Accenture not immune to challenging economic times

Peter Dinham
Sunday, 29 March 2009 11:22

IT Industry - Deals

The report further observes that, while some IT players, such as IBM or HP, have earned a reputation for their R&D investments and developing groundbreaking technologies, Accenture may not necessarily lead in services innovation, but prefers to save and invest in more applied approaches that can help clients in the short-term.
 
“Additionally, Accenture has historically stayed away from major acquisitions and focuses on ‘tuck-in’ acquisitions (not usually exceeding $600 million a year) to expand its expertise in specific functional areas or expertise.

“It appears that Accenture will stay true to its approach and will observe from sidelines merger discussions of IBM and Sun, as well as Satyam and BearingPoint sell off and potentially missing out on the consolidation in the industry. “

TBR observes that, overall, it believes Accenture remains one of IT services leaders given its general adaptability to changing market environments and that over the years, the company successfully and timely reinvented its business model and had remained relevant for its clients.

“In the last IT downturn in early 2000s, outsourcing became key to Accenture’s differentiation and success. This time around, Accenture will need to re-start its consulting engine (most of declines in the quarter came from consulting unit) and TBR believes outsourcing will need to pick up as well.   Just like in the past, Accenture will aim to benefit from strong client demand for its brand name and reputation. “

However, at the same time, TBR says it does not underestimate the changing landscape and competitive pressures.

“Deloitte is becoming stronger through its acquisition of BearingPoint parts, IBM may acquire Satyam and Sun, HP Services’ acquisition of EDS is going well, while the Indians are regaining strength too. TBR believes all these companies and market environment will continue to keep Accenture awake at night. “