What’s going on in technology services? AI should be rocket fuel for Accenture, Capgemini, Infosys, Wipro, Cognizant et al. Even the frontier labs are building services arms to help big customers ingest the technology, which is proof that the demand for hands-on help is real. The services giants should be feasting.
They certainly talk as if they are. On their latest earnings calls, the CEOs said “AI” this many times:
Julie Sweet, Accenture: 64
Ravi Kumar, Cognizant: 81
Srini Pallia, Wipro: 57
Salil Parekh, Infosys: 56
Raul Fernandez, DXC: 31
That’s, um, a lot. Add the LinkedIn posts, the industry panels, and the investor days renamed “AI Days,” and you have the most robust sales pitch in the history of B2B.
Now look at what the pitch is producing:
Wipro is guiding to flat-to-down revenues.
DXC is guiding further down, at -5%.
Infosys just cut its full-year outlook to 1–2%.
Cognizant’s bookings fell 7%.
Accenture, the class of the field, guides to 3–6%, with a couple of those points bought through acquisitions.
US inflation is at 3.7% and the 10-year Treasury sits around 5%. That isn’t growth.
If there’s an AI party going on, these services giants are on the outside, staring through frosty windows.
During the last big technology cycle (the Internet buildout), these same firms were growth sensations, with CAGRs at 20% to 50%. What changed?
Clients are getting clear-headed about AI. They’ve split their IT in two, the way banks did after 2008. The bad bank is the old IT: application maintenance, testing, armies billed by the hour. Clients are running it for cash and clawing back every AI efficiency as a lower price. The good bank is the new AI work, and it’s going in-house or to nimbler firms whose talent and methods were born for this market. The incumbents got the bad bank. Someone else is getting the good one.
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