Accenture: Using terminology as a competitive differentiator

I'd like to reference two articles in this blog post if I may. The first was written by Stuart Lauchlan of Diginomica entitled 'Don't mention the outsourcing, but dig deep into digital at Accenture'. In this article, he credits Accenture with entering the 'digital' market early as it is now reaping the rewards of strong, consistent growth. Lauchlan later goes on to recall how Pierre Nanterme, Accenture CEO, chose to abandon traditional terminology such as 'consulting' and 'outsourcing' as he believed they did not represent Accenture's true capabilities. My initial reaction to this is that it was a clever and easy move to make. Although there has been significant changes in the IT world, does Accenture still outsource? Yes. Does Accenture still consult? Yes. Nothing has changed drastically, yet it has re-branded its marketing strategy to align itself with market demand.

The second article I'd like to refer to was written by Varun Sinha entitled 'How Accenture Has Emerged as a Threat to Infosys, Wipro'. Like the former, this was written following Accenture's quarterly earnings announcement and it goes on to describe how Accenture's growth both signaled a growing market for India-led vendors but also increased competition as Accenture continues to grow faster. It is touched upon briefly in this article but what struck me was the notion of whether Accenture's decision to abandon traditional terminology was a way of differentiating itself from traditional, India-led competitors.

Instinctively, when you hear the word 'outsourcing', it leads you to the thought of reducing operations in one country in favor of a lower cost country. This fundamental thought process was originally a competitive differentiator for India-led organizations but with Accenture's repositioning of terminology, it can now bask in the perceived imagery of higher value services at a premium.

Finally, I looked at relative R&D spend statistics among some of the largest IT services vendors to see whether this repositioning was potentially supported by investment. Although it doesn't go into detail of how R&D was spent, Accenture's R&D spend as a percentage of its annual revenue rose from 2.01% (2012) to 2.50% (2013), a rise of over $150m, before settling back down in 2014. Other vendors had either reduced/maintained R&D spend or increased its percentage as part of a lower annual revenue whereas Accenture saw a rise in both. Although not conclusive, this suggests that Accenture could have invested in digital technologies to support its marketing efforts.

I commend Accenture for the foresight to take this step. The question I'd like to leave you with is this: 'Which era will we be entering next?' Maybe 'virtual services' for example? I'd love to hear what you have to think so please leave your comments below and if you've enjoyed reading this post, feel free to share it on social media.

Best Regards,

Jonathan Cordwell
Research Analyst, Healthcare Strategy
ResearchNetwork, CSC

1. Diginomica, Don’t mention the outsourcing, but dig deep into digital at Accenture, http://diginomica.com/2015/06/26/dont-mention-the-outsourcing-but-dig-deep-into-digital-at-accenture/#.Va0P7PlViko, 26th Jun 2015
2. NDTV Profit, How Accenture Has Emerged as a Threat to Infosys, Wipro, http://profit.ndtv.com/news/corporates/article-how-accenture-has-emerged-as-a-threat-to-infosys-wipro-775537, 26th Jun 2015