Accenture aims for bigger outsourcing customers

Accenture Canada wants to convince enterprise customers it is ready to build upon its experience in outsourcing to handle the IT infrastructure chores managed by larger firms such as IBM.

On Friday the company is hosting a private event in Toronto in partnership with Microsoft where clients will be given an overview of what executives call its “global sourcing model.” This includes the use of facilities in everywhere from Canada and Latin America to China and the Phillipines to run, maintain and manage business-critical software and the hardware platforms underneath them. The day will include a presentation from Scotiabank, a recent customer, and the company will allow announce it has secured an outsourcing contract with one of Canada’s largest insurance firms, though the name of the client will not be revealed.

Sanjay Tugnait an Accenture Canada executive in charge of the application outsourcing practice, among other areas, said the event is intended to reposition the firm among large companies.

“A lot still have the accounting, the mindset that Accenture is a high-value consulting organization,” said Tugnait, referring to Accenture’s origins as a spin-off of former accounting firm Arthur Andersen. Tugnait added that 45 per cent of Accenture’s revenue comes from outsourcing. “A lot of these facts are not truly penetrated right down to all the levels in the market.”

Accenture hasn’t really focused managing IT infrastructure in the past but is doing so now because more clients want the company to act as a single service provider, Tugnait said. The top 20 companies in Canada have all done some form of outsourcing already, he added, which means there is often an appetite to hand off more functions. 

“Any CIO or any CEO is asked by the board, ‘Have you done global sourcing?’” he said.

Stephanie Moore, a Forrester Research analyst who will be discussing outsourcing trends at the event, said Accenture has thrived in areas like application outsourcing, where projects come out of lines of business rather than the IT department. Such clients tend to be more selective, which means firms like Accenture may have to work harder to win the lion’s share of the business.

“People aren’t going to outsource their data centre to Accenture the way they do the IBMs of the world,” she said. 

Tugnait said Accenture clients are looking for integrated knowledge as well as domain competence of business and technology issues. This includes specific knowledge of insurance business processes, for example, or the drug discovery processes conducted at pharmaceutical companies.

“It’s not just an IT thing anymore,” he said. “The business users are there to define requirements, the end goal of what needs to be delivered on and within the specific phase when we look out and test it.” 

Moore said Accenture will face more competition as big outsourcing firms look for more lucrative opportunities.

“Infrastructure is what people did first, but that has really become commoditized. The margins aren’t very high in that business,” she said. “It’s really a price game. One person supports a mainframe as well as the other person.”

Recent Accenture application outsourcing wins include contracts with XM Radio and EnCana.

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