Why Do Accenture And IBM Stand Out When Markets Change?
Many industry analysts have a theory that digital transformation will happen rapidly. But I don’t believe that. I think it will happen over five to 10 years. While digital adoption grows, we’ll see dramatic consolidation in the IT and business process services markets based on the legacy labor arbitrage factory model. A plethora of arbitrage-based service providers remain in the market. In 2018, we’ll see that some service providers will be able to transition to digital, but some won’t. Those that don’t manage to change will consolidate. But I believe we’ll even some consolidation among those that make the change to the digital world. We’re starting to see early signs of market consolidation in 2017.
I spoke with a colleague recently who asked me if it was as difficult for service providers to make the change years ago from the old operational excellence model to the labor arbitrage model as it is now for the arbitrage-based providers to switch to the digital model.
Indeed, it was. And most companies – including ACS, CSC and EDS, which were market leaders at that time – failed to make the change. Hence, they opened the door for the growth of the Indian service providers that were able to master the change and capture market share. The only two incumbents that succeeded in making the change from the operational model to the labor arbitrage model were Accenture and IBM.
