George Schindler: Yes, it’s a great question. We are looking at M&A in both government and commercial. I wouldn’t say we’re favoring government because we like having a good mix of industries out there. But — but at this point, yes, government, we’re going to play into that. And so we do have a set of government opportunities in our active funnel right now.
Richard Tse: Okay and then with respect to the rise of AI, just kind of curious to see what proportion of bid engagements are asking you to address that and how would it eventually kind of impact the margin profile? Like does it have kind of incremental margin upside and those type of engagements? I’m just trying to understand like where we are with your enterprise customers.
George Schindler: Yes. So there’s kind of two aspects of AI, right, introducing AI into the solutions. And like I said, I think everybody is interested in and seeing how they can leverage that, particularly in the operational type solutions. And so that’s a lot of our IP, right? We’re doing a lot of our IP is in the operational efficiencies for our clients. And so we’re introducing a lot of AI, and that’s very welcomed by them in those types of solutions because they’re interested in kind of proving out some of these cases and business cases. And so that’s something that we’re — is an element of those. And of course, given that it’s in high demand, yes, there’s an element where accelerating those comes at a slightly higher margin profile.
So that’s the good news there. But there’s also the opportunity for us to use AI in our own delivery, in the delivery of everything that we do. So we’re looking at that from bidding proposal support to co-design and testing, documentation, code generation, code migration. So that’s the opportunity for, I think, margin improvements, especially as you do that on an outcome-based solution sale. So that’s really the opportunity, I think, for us it’s twofold, right? It’s introducing that for our clients into the profile. Now what I would say is we’re still seeing pilots that some of the enterprise clients are maybe doing that at a little more of the scale, larger implementations. We are seeing that at some of the larger implementations. But there still tend to be smaller point projects and absolutely still experimentation when you’re talking about customer-facing AIUs. So this is our clients to their customers.
So I think it’s still — that’s why I mentioned it’s the early days, but it’s certainly — there are opportunities here for sure.
Richard Tse: Okay, great. Thanks for the insight.
George Schindler: Yes.
Operator: Thank you. [Operator Instructions] And your next question will be from Jason Kupferberg at Bank of America. Please go ahead.
Tyler DuPont: Hi, good morning George and Steve. This is Tyler DuPont on for Jason. Thanks for taking my question. I wanted to start by asking about visibility into calendar 2024 client budgeting decisions. It seems like based on your comments that backlog is rising quite steadily and nicely, but some clients more cautious on pulling the trigger on converting some of those budgets into actual spend. I’d be curious sort of how this current environment compares to previous time periods and when you believe the visibility to firm up more substantially as we look through the year?
George Schindler: Yes. Well, I said this for several actually years, I think, is that I think that IT, just given the nature of how important it is to the business It’s, in general, not seen as discretionary of course, within the spend, of course, there’s discretion — but in general, it’s not seen that way. So I think you’re going to see a more rapid — you didn’t see as deep of a slowdown despite some of the uncertainty. And I think you’ll see a faster ramp back up. When that happens, I can’t call. I think you’re going to see some of that in the back half of the year. But that’s the discussion we’re having. So you’re right, we’re building that pipeline and not pulling the trigger yet. But I really believe it’s going to be a little bit faster.
I think everything happens faster in today’s world. But I think you’re going to see that happening a little quicker than some of the prior cycles. Even their buying is different, right? The way we execute projects, the way they buy projects is different than it was in previous economic slowdown. So that’s kind of what I see. Of course, I can’t call that. But that’s what I would anticipate.
Tyler DuPont: Sure. Sure. That’s super helpful, thanks. And I guess as a follow-up, I’d be curious to hear more about the pricing dynamics you’re seeing given the current demand environment? I know based on, again, comments, it seems like SI&C project is a little bit softer with clients favoring more matter services at the moment, understandably I’d be wondering if there’s any pricing concessions being made in SI&C to secure the deals that do exist. And maybe if you can sort of juxtapose what you’re seeing there versus the strength of the managed services deals.
George Schindler: Yes. We’re not really seeing them. I mean, I guess there would be two things, right? There’s the SI&C deals that are more focused on cost optimizations. We’re selling those and is ROI-led and so we’re pretty good at doing that. And so it’s still — although it’s not a managed service, it’s still driven kind of outcome based. And so you can — the pricing is different in those situations. And then the other SI&C that’s going on is pretty important and quality becomes very important. The time to deliver becomes important. And so we’re not really seeing big concessions on those projects wholesale. Of course, there’s always bad behaviors, I would say, by — in any given bit. But in general, we’re not seeing that. You see our our actual bill rate efficiency is holding pretty steady. We’re not seeing a rising rate environment like we saw a year ago, but we’re not seeing degradation right now.
