Accenture Shifts Growth to India
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Tech service firm’s employee strength in India will be 35,000 vs. 30,000 in the U.S. by August.
By Kalpana Shah
RedHerring.com
January 29, 2007
On his maiden visit to India, Accenture CEO William Green told reporters in Bangalore on Monday that the consulting giant would continue to hire new employees in all geographies this year, but that the numbers would be highest in India.
At the end of the fiscal year, which falls in August, the Indian operations will have added at least 8,000 new employees to take the figure from the current 27,000 to a new high of 35,000, surpassing for the first time the number of employees in the United States.
“Twenty years ago, when we first came to India [as Arthur Andersen], this was an outpost,” Mr. Green said. “Today, it is the flagship of our global delivery network.”
In Asia, Accenture also has 8,000 employees in the Philippines and about 14,000 in China, said Basilio Rueda, senior managing director of Accenture’s global delivery network. The company is looking at Vietnam as the next destination to hire smart people, he added.
Mr. Green said that global outsourcing demand continues to be a strong trend as companies look to improve their quality and service by cutting costs. “There’s more work to be done than we can take on,” he said. He sees strong demand from Japan, growing interest from Europe, and no sign of a slowdown in the U.S.
After the tech meltdown in 2002 and the rise of Indian offshore software services firms such as Infosys, Wipro, and TCS (Tata Consultancy Services), Accenture has ramped up its back-office operations from India to take advantage of the wage arbitrage opportunities that a lower-cost workforce can bring to the table.
But Mr. Green said the focus this year will return to Accenture’s lucrative consultancy business. “We want to re-energize this business,” he said. “We see that it is this unique strength of ours that is difficult [for competitors] to replicate. And we see tons of opportunities to drive this business out of India.”
Despite the announcement, shares of Accenture fell $0.14 to $36.39 in recent trading.
Homegrown Growth vs. Imported
India’s homegrown software giants have been growing at 30 percent a year for the last few years and have understood the need to offer high-value services such as consulting. Other global competitors of Accenture are also active in India.
IBM, Accenture’s closest competitor, had 53,000 employees in India as of December 2006. In June of last year, IBM declared it would invest $6 billion in India over three years to increase outsourcing services and client management from the country (see IBM Invests $6B in India).
EDS, another competitor, has chosen the inorganic route to growth by acquiring software services firm MphasiS in April 2006 (see EDS Offers $380M for MphasiS).
When asked about Accenture’s investment plans for India, Mr. Green made an oblique reference to IBM, saying: “Companies make statements giving happy numbers, but who knows what they are actually doing on the ground. We don’t calculate such figures. However, we do spend a billion dollars every year in training our people and on R&D.”
Much of that was flowing to India, he implied, because last year the company also decided to locate a research lab in Bangalore.
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