Accenture Solutions Operations

By Matthew Rothenberg  |  Posted 2001-12-10

Bulking Up

Accenture is having a tough time escaping its reputation as a high-priced consultant with limited ability to handle large-scale infrastructure deployments.

PDF DownloadWhile clients for its information technology outsourcing services remain smaller and scarcer than those of rivals IBM Global Services, EDS and Computer Sciences Corp., Accenture has chalked up some big deals, including a $1.7 billion, seven-year contract to modernize and manage information technology systems at J. Sainsbury, the U.K.'s second largest grocery chain.

Accenture's outsourcing business is best known for applications development. Its weak spot: a lack of experience operating data centers and infrastructure.

Size counts in major technology outsourcing deals. Accenture's outsourcing business is just one-tenth the size of EDS', based on annual revenue. As a result, Accenture doesn't have the economies of scale yet to make significant inroads in attracting more heavyweight infrastructure engagements. It also shoots for a 20% net income on engagements, far higher than those commanded by other outsourcers, according to industry insiders. Going forward, Accenture may have to reconsider its prices if it wants to remain competitive.

Some companies—such as Dow Chemical and Earthgrains bakery—outsource application development and support services to Accenture and turn over their technology infrastructure to other outfits.

Dupont retained Accenture for application development and support, and Computer Sciences Corp. for infrastructure and some applications, according to Diane Strickler, Dupont's director of information technology. "We're looking to Accenture to increase productivity by 25% in the application space," she says.

Although Accenture's profits dropped from $2.5 billion in 2000 to $377 million in 2001, potential customers need not worry about the company's financial health. The decline was due to special one-time charges related to the company's initial public offering.