2022 Expectations: Insights from TBR’s Professional Services team

2021 featured accelerated changes in digital transformation, IT services and consulting markets that led TBR to reevaluate its coverage of these spaces. Going into 2022, we will be diving deep into new research streams and established areas. Join Practice Manager and Principal Analyst Patrick Heffernan and TBR’s entire Professional Services team for a free-wheeling discussion of all things professional services and expectations for the coming years.

Register today to reserve your space

TBR webinars are held typically on Wednesdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous webinars can be viewed anytime on TBR’s Webinar Portal.

For additional information or to arrange a briefing with our analysts, please contact TBR at [email protected].


The IT services predictions set to shape 2022

“The firm’s senior analyst, Elitsa Bakalova, claimed that the trends focus on the theme of sustainability — in hiring practices, climate change and emerging technologies. ‘Even with a rush of emerging technologies and responses to the pandemic at the forefront of IT services [providers’] strategies and client success stories, the fundamentals of IT services remain rooted in people — in recruiting, training and deploying the right talent to solve IT-related business problems and staff enterprise IT needs,’ she said.” — ARN

Lenovo Turnkey Solutions: How Lenovo’s art of the practical enables clients to practice the art of the possible

New offerings built on a smart long-term strategy

In advance of Lenovo’s Oct. 18 announcement of Lenovo Turnkey Solutions, executives with the company’s Industry Solutions group briefed TBR on elements of the new offering. In building the turnkey solutions, executives emphasized Lenovo’s continued focus in three critical areas: simplicity, core competencies and smart partnering. Keeping in mind Lenovo’s role in the ecosystem — particularly from the perspective of IT services vendors and consultancies — TBR sees Lenovo’s approach as essential to its promise to deliver the art of the practical while enabling clients and partners to practice the art of the possible.

So, what are those three critical areas?  

  • Lenovo’s focus on keeping things simple by “removing complexity of configuring solutions” is beneficial for consultancies and IT services vendors trying to help their clients accelerate adoption, innovation and transformation. By decreasing the configuration to a few key variables, partner enablement and scale through the channel become more manageable. Lenovo’s executives repeatedly emphasized the company brings technology from many vendors to an engagement and “makes the technology practical” to enable a seamless client experience. In TBR’s view, a technology partner that wants to leave complexity to a consultant is exactly the kind of tech partner consultants love.
  • That very division of labor connects to the second point: Lenovo focuses on doing what it does well and leaving its clients’ and partners’ market differentiation up to them. As Lenovo executives noted, their clients do not do IT or hardware; their clients do everything else and can leave IT and hardware to Lenovo, while Lenovo leaves everything else to its clients (and partners). TBR has repeatedly observed that vendors that remain focused on what they do well consistently outperform competitors with more diverse and multifaceted strategies.
  • Lastly, Lenovo’s willingness to develop and provide both niche and broad solutions indicates the company is taking strategic cues from clients and ecosystem partners, rather than trying to tell the market what it wants. Lenovo is serving clients’ and partners’ needs, not focusing on selling Lenovo solutions — of course, they do that too, very much, but it is a matter of focus and strategy.

In summary, Lenovo’s integrated turnkey solution strategy revolves around having a finger on the pulse of customer demand to identify solution areas that can inherently be simplified down to a handful of configurable variables to enable scale through the channel while playing their well-defined role in an evolving and complex ecosystem. Lenovo removes the complexity of multipartner involvement, while staying close to clients and their needs — a smart long-term strategy with plenty of room for sustained execution.

Additional contributor: Jacob Fong, Research Analyst

Acquiring digital skills enables vendors to build local resources to expand revenues in APAC

Key Insights

IT services vendors are ramping up activities around building local market resource capacity on top of locally sourced global IT services delivery resources that have existed for decades.

Revenue growth leaders are eyeing opportunities to further penetrate the APAC market by leveraging digital design and creative capabilities to drive high-value opportunities.

Hiring local market resources, appointing leadership and pursuing acquisitions will improve vendors’ ability to diversify global revenues during 2022.

Acquiring digital skills enables vendors to build local resources to expand revenues in APAC

Note: TBR is expanding the IT Services Vendor Benchmark with industry-specialized and geographic deep-dive research, which we will alternate every quarter. In this 2Q21 edition of the report, we have added analysis around strategies, key developments and performance in the APAC region for select vendors in the benchmark.

The IT Services Vendor Benchmark details and compares the initiatives of and tracks the revenue and performance of the largest global IT services vendors. The report includes information on market leaders, vendor positioning, the IT services market outlook, key deals, acquisitions, alliances, new services and solutions, and personnel developments.

Opportunities for IT services abounding in a resurgent APAC market

In the most recent edition of the quarterly IT Services Vendor Benchmark, which published Oct. 7, TBR analysts took a deep dive into services vendors’ performance in APAC over the last few quarters, noting trends and anticipating how the market would react to easing pandemic restrictions and new investments in people and capabilities. The following comes from that deep dive; the full content is available from TBR.

IT services vendors see accelerating revenues as pandemic pressures slow and local investments grow

While pandemic-related pressures slowed APAC revenue growth for the vendors in TBR’s IT Services Vendor Benchmark during 2Q20, 3Q20, 4Q20 and 1Q21, regional revenue growth accelerated during 2Q21, supported by the gradual lifting of restrictions due to vaccine rollouts across the region. TBR believes the recent ramp-up of hiring of local market resources, leadership appointments, and acquisitions and partnerships will improve vendors’ ability to serve clients that are based in APAC and global clients that have operations in the region, and diversify global revenues during 2022.

APAC revenue leaders aim to better compete globally through investments outside core Japan market

The two benchmarked leaders in revenue size in APAC — Fujitsu and NTT DATA — remain deeply rooted in the APAC market, even as these vendors continue to invest in new resources and capabilities outside their core market of Japan to better attract and support clients abroad. Attempting to penetrate new geographies can be a double-edged sword for the two vendors, as it can help Fujitsu and NTT DATA compete abroad against more established peers in markets such as the U.S. and Europe, but also opens the door for peers to capture market share in Japan. The two companies have thus far taken somewhat divergent paths, with NTT DATA centering its efforts on augmenting U.S. operations through acquisitions, which is helping it gain traction in the market, while Fujitsu focuses on more internal transformations to grow its services resources and portfolio in new markets to earn client mindshare. 

NTT DATA closed the acquisitions of Acorio in 4Q20, Hashmap in 1Q21 and Nexient in 2Q21. The three U.S.-headquartered companies will add capabilities in digital, cloud and consulting, respectively, and, in the case of Acorio, horizontal technical capabilities around ServiceNow. We fully anticipate North America-focused NTT DATA Services will maintain an active acquisition pace over the next year, as synergies begin to increase and compound, boosting top-line revenue growth into 2022. 

Pursuing APAC expansion through innovation-led engagements around customer experiences

Quickly growing revenue leaders are eyeing opportunities to further penetrate the APAC market by leveraging digital design and creative capabilities to drive high-value opportunities across regions such as Japan and India. Consumer and enterprise preferences toward digital experiences and cloud-based “as a Service” solutions increasingly influences clients’ digital transformation agendas, providing growth opportunities for well-positioned vendors.

Accenture, No. 5 in revenue size in 2Q21, announced the opening of an office in Japan to host Accenture Interactive’s Droga5 team, along with plans to open similar facilities in the next 12 months in Brazil and China. Adding Droga5 capabilities in the country will augment Accenture’s innovation-led discussions to expand the company’s addressable market in areas such as marketing operations, including design, content development and content moderation, among others.

No. 6 in revenue size, Tata Consultancy Services (TCS) provided consulting and systems integration services for an India-based over-the-top streaming platform, SonyLIV, to help personalize subscriber experiences leveraging AI and machine learning. As a part of the engagement, TCS will also launch an Experience Design Center focused on rapid prototyping and digital innovation. Engagements such as this can provide a pathway into high-value services with TCS Interactive around digital design, branding and marketing. 

India-based talent serve as launching pad for services in APAC, diversifying revenue streams

The story in India is slightly different. India has traditionally offered an abundance of cost-effective global service delivery, but the local market itself only accounts for a small fraction of most vendors’ total revenues. Some companies are now viewing this juxtaposition as an opportunity, and despite a severe second wave of COVID-19 hitting between April and June 2021, vendors increasingly competed for new business with local clients in India in 2Q21. While India is unlikely to become the next frontier for growth in the near term, demand for digital transformation in the region can be an avenue for global revenue diversification, provided vendors can attract and retain skilled talent amid rising demand.

Earlier this year, Infosys signed a contract with the Federal Bank of India to implement the Oracle Customer Experience Cloud solution, helping the bank improve customer experience. Infosys also developed a new SaaS offering designed specifically for Urban Cooperative Banks in India. Infosys is facing fierce competition in recruiting and sales opportunities from both India-native peers and multinational corporations such as Accenture and Capgemini. For example, during the quarter Accenture signed deals with India-headquartered Mankind Pharma and Bharat Petroleum.

Capgemini’s three awards in the inaugural edition of the NASSCOM Engineering and Innovation Excellence Awards 2021 in India indicate the company is well positioned in the segment. Infosys has an opportunity to double down on its partnerships with Amazon Web Services, Google and Microsoft similar to peers like Wipro and Cognizant, which have formed joint business units and have been investing heavily in the country to provide the infrastructure backbone needed for India to pivot from being a frontier to emerging as a more developed market. Managing messaging around these relationships and Infosys’ broad technology agnosticism might prove most challenging for the company.

The IT Services Vendor Benchmark details and compares the initiatives of and track the revenue and performance of the largest global IT services vendors. The report includes information on market leaders, vendor positioning, the IT services market outlook, key deals, acquisitions, alliances, new services and solutions, and personnel developments.

IT services and digital transformation: 4Q21 insights from TBR’s Professional Services team

With IT services again enabling digital transformation, DeFi shifts blockchain into higher gear

As vendors address clients’ needs around cost optimization and IT transformation, many are beginning to eye investing in next frontiers such as sustainability, product engineering services and blockchain for growth. However, vendors must overcome skills shortage gaps in these domains before they can move forward. We do not anticipate these domains to require vendors developing a new services category, but rather augmenting existing ones, allowing vendors to build trust with new buyers while still relying on legacy capabilities to support it. Decentralized finance (DeFi) will likely become the necessary catalyst for broader adoption of blockchain.

Further, vendors must carefully message the promises of these new technologies as they relate to their core value proposition without jeopardizing service quality and partner ecosystem relationships. This is particularly important when scaling up blockchain technologies as implementation requires trust across multiple parties.

Join Patrick Heffernan, Boz Hristov, Geoff Woollacott, Elitsa Bakalova and John Croll Wednesday, Nov. 3, 2021, as they reveal insights into and latest trends of the IT services and digital transformation markets, with IT services revenue growth accelerating ahead of prepandemic levels, setting the stage for investments and collaboration in next frontiers. The group will also discuss recent performances of the leading 30 IT services providers and the role of blockchain among the key technologies enabling digital transformation programs.

Don’t miss:

  • TBR’s overview of performance and key trends for the 30 vendors in our IT Services Vendor Benchmark
  • Deep dive on IT services vendors’ investments and activities in APAC
  • Beyond the hype of cryptocurrency, and what’s next for DeFi

Register today to reserve your space

TBR webinars are held typically on Wednesdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous webinars can be viewed anytime on TBR’s Webinar Portal.

For additional information or to arrange a briefing with our analysts, please contact TBR at [email protected].


Innovation and transformation centers: 4Q21 insights from TBR’s IT Services team

The silver lining of downward pressures that innovation and transformation centers are facing

Join Practice Manager and Principal Analyst Patrick Heffernan, Principal Analyst Boz Hristov, Senior Analyst Elitsa Bakalova and Senior Analyst Kelly Lesiczka Wednesday, Oct. 27, 2021, for an in-depth discussion on innovation and transformation centers, those places where IT services vendors and consultancies collaborate with clients and technology partners to create new business models and deploy emerging technologies to disrupt the market.

Don’t miss

  • Silver linings of all the downward pressures on in-person innovation sessions and physical centers
  • How these centers have evolved through the pandemic and what we can expect in 2022
  • Specific examples from vendors, including traditional strategy houses like McKinsey & Co. and Boston Consulting Group as well as Big Four firms, consulting-centric IT services vendors, tech-centric vendors and India-centric vendors

Register today to reserve your space

TBR webinars are held typically on Wednesdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous webinars can be viewed anytime on TBR’s Webinar Portal.

For additional information or to arrange a briefing with our analysts, please contact TBR at [email protected].


Deconstructing COVID-19’s impact on IT services and manufacturing

For IT services vendors working with manufacturers, resiliency, business continuity, security and digitalization spark new revenue growth

During 2020 the COVID-19 pandemic negatively affected IT services vendors’ revenue growth in industrial solutions, manufacturing and automotive due to country lockdowns across the globe that caused major supply chain and production disruptions. Enterprises in the sector weathered the worst of the pandemic at the beginning of 2020 and made the necessary run-the-business changes to improve operational efficiency and reduce costs. As such, IT services vendors evolved their relationships and are now working with clients to ensure their IT and workforces are modernized, secure and digitally enabled and their operations are resilient.

Uncertainty around the pandemic can continue to create disruptions like the supply chain challenges faced at the onset of the crisis. IT services vendors are capitalizing on their advise-build-run expertise to support clients during challenging times and capture growth opportunities, indicated by the revenue growth acceleration that began in 4Q20. Vendors are investing in digital twins to enhance their supply chain, digital sales and marketing as well as in AI and machine learning capabilities to offset pressure.

According to TBR’s special report Digital twins, innovation and Godzilla: 3 IT services trends for the rest of 2021, published in April, digital twins are becoming more synonymous within the supply chain of manufacturing firms as they present a hedge against unique macroeconomic factors, such as the pandemic. Larger technology vendors are finding partnerships, bringing cloud-enabled analytics to shipping, and opening opportunities for IT services vendors and consultancies. These openings allow for interoperability across supply chains, orchestration of technologies and data, and change management.

With COVID-19 disrupting global supply chains and forcing participants to seek alternative channels to either reduce transaction costs enabled by blockchain or transform IT infrastructure by migrating applications to cloud to offset technical debt and diminish financials pressure, some vendors have had the opportunity to gain a prime position. Six of the top 10 revenue leaders in industrial solutions, manufacturing and automotive accelerated revenue growth year-to-year in 1Q21 compared to 1Q20.

Accenture is gaining traction with manufacturing clients by helping them improve operational technology security and discrete manufacturing processes to optimize efficiencies. Accenture is also investing in developing, integrating and connecting smart devices that help Accenture drive Industry X-centric sales and extensions into C&SI services around analytics and AI. SAP implementation opportunities enabling agile IT infrastructure through SAP Business Suite 4 HANA and improving customer experience through SAP Fiori, illustrated by the deal expansions with Siemens Gamesa Renewable Energy and Johnson Controls, helped Infosys grow vertical sales 7.4% on an annual basis in 1Q21.

Acquisitions contribute to IT services vendors’ expansion in engineering and R&D services

The acquisition of Altran in April 2020 expanded Capgemini’s capabilities and revenues in the sector. On Jan. 1 the company established Capgemini Engineering, a new global business line and brand. Capgemini Engineering includes 52,000 engineers and scientists and provides R&D and engineering capabilities in three domains: product and systems engineering, digital and software engineering, and industrial operations.

In March Cognizant announced plans to acquire ESG Mobility, a Germany-based provider of engineering R&D servicers for autonomous and electric vehicles. The acquisition will provide Cognizant with advanced technologies to complement its existing automotive capabilities, giving the company an opportunity to upsell existing clients that are targeting growth in autonomous or connected vehicles.

Recent acquisitions, such as Eximius Design and International TechneGroup Incorporated, bolstered Wipro’s capabilities around digital engineering services and product lifecycle management, which will strengthen the company’s ability to provide client-specific outcomes in areas like industrial manufacturing, a vertical that cloud platforms are targeting for growth given the IaaS opportunity related to IoT data.

DXC’s acquisition of Luxoft in 2019 continues to enable DXC to move up the value chain as it expanded the company’s presence in Europe, deepened its expertise within the manufacturing industry and added high-value digital engineering capabilities. During 1Q21 DXC Luxoft launched a joint venture, ALLUTO, with LG around vehicle customer experience and will focus on the commercialization of digital automotive technologies, such as in-vehicle entertainment and infotainment as well as ride-hailing systems.

The 1Q21 IT Services Vendor Benchmark, which published on June 30, extends the analysis above to include how pairing technology and engineering skills and low-cost presence positions India-centric vendors for growth in manufacturing in the coming quarters and further adoption of technology partners’ solutions to advance Industrial IoT initiatives.

Note: This blog has been adapted from TBR’s 1Q21 IT Services Vendor Benchmark, which provides a quarterly assessment of leading IT services vendors’ performances and an assessment of their strategies. A newly launched Industry Views section within the benchmark provides analysis that focuses on one industry sector. In 1Q21 TBR began with a deep dive on the industrial solutions, manufacturing and automotive sector. Every quarter we will alternate industry deep dives with geo deep dives.

CompuCom and the 4 dimensions of employee experience

The future of hybrid when your home printer runs out of ink

We recently met with CompuCom, an 8,000-person technology vendor providing hardware, software and services across the digital workplace, and discussed the company’s evolving role as the nature of how and where people work changes, especially for professionals inextricably linked to and dependent upon IT. To frame the discussion — and CompuCom’s place in the IT services ecosystem, which TBR’s Professional Services team tracks closely — one of the CompuCom executives asked, “What does hybrid work really mean going forward?” The question was particularly applied to professionals using home and personal technology for enterprise-level work. While everyone seems to be asking these questions and refining their answers based on pandemic-forced experiences, CompuCom has taken a broader view, suggesting employee experience (EX) is at the heart of the issue, rather than technology.

As described by CompuCom, employee experience fits within four dimensions: technology choice, self-sufficiency, well supported, and workplace flexibility. The first dimension is centered on technology that meets employees’ needs and “securely integrates personal technology” into the workplace ecosystem. Self-sufficiency is employees’ desire to be able to get their work done with minimal friction. And well supported and workplace flexibility most clearly align with hybrid work environments, with employees needing trusted technologies they can securely use anywhere, anytime. TBR has reported on other IT services vendors and consultancies shifting focus to the employee experience, particularly during the early months of the pandemic. This framework may not be new, but CompuCom has smartly articulated what many other vendors have been trying to provide, often with more offerings and less focus.

As small and midsize enterprises look to migrate to the cloud, the desire to take advantage of emerging technologies without investing heavily in IT staff may provide an opening for CompuCom to deliver its full end-to-end solutions, including hardware from trusted brands like Dell Technologies, without the higher-end services and support price tag. Delivering multivendor device support and addressing technology choice as a component of the employee experience will further resonate with SMB clients. Managing CompuCom’s ecosystem relationships while delivering value may depend on the second revelation from the company: experience-level agreements (XLAs).  

The future of IT services when XLAs replace SLAs

Building on this framework, CompuCom has begun measuring its value to clients by the employee experience delivered, rather than standard service-level agreements (SLAs). The company has even developed persona-based, experience-level indicators (XLIs), recognizing that at any one client, CompuCom will be serving multiple persons. TBR will continue tracking CompuCom’s efforts to transition XLIs into XLAs as a widely accepted standard for replacing SLAs among its clients and the larger IT services ecosystem. 

A second point about CompuCom’s approach struck TBR as noteworthy, especially as post-pandemic trends have pointed toward IT services vendors and consultancies rapidly expanding their offerings into areas such as engineering and legal services: CompuCom intends to stay in its own lane, deliver what it delivers well and grow through bringing technology to the workplace. That sounds unradical and almost boring. As one CompuCom executive said, “We’re focused on the workplace experience.” Having a clear focus and doing what you do well, in TBR’s experience analyzing IT services vendors and consultancies, have been key characteristics of solidly performing and growing companies.

According to TBR’s Digital Transformation: Voice of the Customer Research, in the early days of the pandemic enterprise buyers shifted priorities and budget spends from improving the customer experience (CX) to improving the employee experience by ensuring staff safety and productivity measures were in place. While the pendulum swung back a bit toward CX spend in early 2021, the shift toward everything hybrid will compel all parties, including employees, to seek and offer innovative ways to collaborate within the ecosystem, thus creating channels for robust EX and driving opportunities for companies such as CompuCom. 

In the coming months, TBR intends to revisit CompuCom’s portfolio and performance in the context of the larger IT services and technology vendor landscape, particularly in relation to the U.S. market and digital transformation. 

IT Services and Digital Transformation: Insights from TBR’s Professional Services team

As vendors branch out from traditional revenue bases, enabling innovation drives investments in sustainability services, product engineering and supply chain optimization. While cloud continues to be the main technology driving digital transformation investments, buyer-vendor relationships are entering the next phase, where parties must account for new ways of engaging and delivery and opportunities are pivoting from projects to products.

Join Patrick HeffernanBoz HristovElitsa BakalovaKelly Lesiczka and John Croll as they reveal insights into and latest trends in the IT services and digital transformation markets. The group will also discuss recent performances of the leading 30 IT services providers and enterprise buyers’ priorities as they accelerate their digital transformation programs.

Don’t miss:

  • TBR’s overview of performance and key trends for the 30 vendors in our IT Services Vendor Benchmark
  • Accelerating revenue growth in sectors hit hard by the pandemic, such as industrial solutions, manufacturing and automotive
  • Enterprise buyers’ priorities in the rapidly evolving digital transformation market
  • Short- and long-term opportunity areas that will continue to drive digital transformation investments

Register today to reserve your seat 

TBR webinars are held typically on Wednesdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous webinars can be viewed anytime on TBR’s Webinar Portal

For additional information or to arrange a briefing with our analysts, please contact TBR at [email protected]