Gazing into the crystal ball

Road to the final four in global, managed services

Another industry consolidation story will play out further in global networking. Four “brackets” are in the midst of major streamlining within their own sectors: technology solutions (Cisco, Dell, IBM); telecom networking (AT&T, BT Global, Equant); professional services (Accenture, CapGemini, IBM); and the Indian BPOs (Infosys, TechMahindra, Wipro). We now are even seeing some cross-bracket deals, such as HP/EDS. I see at least five more major deals announced in this space.

So what happens now?

Other priorities for the telephony sector will continue, but they are largely incremental. They include upgrading the customer experience, streamlining global supply chains for gear, “best shoring” of knowledge workers and finding ever more ways to build profit cushions in a hypercompetitive marketplace.

In 2009, this sector needs to commit to excellence in execution on the above evergreen priorities while also keeping an eye on the horizon: the fundamental crystal ball issues and opportunities. This year poses structural and urgent challenges for us all, but I view it as a year of much-needed sector housecleaning, which will set the stage for higher capital productivity and greater market benefits in the longer term. The future is getting less cloudy each day.

Alex Liu is a partner at A.T. Kearney and leads its communications, media and high technology practice in North America. For more of his predictions, read an expanded version of this column at telephonyonline.com.