The "glamour" in projecting Generative AI (GenAI) services for IT service companies isn't just about the technology itself; it's about fundamentally recasting their role from a simple implementer to an indispensable strategic partner.
This new narrative allows them to sell a "corporate fantasy"—a complete, top-to-bottom redesign of the client's business. This is a much more "glamorous" and lucrative position than just managing IT infrastructure.
These are built on four key projections:
Selling a New Business Paradigm: The pitch is no longer an "IT upgrade"; it's the "largest organizational paradigm shift since the industrial and digital revolutions". Service firms are selling the concept of the "Agentic Organization", a future where AI-first workflows operate at "near-zero marginal cost" and AI agents become a core part of the workforce.
Elevating Their Role to "Reinvention Partner": This narrative shifts the service firm from a commoditized vendor to a "reinvention partner of choice". As noted in the analysis of the consulting industry, this allows them to capture the 60% of GenAI budgets allocated to high-margin "consulting and planning" rather than just development. Accenture, for example, now frames its business as "Reinvention Services" and splits its revenue almost equally between "consulting and managed services".
Owning the "Master Blueprint": GenAI is a "general-purpose technology" that impacts the entire enterprise value chain. This gives service firms a "master blueprint" to sell services into every function, from "Order to Cash" and "Supply Chain" to "Human Capital". They can sell the complete transformation, including upskilling the client's new "Agentic Workforce" with roles like "M-Shaped Supervisors" and "T-Shaped Experts".
Selling Proprietary "Magic" (Not Just COTS): Instead of just implementing someone else's Commercial Off-the-Shelf (COTS) software, the new glamour comes from selling their own proprietary platforms. HCLTech does this with its "AI Force" platform, and Accenture has its "AI Refinery". This "Custom Off-the-Shelf" model makes them a product company, not just a service provider, which is far more glamorous and creates strong client lock-in.
GenAI Revenue Classification System for Consulting & IT Services
This system classifies GenAI revenue into three primary pillars, reflecting the models used by firms like Accenture and HCLTech. It is designed to capture revenue at every stage of the client's journey, from initial strategy to long-term operations
Pillar 1: GenAI Strategy & Advisory (The "Consulting" Pillar)
Focus: High-margin, C-suite advisory to define the "why" and "what." This maps to Accenture's "Strategy and Consulting" and HCLTech's "AI Labs" and GRC services.
L2: Service Category
L3: Example Service Offerings (as sold to clients)
AI Strategy & Value
• GenAI Use Case Prioritization: Identifying high-value, feasible GenAI opportunities (e.g., "Slam Dunks" vs. "Maybes").
• AI-Led "Reinvention" Roadmap: A "future-back" design for an "Agentic Organization," moving from legacy to AI-first models.
• AI ROI & Funding Model: Building the business case, ROI framework (e.g., "Cost Savings," "Productivity"), and funding models.
AI Governance & Responsible AI
• Responsible AI Framework: Designing and implementing "Responsible AI by Design" principles and governance structures.
• AI Governance, Risk & Compliance (GRC) Service: Establishing policies and audit frameworks for "agents controlling agents" to meet standards like the EU AI Act or NIST.
• AI Model & Bias Assessment: "Red teaming" and auditing models for bias, fairness, and hallucinations.
AI Talent & Workforce
• AI Upskilling Programs: Enterprise-wide training for "AI Builders," "Executives," and "AI Power Users".
• Agentic Workforce (Re)Design: Designing new operating models and talent profiles like "M-Shaped Supervisors" and "T-Shaped Experts".
• AI-Led Change Management: Managing the cultural shift and "building trust between humans and AI agents".
Pillar 2: GenAI Implementation & Co-Creation (The "Technology" Pillar)
Focus: The core "build" and "professional services" revenue. This involves building the platforms, models, and AI-first workflows.
L2: Service Category
L3: Example Service Offerings (as sold to clients)
Platform & Data Foundation
• Data & Cloud Modernization: Building the "modern data foundation" required to "fuel" AI models.
• AI Platform Implementation: Deploying and customizing platforms like "HCLTech AI Foundry" or "Accenture AI Refinery".
• "Custom Off-the-Shelf" Platform Dev: Building modular, "Al-assisted, easily customizable" applications that avoid COTS "feature bloat".
Application & Process Transformation
• GenAI for SDLC: Using "AI Force - Software" to accelerate the software lifecycle (e.g., code generation, automated testing).
• Legacy Modernization: Using "AI Force - Software Mod" to "reverse-engineer" and modernize legacy systems.
• Agentic Process Automation: Deploying "AI Force - BizOps" to automate and redesign core value streams (e.g., "Order to Cash," "Supply Chain").
Custom Model & Agent Development
• Custom LLM/SLM Development: Fine-tuning and "refin[ing] LLMs" with proprietary client data for specific business contexts.
• "AI Agent Builder" Service: Creating "squads" of specialized AI agents ("Critic Agents," "Compliance Agents") to automate complex tasks.
• Physical AI & Robotics: "AI Engineering" services for designing AI-enabled hardware and robotics.
Pillar 3: GenAI Managed Services & Operations (The "Operations" Pillar)
Focus: Recurring revenue from running, managing, and optimizing GenAI solutions. This maps to Accenture's "Operations" and HCLTech's "Managed Services".
L2: Service Category
L3: Example Service Offerings (as sold to clients)
AI/ML Operations
• Model Monitoring & Tuning (MLOps): Ongoing "AI/ML Operations, Model Management, & Value Realization".
• "AI Force - ITOps": A managed service for "proactive, self-healing IT environments" and "autonomous remediation".
• GenAI FinOps: A managed service to monitor and optimize "tokens consumed and dollars spent" on LLM consumption.
AI-Enabled Business Process Ops
• AI-Augmented BPO: Operating entire business functions (e.g., customer service, finance, procurement) on behalf of a client, using an "AI-augmented frontline" workforce.
• Agentic AI as a Service: Managing a client's "agent factory" and automated workflows as a recurring service.
Platform & Governance as a Service
• Managed AI Platform: Hosting and managing a customized "AI Force" or "AI Refinery" platform for a client.
• Managed AI GRC Service: Providing "real-time" compliance and governance monitoring as an ongoing service.
This video provides an overview of how HCLTech is using its AI Force platform to transform the software development lifecycle, a key part of the "Implementation" pillar.
Just came across the report from Royal Society, - the UK's national academy of science, - Hidden Wealth: the contribution of science to service sector innovation. Innovation to services and its linkage to hard sciences happens to be one of the core focus area of this report. This excellent report presents the findings of a major study on the role of science, technology, engineering and mathematics (STEM) to innovation in the services sector. One of the pioneering and comprehensive investigations of the impact assessment of services innovation in the current age . Why is service sector economy so important? Let’s look at the significance of this : Over 2/3rd of the global economy (GDP)is centered around services with developed countries seeing a greater percentage of service sector contribution to their national economies. By far the single largest employing sector in the developed world, the significance of service industry cant be overlooked. It goes without saying that the competitiveness of service sector along with government policies and implementation efficiency would to a great extent determine the competitiveness of the nation. The study revealed that STEM is omnipresent in the service sector, but, unlike the case in the industrial sector, its impact is rarely recognized. The Hidden Wealth study, points out that despite the great significance of services to global economy, their nature remains somewhat undefined and is invisible under a majority of circumstances ! Employment and economic vibrancy in developed countries hinges on service sector and hence this is an important body of study and the findings very relevant and useful to developed nations in large measures and by extension to global economy.
The report reinforces the traditionally held view about service sector :"Our main conclusion, . . . is that services are very like to remain central to the new economy, not least because we are at or near a tipping point: innovations now underway seem likely to change dramatically the way we live and to generate many services (though few can be predicted in detail at present). . . ."
"Scientific and technological developments have triggered and brought about major transformations in services industries and public services, with the advent of the internet and world-wide-web . However, the full extent of STEM's current contribution is hidden from view - it is not easily visible to those outside the process and is consequently under-appreciated by the service sector, policymakers and the academic research community. This blind spot threatens to hinder the development of effective innovation policies and the development of new business models and practices in the UK."
Services rely significantly on external STEM capabilities to support or stimulate innovation - indeed they tend to innovate in more external and interdependent ways than manufacturing firms. This can take the form of bought-in expertise or technology and collaborations with suppliers, service users, consultants or the public science base. Through these ‘open innovation’ models, service organisations respond to the knowledge, science, and technology that they see being developed elsewhere (eg in other companies or universities), and use collaboration to solve their problems in innovative and competitive ways.” The Hidden Wealth report eloquently makes the case that most of the economic value of breakthroughs in science and technology will likely be realized through services, and thus, this is the area around which most new, high paying jobs will be created. In conclusion: “The main message of this study is that the contribution of STEM to service innovation is not an historic legacy, nor simply a matter of the provision of ‘human capital - important as the latter may be. STEM provides invaluable perspectives and tools that will help to nurture emergent service models and define future generations of services for the benefit of businesses, government, and citizens.”
Months back, Bob Cringley wrote IBM- Disaster In The Making. In an update post he writes, problems continue to abound within IBM writes,Bob Cringley. He thinks that close to last weeks layoffs of 1300 people,another 100,000+ layoffs would no later than the end of this year. He explains,LEAN, an IBM initiative is aboutoffshoring and outsourcing at a rate never seen before at IBM. He estimates that for one overseas hire within global services, one may get the axe in the US. This, he contends is aimed at eliminating 150,000 posiitons within the US. He adds, initiatives are on within IBM to identify common and repetitive work now being done that could be automated or moved offshore, and to find work Global Services is doing that it should not be doing at all. Implicit in LEAN is that Global Services will be eliminating not just employees but customers, too - customers whose contracts were underbid and whose projects may never be profitable for IBM.All this is supposed to happen by the end of 2007, by the way, at which point IBM will also freeze its U.S. pension plan. there is a broad expectation at all levels of IBM familiar with the LEAN plan that it will cause huge problems for the company. He concludes that this may just speed up the death spiral of IBM. (All these are Mr.Cringley's view).
In the follow up post to this, let's see whats changing in the services marketplace.
Sadagopan's Weblog on Emerging Technologies, Trends,Thoughts, Ideas & Cyberworld "All views expressed are my personal views are not related in any way to my employer"
