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
- 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
- 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
Hej, Hallå, Hallo and Namaste! Welcome to a new blog post from the Health Care Bear! After potentially destroying several languages in the first sentence, I'd like to introduce today's topic: The rise of India-led pureplay vendors in the Nordics. Although this can be classed as a cross-industry topic, it has significant relevance to the Healthcare vertical as well so stay with me.
India-led pure plays have been making inroads into the Nordic private sector over the past few years and so I wanted to write a blog post pointing at a few drivers for their success. Enjoy...
Cost reduction is a top priority in the Nordics: CIO surveys from the likes of Gartner and IDC all highlight the fact that organizations in the Nordics are looking to reduce costs. It is also clear that they are looking to achieve these cost savings through making business processes more efficient. It goes without saying that India-led IT vendors thrive in low cost engagements and so this trend plays to their strengths. Other vendors however can capitalize on other priorities such as a need for agility on a smaller scale due to numerous large scale IT deployments being unsuccessful in the private sector.
Organizations generally indifferent to cloud: Cloud has taken the world by storm. Despite security concerns still present in the market, it is quickly becoming the norm (that rhymes by the way.) I'm sure this is not an isolated case in the Nordics but a lot of organizations are of the opinion that they are being evermore forcefully nudged into deploying cloud solutions. With IT providers looking to capitalize on this global trend as well as smaller niche providers offering only SaaS solutions, it seems to them that they don't really have much choice. Nordic CIOs are indifferent as to which solution to choose as long as it reaps the results they are looking for. Cloud is no longer a differentiator and so if IT infrastructure is disappearing, what's stopping clients from choosing an India-led vendor? Other aspects such as onshore presence, local knowledge and scalability are important but cloud is levelling the playing field.
High percentage of CIOs reporting into CFOs: There is a higher percentage, compared to other regions, of CIOs in the Nordics reporting into CFOs. It may seem as though I'm repeating myself here but this plays well into the hands of India-led vendors as CIOs will take a much more black & white approach to selecting a vendor based on financial viability and efficiency. Public sector CIOs in the Nordics hold substantial IT budgets and so if the likes of Infosys, TCS, Wipro etc are able to break into the Public sector based on their success in the Private sector, they would be able to use this mentality to their advantage and the competitive landscape could drastically change.
That's all for today, I hope you enjoyed this latest blog post. If you did, then please share on social media with your colleagues. Many thanks for your time, look forward to posting again shortly.
Best Regards,
Jonathan Cordwell
Research Analyst, Healthcare Strategy
ResearchNetwork, CSC
Bonjour everybody and welcome to another Health Care Bear blog post. Today we shall be looking at the India-led IT Consulting and Services multinational, Infosys. Infosys has been through a tough few years recently, which has gradually pushed it towards the back of the line when it comes to winning Healthcare business. Granted, its strengths lie more in the manufacturing space but without a doubt, it does recognize the growth potential in Healthcare. So today I am going to be looking at a few areas which have hindered Infosys' Healthcare business. If you have any comments then please feel free to leave them below as I'd love to hear what you think. Let's get started...
Constant reorganization: Although not necessarily directly related to Healthcare, the image at the top of this blog post shows that there has been a lot of top-level reorganization within Infosys over the past few years. Whilst it focuses on restructuring its internal workforce to position itself for future growth, it cannot properly focus on winning new business in Healthcare and will suffer from leadership inconsistency. If these recent changes weren't enough, Infosys recently announced that it will be once again restructuring its business from the 1st April 2015. Despite the potential benefits of this restructure such as enhanced flexibility, its clients may once again suffer. At a time when it is looking to renew core existing contracts, this is very inconvenient timing. Such is the desperation of keeping hold of these clients, the CEO himself is even taking charge of around a dozen top customer projects.
Underdeveloped solution portfolio: In the past year, Infosys launched just two healthcare-centric platforms; Clinical Trial Supply Management and Osteoporosis Solutions. Over the same timeframe, Infosys won only two engagements; a contract renewal with the District of Columbia for health information exchange (HIE) and an ERP deal for implementation services with L.A. Care Health Plan. Such lackluster effort for a vertical which it recognizes has growth potential is disconcerting, especially when you see competitors such as Cognizant and IBM make strides through acquisitions and expanded capabilities in strategic areas such as cloud. It can no longer rely on its previous BPO success and must innovate to just keep up.
Startup acquisition strategy: This seems to be a trend among many India-led IT service providers. They are looking to invest in the "next big thing" in order to bolster their innovation credentials and pull away from the pack. According to the Economic Times, Infosys has a $500m fund to invest in startups pursuing disruptive ideas. Due to Infosys falling behind the pack over the past few years, this is a survival strategy. It's reportedly failed acquisition of TriZetto to fellow India-led competitor Cognizant potentially exhibited an appetite for larger acquisitions but due to its investment in other startups, it looks as though it will stick with partnering in Healthcare. Meanwhile, Cognizant's acquisition of TriZetto is enabling it to pull away from the India-led pack and take a high-value-add approach with further onshore presence. Unless Infosys finds a diamond among the coal or invests in an established player, it may stay in limbo and be forced to rely on its network of partnerships to win business in Healthcare.
That's all for today folks! Many thanks for taking the time to read my blog, it's very much appreciated. If you did enjoy it and found it useful then please share it on social media as it would greatly help.
Best Regards,
Jonathan Cordwell
Research Analyst, Healthcare Strategy
ResearchNetwork, CSC
- Business Today, Missing Murthy, 17 Feb 2013, http://businesstoday.intoday.in/story/infosys-woes-profit-revenue-growth/1/191782.html
- Zacks, Infosys (INFY) to Restructure Business: Time to Buy?, 9 Feb 2015, http://www.zacks.com/stock/news/163721/infosys-infy-to-restructure-business-time-to-buy
- Times of India, Infosys, Wipro set to enter Rs 12,000 crore renewal ring, 6 March 2015, http://timesofindia.indiatimes.com/tech/tech-news/Infosys-Wipro-set-to-enter-Rs-12000-crore-renewal-ring/articleshow/46476526.cms
- TBR, Infosys PSBQ 4Q14, 2 Feb 2015
- Economic Times, Why Wipro, TCS, Infosys are wooing retail, healthcare startups and investing in them for survival, 11 Feb 2015, http://articles.economictimes.indiatimes.com/2015-02-11/news/59043865_1_startups-wipro-ceo-tk-kurien-silicon-valley
