the stakeholder ecosystem without losing focus on talent and partners is key to strengthening trust with clients

As much as Infosys values the role of partners, the company recognizes the importance of its greatest assets — its people. However, Infosys has not been spared in the war for talent. The company continues to evolve its resource management value proposition from hiring for skills to hiring for potential, investing in talent development programs that target nontraditional recruits with the goal of establishing emotional connections with the brand, which could help strengthen loyalty and improve retention. For example, a collaboration between the Infosys Foundation USA and the CBS television series “Mission Unstoppable” will highlight three teachers from the foundation’s Pathfinders Institute program — Infosys’ professional development program for K-12 teachers in computer science. The company also expanded the Infosys Springboard learning program to the U.S., which currently has 1.2 million users largely in India, to support early learning as well as career reskilling programs in the U.S. as the region remains a priority for Infosys.

 

Further, the first group of apprentices graduated from Infosys’ New Apprenticeship (NEW) program, having undergone 12 months of structured and on-the-job training in IT services and incident management. NEW cohorts also earn certifications, such as ServiceNow Certified Systems Administrator, and can earn college credits at Southern New Hampshire University. While much of the cloud-related work today is largely geared toward cloud application development, migration and managed services, Infosys’ leadership sees a bigger gap in the support domain moving forward due to increasing use of low-code development tools, especially as the company seeks to scale deployment of Infosys Cobalt’s 35,000 assets including 300 industry solutions. Training staff on low-code/no-code solutions will help it build trust with business buyers while supporting Infosys Cobalt’s goal to evolve its value proposition toward delivering business outcomes.

 

As Infosys’ portfolio and go-to-market efforts enable the company to climb up the value chain within enterprises, the company remains realistic about its core strengths. The role of alliance partners is key across both technology and advisory services. Just as Infosys seeks to capitalize on partners’ capital expenditures outlays — particularly hyperscalers — and position itself as an ecosystem orchestrator, the company also appreciates the value consulting partners bring to the table. The recent formalization of the global partnership with EY, which is focused on deployment and management of industry-aligned digital assets, further solidifies Infosys’ ability to recognize its strengths rather than pursue risky bets and try to branch out into uncharted territories.

Infosys proves its value as an ecosystem orchestrator by applying the right technologies and partner-backed innovation to clients’ sustainability initiatives

The event showed across multiple levels that Infosys sticking to what it does best is highly advantageous when applied in a partner innovation setting, including around sustainability. Recognizing that no one vendor can do it all, Infosys’ EVP and head of manufacturing spoke at length during one session with a client executive from a global HVAC company about the two companies’ relationship around HVAC and building system sustainability, including how Infosys is leveraging the HVAC company’s capabilities as both a client and an innovation partner. With nearly 40% of the world’s carbon emissions coming from buildings, decarbonizing physical estates will be one of the most challenging tasks for enterprises, particularly as the majority of existing HVAC systems are not intelligent or connected in any way. The two companies are trying to tackle this issue and make the well-known phrase “what gets measured gets managed” a reality for the HVAC industry.

 

Through the conversation TBR came to understand that Infosys Cobalt provides the bridge for its partner’s HVAC expertise with the possibilities of IoT and big data. Work between the two companies has helped Infosys reduce its emissions (Infosys became carbon neutral as of 2020) and enabled the global HVAC company to track building efficiency and troubleshoot issues before even arriving on customers’ sites by leveraging the cloud and IoT-powered HVAC systems. While Infosys’ services line of business does not create emissions from manufacturing, its manufacturing clients can be confident that Infosys is bringing the right partners to the table, is a carbon-neutral supplier (therefore supporting its clients’ scope 3 downstream emissions targets), and can apply its technical prowess to help measure where clients are starting out, enabled by cloud.

Conclusion

From cyber to AI to industry specialization, Infosys Cobalt will continue to provide the bridge between Infosys’ core and new portfolio offerings while supporting the company’s efforts to extract additional wallet share from its client roster and pursue new logo opportunities. Just as Infosys’ leadership, clients and partners throughout the event recognized that scaling adoption of new ideas and solutions is less about technology and more about the culture of an organization, the same sentiment applies to Infosys’ internal transformation. Infosys’ organizational culture has gone through growing pains associated with its portfolio as well as client demands over the past four decades. It has not always been easy or straightforward and has sometimes resulted in shaky performance.

 

Today, Infosys’ culture is strong largely due to leadership’s ability to recognize the company’s place within the ecosystem. Despite rising attrition levels, which is an industrywide trend, Infosys’ approach to talent training and inclusion provides the strong foundation necessary to pursue organizational goals. Infosys Cobalt is no exception. Instead of setting it up as a stand-alone unit, an approach many of Infosys’ peers have taken with similar offerings, Infosys Cobalt spreads across the entire organization, leveraging the skills, expertise and industry knowledge of the company’s sales and delivery personnel. Ensuring Infosys Cobalt provides consistent and standardized client support is key, but could create internal competition when trying to pull the most skilled resources in multiple client engagements at the same time. However, this also presents an opportunity for Infosys to test its ability to become an ecosystem orchestrator. Adopting a customer zero mindset often provides the most valuable use case before deploying at scale to market.

 

TBR will continue to track and analyze Infosys’ performance and investments as part of its quarterly Infosys report, IT Services Vendor Benchmark, Global Delivery Benchmark and Digital Transformation research. Contact us today to gain full access to these upcoming publications.

EY on sustainability reporting: Data, credibility and transformation  

Lessons learned from the EY-hosted webcast “How the Corporate Sustainability Reporting Directive will transform your organization”

KPMG Decarbonization: The change agent helping the firm pivot toward its next chapter

The KPMG Global Decarbonization Hub supports the organization’s ESG agenda by bringing skills, partnerships, tools, and data and analytics solutions that further enhance KPMG’s advisory-led value proposition.

Inflation, cybersecurity and taxes: PwC’s update from Dubai

What happens in Dubai … well, happens everywhere

On March 1, PwC Dubai hosted a LinkedIn webcast, “Transforming Our Region,” featuring commentary by Stephen Anderson, PwC Middle East markets leader; Richard Boxshall, PwC chief economist for the region; and Hanan Abboud, a partner in PwC’s International Tax & M&A practice. This latest episode of the webcast series, which started in the summer of 2020, included three main themes, two of which likely resonate strongly outside the Middle East region.

Global inflation can be a drag, but regionally not so bad

First, Anderson and Boxshall noted recent regional economic growth and an overall positive picture, particularly as the pandemic begins to wane, but cautioned about inflation as a damper in the near term, with a critical caveat: Many of the global inflationary pressures and trends have been more muted in the Middle East, particularly within the economies of Saudi Arabia and the United Arab Emirates (UAE). Boxshall reported that inflation has been relatively low and well managed locally, at around 2% for the region, but varies widely across countries.

Like elsewhere, energy prices and supply chain snafus drive most of the inflationary concerns and effects in the Middle East, but high oil prices act as a double-edged sword for some of the most important regional economies, as more money flows into government coffers while demand is put at risk of being suppressed in the long run. Overall, PwC reported on the cautious sentiment in the region as the business leaders it surveyed see inflation elsewhere and hope for sustained smart economic stewardship to keep inflation low in the region.

Cybersecurity tops concerns

Investment and innovation comprised a second regional trend with global echoes, primarily because of the main concern about what could hold back growth: cybersecurity risks. According to Anderson, cybersecurity generated more worry among Middle East business leaders than geopolitical tensions or lingering pandemic-related healthcare risks. Notably, PwC’s survey did not factor in Russia’s invasion of Ukraine, which could bring geopolitics to the forefront. In TBR’s view, consultancies like PwC that can address clients’ cybersecurity concerns in concert with offerings around innovation, transformation and sustainability will continue to outpace cyber-centric or niche vendors as client leaders increasingly appreciate the business value of integrating cybersecurity into enterprisewide strategy.

Joining the global movement toward 15% tax rate

The last development PwC highlighted will have the greatest near-term effect in the UAE but bodes well for global economic growth and regional good governance. Anderson and his colleagues noted that the UAE became the first country in the region to announce plans to adhere to Organization for Economic Co-operation and Development (OECD) guidelines by instituting a 15% minimum corporate tax rate. With the country planning to implement the 15% tax rate effective June 1, 2023, and the local business corporate tax rate capped at 9%, PwC acknowledged plenty of unknowns and expects plenty of exemptions. But overall UAE is continuing its decades-long efforts to keep the country economically attractive and closely intertwined with the global economy.

Advising clients on adjustments to the new 15% tax rate, to include navigating free-trade-zone rules, will provide near-term opportunities in the UAE and longer-term revenues as other regional governments adopt similar tax structures. For PwC, a new UAE tax regime aligns perfectly with PwC’s The New Equation strategy and emphasis on trust, transparency and global interconnectedness. As TBR noted in November, “Globally, PwC partners were leaning into the trust and leadership components of The New Equation and finding clients receptive to, and even welcoming of, PwC’s efforts to ‘peek around the corner’ at trends, challenges and opportunities on the near and far horizons.”

Don’t bet against the Emirates

In TBR’s estimates, PwC’s 2021 management consulting revenues in the Middle East topped $670 million, roughly one-third of the firm’s APAC revenues but growing faster than any other PwC region. Inflation spikes and cybersecurity strikes may slow that growth, but a more likely scenario is that the UAE, the Kingdom of Saudi Arabia and other regional economies will maintain their rapid growth as their booming talent pools and friendly tax and corporate governance structures continue to draw investments and continue to create opportunities for consultancies like PwC. I served in Dubai, UAE, as a foreign service officer for the State Department in the late 1990s and know it’s a fool’s bet to think the UAE won’t, eventually and sometimes in surprising ways, do exactly what they say they’re going to do.

2022 Predictions: Digital Transformation

Join Practice Manager and Principal Analyst Patrick Heffernan, Principal Analyst Boz Hristov, Senior Analyst Evan Woollacott and Senior Strategy Consultant Geoff Woollacott Thursday, Feb. 3, 2022, at 1 p.m. EDT/10 a.m. PDT for an in-depth, exclusive review of Top 3 Predictions for Digital Transformation in 2022, part of TBR’s Predictions special series examining market trends and business changes in key markets, such as cloud, IT services, digital transformation and telecom. 

At the end of 2021, TBR declared, “Digital is dead; long live business transformation.” In this webinar, our team will discuss the trends and shifts in 2021 that led enterprises to focus increasingly on the business transformation and change management aspects of digital transformation as well as what will come next as emerging technology adoption continues to accelerate.

Coming around to specific vendors, the team will highlight which firms will outpace peers in the 2022 market, including a look at how innovation and transformation centers will — or will not — provide differentiation. Building on a key prediction around leadership and talent, they will also examine whether IT services vendors, consultancies and their technology partners have invested smartly in building, training and equipping their executive leadership ranks.

Don’t miss:

  • How will the business side of digital transformation eclipse technology imperatives in 2022
  • What will consultancies and IT services vendors do to stay relevant in a fast-changing market
  • Whether executives are prepared to lead in a post-pandemic world.

Mark your calendars for Thursday, Feb. 3, at 1 p.m. EDT,
and
REGISTER to reserve your space.

Related content:

HCLT’s groundbreaking apprenticeship initiative: Long-term vision, near-term effects

In the battle for talent, prepare for the long war

Recruit, retain and train. Every IT services vendor over the past couple of years has been pulling every lever to find, manage and reward talent in a chaotic market in which new competitors and newly empowered professionals have spiked attrition across the board and strained HR staffs as never seen before. The pandemic brought about a new appreciation for employee well-being while proving virtual engagements and delivery could work for IT services vendors. As 2022 starts, filling talent gaps in the near term will continue to challenge every vendor. Notably, HCL Technologies (HCLT) has begun investing in the long term with a program that is perhaps unique among IT services vendors and certainly, in TBR’s view, timely, a little risky and genuinely good for society. 

On Dec. 9, TBR spoke with Ramachandran Sundararajan, HCLT’s EVP of Human Resources at HCL America, and Rohan Varghese, HCLT’s VP and global head of Analyst Relations and Customer Advisory Board, both of whom provided details on the new apprenticeship program. The following reflects that discussion and TBR’s ongoing analysis of HCLT.

Flexibility, STEM and a 5-year apprentice journey  

With the company’s new apprenticeship program, announced in November, HCLT has crafted an expansive, flexible, multiyear journey for students intent on joining the IT services and science, technology, engineering and math (STEM) ecosystem. The core program begins with a year spent at HCLT as a salaried employee, including a three-month “boot camp” that introduces apprentices to various aspects of HCLT’s IT services, consulting and technology businesses. The second phase focuses on practice-based learning. Sundararajan emphasized the “practice” part, noting that apprentices would have exposure to and gain experience working across many of HCLT’s core areas, such as SaaS, cloud, security and networking services. Over the final three months of the first year, apprentices join a live project environment, supporting and providing help at an appropriate proficiency level and putting to use skills learned from working in sandbox environments.

When apprentices graduate from this last phase, they become eligible for an HCLT-funded college program and can fully appreciate the flexibility that HCLT offers. Graduated apprentices can enroll in a four-year STEM program at any university, with HCLT picking up the tuition and fees and keeping the student on the company’s payroll. Apprentices can also choose an associate degree track to move more quickly to full-time employment. Or apprentices can opt for industry-recognized certifications, moving even more rapidly into the full-time workforce. In all three journeys, HCLT pays the academic costs, allowing the apprentices to earn a degree without any student debt.

Looking beyond the usual boundaries while staying aligned to HCLT’s core

Notably, HCLT has designed the apprenticeship program to seek candidates both geographically and economically diverse from the standard STEM talent pool. HCLT wants to attract students with fewer financial advantages than the average college student and will be recruiting most heavily in cities away from the technology hubs of Silicon Valley; Austin, Texas; and Boston. Sundararajan said HCLT will work with community groups in Cary, N.C.; Hartford, Conn.; and Sacramento, Calif., among other cities, although HCLT would welcome apprentices from any part of the U.S. In addition to throwing the net wide in terms of who and from where, Sundararajan said the goals of the program centered on building skills for the future, recognizing that the technical skills, who has them, and where they live will have lasting effects across their communities.

Supply chain disruption: For EY, just another day in the office and another problem to solve

Know thyself and thy supply chain … or go to the board for more funding  

In early November 2021, and in reaction to the deluge of news and analysis around supply chain disruptions worldwide, TBR met with key members of EY’s supply chain to discuss their firm’s overall response to the current crisis as well as EY’s capabilities and offerings around supply chain management. Al Mendoza, Americas and US-Central Supply Chain leader, and his Europe-based and Shanghai-based counterparts, Matthew Burton and Rodrigo Cambiaghi, respectively, shared their insights on the now, next and beyond for supply chains, including a look at long-range, tectonic changes coming for global enterprises.  

Nothing about the current global supply chain disruption, which has paralyzed ports, slowed manufacturing lines and contributed to growing inflation, surprised EY. The firm’s supply chain professionals saw the deeper and more broadly felt repercussions from COVID-19 as a tsunami that woke up many enterprises to the third- and fourth-level risks they were running in their highly networked and global supply chains.

For EY, which has been working for years with clients on supply chain transformations, the supply chains that have suffered the most during the pandemic — from the peak until now — are those that, according to Mendoza, “don’t understand themselves.” These overwhelmed enterprises did not have the talent, technology or processes in place to manage a massive disruption like the pandemic, even if their suppliers did. EY expects the supply chain ecosystem to shift substantially in the near term, as enterprises learn from the chaos caused by COVID-19 and implement the people, process and technology changes demanded by corporate boards, suppliers and clients.  

In reviewing the current state of the supply chain management market, Burton described traditional supply chains as “woefully inadequate” and said too many enterprises maintain a “linear mindset” and are comfortable with two-week timelines to adequately report on and assess existing supply chains. These enterprises, stuck with an old technology batch mentality, must invest in technology to decrease risk and derive value from their supply chains. Luckily for supply chain officers, the entire supply chain discussion has moved to the board level. In Burton’s assessment, a supply chain officer can “say ‘supply chain’ and you get funding,” as enterprises increasingly expect supply chain management to move from a cost center to differentiation across the value chain. Burton added that boards “were cost-driven and are now resilience-driven.”

TBR has repeatedly heard supply chain issues have reached board levels, but Burton’s explicit connection between disruptions and funding brought clarity and underscores one of the challenges consultancies such as EY face in working with large-scale clients: Every transformational challenge is a boardroom issue and demands funding, even as funding streams remain finite. In TBR’s view, EY’s close relationships with C-Suites and boards likely provide the firm with openings to anticipate, understand and benefit from shifting budgetary priorities around supply chain and other transformational issues.  

Now: Not enough talent and inadequate technology — an age-old story 

For EY’s clients, taking that boardroom directive and investing in technology, people and process improvements cannot happen quickly enough, in part because some enterprises continue managing their supply chains with what Cambiaghi described as “primitive technology.” Notably, primitive technologies have been made more inefficient by a lack of skilled supply chain management practitioners, inadequate training and insufficient change management. Mendoza expanded on the talent challenge, explaining that EY has three advantages over both competitors and clients, which also compete for supply chain talent.

First, as Mendoza said, EY has made a “huge investment” in training recent years, echoing comments TBR has heard from other EY leaders and professionals. Second, the firm assimilates new talent quickly and has been a net importer of talent because of the firm’s growth and culture, sentiments also echoed by other EY leaders. And third, Mendoza said EY’s supply chain practice is led by experts in supply chain, not consulting professionals with other skills brought in to manage supply chain as an offering. Mendoza, Burton and Cambiaghi made clear their passion for supply chain reflected a sense of mission, not simply another EY capability. In TBR’s Management Consulting Benchmark, EY has the second largest Supply Chain Management revenue, when compared to its Big Four peers, behind only PwC.