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Kevin Campbell | Indian IT firms’ best margin days are behind them

Kevin Campbell | Indian IT firms’ best margin days are behind them
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First Published: Fri, Apr 29 2011. 01 20 AM IST

Road ahead: Campbell says being global is a challenge.Photo Aniruddha Chowdhury/Mint
Road ahead: Campbell says being global is a challenge.Photo Aniruddha Chowdhury/Mint
Updated: Tue, May 03 2011. 08 02 PM IST
Bangalore: Accenture Plc’s revenue of US$21.6 billion for the fiscal year ended August 31, 2010 was more than those of India’s top three technology firms combined. Kevin Campbell, group chief executive, technology, is responsible for nearly half of its total turnover.
As Indian tech firms struggle to hold on to margins as they grow, Campbell predicts margins will eventually converge. With operations in 120 countries and an enviable reputation for executive suite relationships, Accenture sets the standard in high-margin consulting, a segment Indian technology companies are struggling to break into. In an interview, Campbell talks of competition and delinking revenue and employee numbers. Edited excerpts:
Does Indian firms’ emphasis on protecting margins open up a window of opportunity for you? You have four times the revenue of Infosys (Technologies Ltd) but profits are comparable. For them, offshoring means primarily India. To you, it could be ‘best-shoring’.
Road ahead: Campbell says being global is a challenge.Photo Aniruddha Chowdhury/Mint
Yes, we have 21,000 people in the Philippines, 5,800 in Greater China, 6,000 in Argentina. There are three reasons why clients like us. We are global, we do work in 120 countries. That took a long time and it was very hard for us. We have deep industry skills. Then, there is our delivery capability, our track record with the really hard projects.
You have grown in India from 500 to 60,000 people in 10 years. But there is a perception that only low-end application development and maintenance work is done out of India.
That was true four years ago but not true today. An insurance company wanted top-end business analysts; we delivered them offshore here. More examples would be banking, consumer-based trade systems, dealer management, all supported out of India. There is management consulting and high-end analytics. More and more industry standards of excellence are located mostly in India.
But we believe in being global. We tell our people, you will be part of global leadership teams. We are aiming for and well on our way to the point where we can prove that where you came from and what you first started to do has nothing to do with where the leadership is. It helps to have a company with no headquarters. And the top leadership, including the chairman, is from diverse backgrounds.
Even the largest Indian technology company, Tata Consultancy Services Ltd (TCS), has $8 billion in revenue with 198,000 people. You have over US$21.6 billion with 215,000 people. Indian firms are trying hard to break the link between adding people and revenue by going up the value chain. How does Accenture do it?
Part of the secret sauce is our industry differentiation. High-end consulting, the technology consulting, the implementation work, all of it driven end-to-end and working together is a model which we grew ourselves, organically. We believe we are the only model for this. There is this understanding of what works together.
(Just) saying you are going to go higher, you can’t do it. It is systemic. Here, you get industry and technical training when you join us off campus. It is the hard, complex global implementations where you learn the most, learn the real... skills.
I have great respect for our Indian competitors. They have done a great job of disrupting the industry and growing fast. (But while) we have proven that we can go downmarket, they have not proved they can go upmarket. The reality is, we are every bit as cost competitive with offshore. Onshore we are not, but there we are a different company.
Being global is a challenge. We didn’t get here overnight. It was over time. I know how hard that journey was for us, it will be very hard for them (Indian companies). Our model is more relevant to clients-to be a global company that collaborates around the world, with a diverse leadership team that stays connected.
I think Indian IT (information technology) companies are disciplined about their margins. Infosys is the most disciplined. We can predict their pricing down to a nickel every single time. Wipro is all over the place. Cognizant (Technology Solutions Corp.) is very focused.
TCS and Cognizant have gone full out to win work. They still have got growth rates that most people would die for but their margins will continue to be under pressure. You can’t add industry skills, can’t keep adding more global locations, pay people significantly more, without that happening.
Our best margin days are ahead of us, their (Indian technology companies) best margin days are behind them.
venkatesha.b@livemint.com
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First Published: Fri, Apr 29 2011. 01 20 AM IST
More Topics: Kevin Campbell | Accenture | IT Firms | Infosys | TCS |