{"id":2314,"date":"2018-04-24T00:00:00","date_gmt":"2018-04-24T00:00:00","guid":{"rendered":"http:\/\/localhost\/projects\/horsesforsources\/digital-services-race_042418\/"},"modified":"2018-04-24T00:00:00","modified_gmt":"2018-04-24T00:00:00","slug":"digital-services-race_042418","status":"publish","type":"post","link":"https:\/\/www.horsesforsources.com\/digital-services-race_042418\/","title":{"rendered":"Can Infosys be the one to challenge Accenture’s digital services dominance?"},"content":{"rendered":"

It took a while, but we’ve finally seen the cards being played from Infosys’ new CEO Salil Parekh – and it’s a concerted digital play to offer clients an alternative to Accenture.  Make no bones about it, the intentions are crystal clear to reverse the course Vishal Sikka set with a software-centric “product” approach, and follow the Accenture model of creative digital services supported by technology-agnostic execution.  The firm, once affectionately dubbed the “Indian Accenture”, has gone full circle to reclaim its mantle and revitalize itself as one of the key services alternatives to enterprise clients seeking high-value digital capabilities enabled by industrial-scale technology execution. Infosys has never been one to go about its business quietly – the firm likes to make big bold statements and attack the industry with a swagger – and, after a full year of navel-gazing as Sikka’s reign fizzled out, amid a very public media obsessed with scrutinizing every private jet excursion and every former SAP executive’s departure package, Salil has made his play in typical Infosys style.<\/p>\n

With the chest-beating battle cries coming out of the firm’s Q1 results, Salil and his new founder friends believe they have the credibility, brand and global presence to slip in front of its rivals, notably Cognizant, TCS and Wipro, and to make up for lost ground and quickly assert their presence in this digital race for client supremacy.  The (surprisingly open) stated effort to sell off their product acquisitions Panaya and Skava<\/a> (and likely more), the recent acquisition<\/a> of creative agency WONGDOODY, famous for its Superbowl ads, and its 2017 addition<\/a> of London-based product design agency, Brilliant Basics, gives Infosys a creative digital footing in both US and Europe.  <\/p>\n

So can Infosys break out of the pack to challenge?  Let’s take a look at the Digital Services market…<\/strong><\/span><\/p>\n

There’s been enough noise and confusion regarding what constitutes digital and which providers are truly breaking ground here, but the stark reality is that Accenture has made a relentless concerted acquisition strategy to dominate this market from the onset, and the current race is on from the rest of the service provider community to challenge them:<\/p>\n

<\/a><\/p>\n

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Click to Enlarge<\/a><\/em><\/p>\n

Digital services provide the natural evolution of traditional IT and business services firms, while products-plus-services is a struggle<\/span><\/p>\n

For all Vishal’s intelligence and vision, the reality became very clear towards the later stages of his tenure as Infosys CEO: traditional IT services firms will always struggle to become products-plus-services firms as they simply do not have the channel to market, the sales structure or the culture to sell these offering at a one-to-many scale. “SAP has 45,000 clients while we only have 1,200” was his realization.  Services juggernauts like Infosys are never going to scale effectively down to the lower middle market, hence need to deepen their footprints with large clients which are profitable to manage in their global delivery model.  And remember Accenture’s aborted attempts<\/a> to make a mid-market play?  <\/p>\n

A one-to-few model may work in very specific areas<\/em> such as procurement (Accenture and Procurian<\/a>) or healthcare (Cognizant and TriZetto<\/a>), but these investments are substantial and require a significant<\/em> amount of time, focus, and investment to make viable.  This is why Salil made the aggressive decision to abort Panaya and Skava – these require a massive effort to deepen sales and delivery capability to make these investments truly worthwhile and pivot Infosys into a much more specialized direction. The realistic growth for a firm like Infosys is in winning big-ticket enterprise services accounts on long-term deals that require significant scale and transformation.  There is a reason TCS is leading the services industry<\/a> in valuation – it has its tentacles firmly wrapped around large, multi-year client relationships and is not bogged down in discreet product acquisitions.  <\/p>\n

Digital services represent the high-value end of the services business where firms like Infosys can embed themselves for many years if they get this right – the ability to design, manage and deliver the customer engaging front office, supported by a digital underbelly, support organization and predictive analytics (as we at HfS term the “Digital OneOffice<\/a>“).  It is that ability to enable clients to respond to the needs of their customers in real-time: Digital is the wow factor<\/em> that is setting apart today’s services firms.  The reality is most of these providers are competent at delivering IT services at scale to meet whatever KPIs were agreed at the onset of a contract.  So the differentiation is that ability to help enterprise clients delivery the digital experience for their own clients – and you can only really do this if you have absorbed sufficient design and consulting talent at scale<\/em>. Digital is much more about a services experience than a specific product experience – there are many apps and tools clients can use, but it’s how they are aligned with the business strategy that really matters.  This is why Accenture’s technology agnostic strategy<\/em> of the last two decades is the one so many services firms are now following.<\/p>\n

The Bottom-line: Accenture created the digital services market and there is no clear contender to take them on from an end-to-end services standpoint.  Infy has as good a shot as any of its key rivals<\/strong><\/span><\/p>\n

Three small-scale acquisitions are merely a statement of intent, but the hard work starts now – and it is a serious about of hard work!  While WONGDOODY and Brilliant Basics are very credible firms and get Infy on the map for digital design and media services, Salil and his cohorts need to savage the market with some further significant<\/em> investments if it wants a place firmly at the big boys’ table. Cognizant has done an excellent job taking its SMAC stack into a very meaningful effective digital offering, and currently is pushing Accenture the most aggressively, with focused offerings and marketing.  Wipro has made some admirable efforts with Designit and Appirio to win some notable deals and has been very focused on this space, vastly improving its communication and positioning with clients.  The reality is, no one has come anywhere close to rivaling Accenture’s scale with digital and we need to see a lot more than some small agency investments if any of these firms want to make a realistic play at Accenture’s dominance.  Firms like Infosys now have to bet big if they want to do more than pay lip service to the new wave of technology-focused offerings.  A major consulting acquisition, such as a Booz or AT Kearney, could make the difference, but will likely be a one-shot deal to make or break their strategy, and we all know how messy these services-plus-consultant acquisitions can get.  <\/p>\n

The bolder play is to go after one of the large creative media\/advertising agencies that offers clients and scale that get Infosys immediately to the table.  Firms like AKQA, BBH, M&C Saatchi, Ogilvy & Mather, Sid Lee and the Miller Group (to name a few) would deliver immediate credibility and digital design capability to a firm as ambitious as Infosys.  Infosys has the swagger to pull something like this off, but has never faced such a test of focus as it does right now – it has picked its path, now the firm needs to pace some serious, eye-catching investments to stay true to its word.  Most importantly, the Founders needs to stay true to Saili and not have him experience the wheels come off like they did for Vishal – that is not a road Infosys can afford to go down again, as next time there won’t be a forgiveness factor from its clients or the industry at large.<\/p>\n","protected":false},"excerpt":{"rendered":"

It took a while, but we’ve finally seen the cards being played from Infosys’ new CEO Salil Parekh – and it’s…<\/p>\n","protected":false},"author":3,"featured_media":2315,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[57,833],"tags":[303],"organization":[439],"ppma_author":[19],"class_list":["post-2314","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-digital-transformation","category-oneoffice","tag-enterprise-irregulars","organization-infosys"],"yoast_head":"\nCan Infosys be the one to challenge Accenture's digital services dominance? - Horses for Sources | No Boundaries<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.horsesforsources.com\/digital-services-race_042418\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta 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