In the worlds of sports and business, there are many examples of teams coming from behind and winning big. Oracle Team USA’s exciting win over Team New Zealand in the 2013 America’s Cup yacht races last week is certainly a big one.
There’s also a race happening among the global services providers in the tier-one transformation services space. I’ve blogged before about the big three currently in the lead in this space: Accenture, Deloitte and IBM. But other service providers are trying to crash the party for the big three because increasingly transformation is the lucrative differentiated space in a commoditizing marketplace.
Transformation is the axis upon which higher-value services are delivered today. It drives profitability and growth in the services marketplace and is the most desirable of capabilities in a maturing market where high growth at profitable margins is increasingly difficult to come by.
Providers coming around the curve in the tier-one transformation space are not new kids on the block and not trying to reinvent themselves. They’re just strengthening their existing capabilities and strategies so they can cross the border and be invited to opportunities to compete against Accenture, Deloitte and IBM.
So who are the potential party crashers? Here are the ones we’re watching.
Cognizant and TCS. Clearly these two strong players are making big strides in the transformation area, particularly where they are already embedded in an account. Both have above-industry growth rates and very strong profitability, and increasingly they are in the mix in large transformation plays. Both are leveraging their large existing client portfolios and capitalizing on the permission and reputation that they have built with those clients to be considered for more expensive and larger-scale transformation opportunities. Often this comes on the back of significant investments in industry capability.
Most Indian firms aspire to achieve a spot at the table; but with the exception of Cognizant and TCS, most of them are somewhat off pace in their ability to regularly get in the mix for consideration for large transformation opportunities.
E&Y, KPMG and PwC. Deloitte’s sister audit firms and consulting companies also are working hard to build capabilities to join the leaders in the tier-one transformation services space. Each is capitalizing on the strengths they already possess.
E&Y’s formula is to search for transformational opportunities in its top 50 accounts and invest in a depth of understanding of the relationship and capabilities needed by these clients. It is rare to see them venture away from these top 50.
The strategy for both PwC and KPMG is to add capabilities and grow inorganically, and both have been on the acquisition trail. They continue to build out their systems integration and consulting activities to become more transformational partners.
Who’s buying transformation?
It’s important to note that the growing influence of business stakeholders in provider selection is fundamental to all attempts to participate in the transformation marketplace. Their increasing influence (at the expense of the CIO and shared services groups) is evident by the fact that the CFO, business unit heads or CMO often now drive the funding as well as the project management in new deals.
Which of the above providers are most likely to join Accenture, Deloitte and IBM at the tier-one transformation space party? We believe it will be the companies that are most adept at addressing the new business stakeholder groups’ issues.