Last week Accenture announced their
intent to acquire PCO Innovation which will be their 2nd acquisition of a
Product Development Services company in less than 90 days. Accenture acquired
significant capabilities in Siemens Teamcenter with their 1st
acquisition on PRION Group in August 2013. Now, with the recent announcement to
acquire of PCO Innovation, it will acquire new clients and have additional capabilities in PTC and
Dassault to strengthens its Technology services offering.
Traditionally, the big 5 consulting
companies always had a focus on ERP and Supply Chain initiatives, as these tend
to be much larger in revenue and are long term compared to Product Development
initiatives which are much smaller. The Accenture acquisition signifies that
these companies are now looking to grow and build their technology and
outsourcing services capabilities for Product Development and become “One Stop Shop” for Discrete
Manufacturing, Aerospace, Automotive, DOD, Retail, Medical Devices, Pharma and
High Tech.
PRION Group has its headquarters based
in Europe while PCO Innovation has its headquarters in North America. This will give
Accenture significant additional presence in Europe and North America market and
help them to become one of the top 3 Product Development Services companies in
the world.
It won’t be surprising if Accenture
next acquisition is a CAD/CAM Engineering Services outsourcing company. Engineering
Services is another area for growth for them where traditionally Indian
companies have controlled 23% of market share as per Zinnov’s Annual Global R&D Service Provider Ratings 2013.
Last year, PWC acquired PRTM, one
of leading management consulting company with significant expertises in Product
Development. Kalypso another niche Product Development consulting company based in
Ohio-US had setup a technology delivery center in Mexico. Well, it shows that Management
consulting companies are looking to capture downstream revenues as well by
either setting up delivery capabilities or through acquisition of delivery capabilities,
while Technology services companies would try to acquire management consulting capabilities
for to move upstream. One example is of Infosys which acquired Lodestone
to up its consulting capabilities and thus provide “End-to-End” services to clients.
As we move into 2014, I foresee more
acquisitions and mergers in the Product Development space (software and
services). And with Accenture, let’s see if the recent acquisition is a “Game
Changer” in the Product Development services.
