W e are not only playing good defense, we are playing offense - Bill Green, Chairman and CEO of Accenture, June 25, 2009.
Green’s rugby-speak should send quavers across India’s software companies, which have nibbled away business from big technology consulting firms such as Accenture and IBM over the past 15 years.
A few months ago, Accenture started a new business unit named Concadia.
This new unit will use the very same technique that the Indian firms employed to penetrate in to the cozy club of IT services to turn the tables on them.
Through Concadia, Accenture has started offering IT capacity expansion services which analysts call staff augmentation services.
Which others call body shopping.
Headed by Vinod Bagal, a managing partner who has been with Accenture for over 15 years, Concadia has taken the industry by surprise. “People are surprised to hear that Accenture is offering staff augmentation services,” says Frances Karamouzis, vice president of research at Gartner. “This business is really about offering the lowest price for a software developer and Accenture typically never competes on price”.
The company’s Web site promotes Concadia’s just-in-time capability to deliver people to clients. Beyond this, the company declined to give details of the business plan or revenue targets from this unit.
The world’s largest technology consulting firm, which employs 177,000 people in 120 countries and has annual revenues of $23 billion, is certainly taking its new unit seriously. It has put Bhaskar Ghosh, a former Infosys hand who joined Accenture six years ago, as its delivery head in India. Industry sources say that Ghosh’s team in India is 200-strong now.
This shows Accenture has truly woken up to the threat from Indian companies. “(A) few years ago, Indian companies were not even on the radar of companies like Accenture,”says Thomas Davenport, professor and director of research at Babson College, Massachusetts . “Things have definitely changed in the meantime.
Indian IT firms have put pressure on margins of these firms,” Davenport, who was once a partner at Accenture, says.
But how come this is a game changer?
Management and technology consulting firms like Accenture have been “moving down” to add outsourcing services ever since Indian outsourcing companies started “moving up” to add consulting services. This was helped by pressure from clients who told the consulting firms to help them cut costs continuously.
Concadia is a direct threat to companies such as Tata Consultancy Services, Infosys and Wipro.
These rivals desire to upstage the likes of Accenture in the end-to-end solutions business and Accenture has picked up the gauntlet. “Global companies have figured out how to work the global delivery model, and Indian companies need to come up with a new trick if they want to stay with their above-20-percent margins” says the consulting head of an Indian IT firm.
In an email response to a questionnaire, Accenture’s corporate communications official Alex Pachetti says, “We are providing the services to our clients that are asking for this type of service. Not all clients ask for this. We are not chasing the opportunity. We will see over time what the level of demand is.” The main challenge for Accenture is that given its consulting DNA, it will be extremely difficult to sell this low-value service.
To overcome this problem, Concadia is already hiring sales people from Wipro and Infosys.
(With inputs from Neelima Mahajan-Bansal)