Accenture turning to value-added services to combat low US dollar

Thursday, January 20, 2011

The Spanish South America region of US consulting and technology services firm Accenture (NYSE: ACN) is relying more on value-added services to sidestep the effects of the low US dollar, Accenture Spanish South America president Roberto Alvarez Roldan told BNamericas.

To maintain a competitive edge, Accenture has put basic offshoring business on the back burner in favor of more advanced BPO, information management and research activities. Such business requires fewer workers, but provides more added value, Alvarez Roldan said.

"A low dollar has a significant impact," he said. "If you have an impact of this nature, what should the response be? The reaction is to get away from commodity offshoring activities ... of a transactional nature."

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Geographically, Accenture plans to step on the gas during the next few months to accelerate domestic market penetration in Chile and Colombia, Alvarez Roldan said.

The division's bread-and-butter vertical markets include financial, telecommunications, energy and utilities, consumer goods, and government, but the executive noted that business opportunities in Chile are strongest in the financial and mining industries, while Colombia stands out for telecommunications, financial and natural resources demand.

Accenture also views Peru as an emerging player with significant offshore potential, but the executive noted that market conditions in the country are still a mixed bag.

"An emerging market that is still hidden but has the possibility of appearing is Peru," he said. "Peru provides advantages in the area of exchange rate, but presents challenges in terms of its volume of bilingual workers."

"You either compete on the international scene or you're stuck. The key to offshoring is the critical mass because it really allows you to lower costs. If you don't have volume and you don't have critical mass, then offshoring doesn't work. No offshoring operation with fewer than 1,000 people is really profitable."

Accenture plans to spend the next months prospecting business opportunities that can be generated from Peru, and will decide at the end of 2011 whether conditions are apt for a delivery center, the executive added.

Globally, Accenture saw net profits rise 15% to US$606mn during its fiscal first quarter, ended November 30. Revenues during the same period advanced 12% in US dollar terms to US$6.05bn.