How Accenture is stealing a march over TCS, Infosys, Wipro

Bengaluru: Indian technology outsourcing companies’ inability to find new customers even as US rival Accenture Plc is managing to do business with firms that dominate the consumer Internet, including Google, Facebook Inc. and Amazon.com Inc., again underlines the reason behind the dismal growth of home-grown companies.

Google, Facebook, Amazon, Uber and Airbnb together accounted for at least $1 billion of Accenture’s $32.9 billion in revenue for the year ended August 2016 (Accenture follows a September-August fiscal), said an executive familiar with the development who declined to be named.

This is significant because until a few years ago, none of these five firms spent much on technology outsourcing.

One reason behind slow growth at Tata Consultancy Services Ltd (TCS), Infosys Ltd and Wipro Ltd is their inability to generate enough business from any of these new-age companies, which are disrupting the business models of many of the Fortune 1000 incumbents (which in turn are customers of Indian technology companies).

A strong consulting practice and early investments in new technology areas, like data analytics and design capabilities, eventually helped Accenture offer solutions, swiftly, in what is commonly called microservices architecture.

As firms like Google and Uber have been following the microservices model for a few years now, Accenture’s ability to offer solutions using the same approach towards writing code makes it the preferred partner for these firms, said the executive cited above.

Microservices can be described as an approach where the underlying code for applications is designed, built and deployed as a simple set of autonomous services.

Under microservices offerings, for example, Accenture helps a team at Google working on Google Maps or Google Translate write code using application programming interfaces (APIs). APIs allow two computers or services to “talk” to each other or exchange data.

“(Accenture) does not make these client numbers public but these five companies bring in over a $1 billion,” said the executive cited earlier, who declined to share the revenue Accenture gets from each firm, but added: “You should remember that few of these companies were not even born in 2005. So until a few years back, most of them were not even spending much.”

“A strong consultancy practice helps because you can scope a deal even before a RFP (request for proposal) is sent. But an even bigger reason is microservices. (Accenture’s) strength in microservices is helping because all these companies, be it Google, Facebook or Uber, have been using microservices architecture,” said a second executive, who also declined to be named.

An aggressive acquisition approach also helped Accenture, which does as much business as TCS, Infosys and Wipro put together, report a 6% dollar revenue expansion last year. TCS and Wipro are expected to report at-best 6% and 5% growth in the year ended March, with only Infosys expected to grow a tad faster at 7.4%.

“Using APIs, message queues, these microservices are orchestrated and managed. They often come from multiple sets of programming languages, models, frameworks and data stores,” said Ray Wang, founder of Constellation Research, a technology research and advisory firm.

“Microservices is similar to the old world of application development and maintenance; however, instead of building a solution in six months, we’re talking six days to six weeks. Microservices involves massive staff augmentation work and, in some cases, priced out as annuity-based projects. Going forward, we will see the work take shape in more AI-driven patterns and models, where AI is used to generate new code based on the patterns and applied to testing and development,” Wang added.

An email sent to the five firms on Friday seeking comment remained unanswered.

An Accenture spokesman declined to comment on client contribution, and said: “We continue to make significant investments in new and high-growth areas across Accenture—especially digital, cloud and security services, which together now account for more than 40% of total revenues and grew at a very strong double-digit rate in the quarter (September-November).”