MNC Vendors in India – Accenture
What is Accenture up to in India? Is it differentiated from the Indian vendors or has it fallen into the commodity trap?
The answer in mixed. Accenture reports its revenues under two heads: Consulting and Outsourcing. In 2007, Consulting accounted for 60% of its $19.7 billion revenue with outsourcing accounting for the remaining 40%. This consulting revenue is the clear differentiation between Accenture and the Indian vendors.
That said, it is the outsourcing part that drew Accenture to set up delivery centers in India. Hence, if you look at what Accenture does in India and what any other Indian vendor does, there is not much difference. It is a clear commodity play, with capacity leasing as the keystone!
Check out this excerpt from the Accenture 10-K filing for fiscal 2007:
Our headcount increased to approximately 170,000 as of August 31, 2007 from approximately 140,000 as of August 31, 2006. Annualized attrition for the three months and year ended August 31, 2007 was 18%, excluding involuntary terminations, consistent with the three months and year ended August 31, 2006. We continue to add substantial numbers of new employees and will continue to actively recruit new employees to balance our mix of skills and resources to meet current and projected future demands, replace departing employees and expand our global sourcing approach, which includes our Global Delivery Network and other capabilities around the world. We have adjusted compensation in fiscal 2007 in certain skill sets and geographies in order to attract and retain appropriate numbers of qualified employees and we may need to continue to adjust compensation in the future. As in previous fiscal years, we have adjusted and expect to continue to adjust pricing with the objective of recovering these increases. Our margins and ability to grow our business could be adversely affected if we do not continue to manage attrition, recover increases in compensation and effectively assimilate and utilize large numbers of new employees.
A clear commodity play if ever there was one!
Sure, Accenture has consulting revenue of $11.86 billion, but if you work for Accenture in India there is every likelihood you are a commodity in a good campus conforming to the Accenture Delivery Suite!
In effect, Accenture has chosen to neutralize the Indian vendors low-cost capacity-leasing advantage by adopting the same model itself in India and combining that with its strong consulting capabilities in the rest of the world. Excellent business strategy to keep the Indian vendors at bay; and it is indeed a testament to Accenure’s execution ability that they have been able to combine two such vastly different cultures within the same organization successfully (this is what HP-EDS-MphasiS will struggle to do into the foreseeable future).
But, a commodity play all the same.
Note the complete absence of a product capability, as opposed to TCS (Bancs) and Infosys (Finacle)! [Products in the Midst of Commodities]
