Accenture plc (NYSE: ACN, ISIN: BMG1150G1116) is a global management consulting, technology services and outsourcing company. It was previously incorporated in Bermuda but since 1 September 2009 has been incorporated in Ireland.[1] It is said to be the largest consulting firm in the world.[2] Accenture is a Fortune Global 500 company[3] with more than 186,000 people in 52 countries. For the fiscal year ended 31 August 2008, the company generated net revenues of US$23.39 billion. Accenture's clients include 96 of the Fortune Global 100 and more than three quarters of the Fortune Global 500.[4]
History
Formation and early years
Accenture originated as the business and technology consulting division of accounting firm Arthur Andersen. The division's origins are in a 1953 feasibility study for General Electric. GE asked Arthur Andersen to automate payroll processing and manufacturing at GE's Appliance Park facility near Louisville, Kentucky. Arthur Andersen recommended installation of a UNIVAC I computer and printer, which resulted in the first commercially owned computer installation in the United States in 1954. Joe Glickauf was Arthur Andersen's project leader responsible for the payroll processing automation project. Now considered to be the father of computer consulting, Glickauf headed Arthur Andersen's Administrative Services division for 12 years.
Splitting from Arthur Andersen
In 1989, that division split from Arthur Andersen and began using the name Andersen Consulting. Both Arthur Andersen and Andersen Consulting consisted of groups of locally-owned independent partnerships and other entities around the world, each in a contractual agreement with Andersen Worldwide Société Coopérative (AWSC), a Swiss administrative entity.
By 2000, Andersen Consulting had achieved net revenues exceeding US$9.5 billion and had more than 75,000 employees in 47 countries,[5] whereas Arthur Andersen had revenues of US$9.3 billion with over 85,000 employees worldwide in 2001.
Through the 1990s there was increasing tension between Andersen Consulting and Arthur Andersen. Andersen Consulting was upset that it was paying Arthur Andersen up to 15% of its profits each year (a condition of the 1989 split was that the more profitable unit - AA or AC - paid the other this sum), while at the same time Arthur Andersen was competing with Andersen Consulting through its own newly established business consulting service line called Arthur Andersen Business Consulting. This dispute came to a head in 1998 when Andersen Consulting claimed breach of contract against AWSC and Arthur Andersen. Andersen Consulting put the 15% transfer payment for that year and future years into escrow and issued a claim for breach of contract. In August 2000, as a result of a conclusion of the International Chamber of Commerce, Andersen Consulting broke all contractual ties with AWSC and Arthur Andersen. As part of the arbitration settlement, Andersen Consulting paid over the sum held in escrow (then $1.2 billion) to Arthur Andersen, and was required to change its name, resulting in the entity being renamed Accenture.
Perhaps most telling about who had "won" the decision was that four hours after the arbitrator made his ruling, Arthur Andersen CEO Jim Wadia suddenly resigned. Industry analysts and business school professors alike viewed the event as a complete victory for Andersen Consulting.[6] Jim Wadia would provide insight on his resignation years later at a Harvard Business school case activity about the split. It turned out that the Arthur Andersen board passed a resolution saying he had to resign if he didn't get at least an incremental $4 billion (either through negotiation or via the arbitrator decision) for the consulting practice to split off; hence his quick resignation once the decision was announced.
Accounts vary on why the split occurred — executives on both sides of the split cite greed and arrogance on the part of the other side, and executives on the Andersen Consulting side maintained breach of contract when Arthur Andersen created a second consulting group, AABC (Arthur Andersen Business Consulting) which began to compete directly with Andersen Consulting in the marketplace. Many of the AABC firms were bought out by other consulting companies in 2002, most notably, Hitachi Consulting and KPMG Consulting, which later changed its name to BearingPoint.
AC's change of name proved to be fortunate as it avoided the taint when Arthur Andersen was dissolved as a result of its role in the Enron scandal.
Emergence of Accenture
On January 1, 2001 Andersen Consulting adopted its current name, "Accenture". The word "Accenture" is supposedly derived from "Accent on the future". Although a marketing consultancy was tasked with finding a new name for the company, the name "Accenture" was submitted by Kim Petersen, a Danish employee from the company's Oslo, Norway office, as a result of an internal competition. Accenture felt that the name should represent its will to be a global consulting leader and high performer, and also intended that the name should not be offensive in any country in which Accenture operates.
IPO
On July 19, 2001, Accenture offered initial public offering (IPO) at the price of $14.50 per share in New York Stock Exchange (NYSE); Goldman Sachs and Morgan Stanley served as its lead underwriters. Accenture stock closed the day at $15.17, with the day's high at $15.25. On the first day of the IPO, Accenture raised nearly $1.7 billion.[7]
Controversy and criticism
Tax haven headquarters
In October 2002, the Congressional General Accounting Office (GAO) identified Accenture as one of four publicly-traded federal contractors that were incorporated in a tax haven country.[8] The other three, unlike Accenture, were incorporated in the United States before they re-incorporated in a tax haven country, thereby lowering their U.S. taxes. Still, critics have panned Accenture's incorporation in Bermuda, generally because they viewed Accenture as having been a U.S.-based company trying to avoid U.S. taxes.[9][dead link] The GAO itself did not characterize Accenture as having been a U.S.-based company; it stated that "prior to incorporating in Bermuda, Accenture was operating as a series of related partnerships and corporations under the control of its partners through the mechanism of contracts with a Swiss coordinating entity."
Non-US partners made up the majority of owners at the time Accenture split from Arthur Andersen & Co. In determining where to establish headquarters for an international company with very large operations in North America, Europe, Asia and South America the Firm presumably looked for the most favorable legal and tax environment. Historically, the physical location of the Managing Partner had determined the headquarters location at any given time. For example, under George Shaheen headquarters were in New York/Palo Alto, while under Joe Forehand the location moved to Dallas.
While Accenture has its roots in a Chicago audit firm, more than 50% of its clients, work, and employees are outside of the United States. At the time of the split from Arthur Andersen & Co., 60% of its partners were from outside the United States, with particularly large practices in Spain and the United Kingdom.
However Accenture announced on May 26, 2009 that its Board of Directors has unanimously approved changing the company’s place of incorporation to Ireland from Bermuda.[10] Accenture’s shareholders will be asked to vote in favor of the proposed move at shareholder meetings expected to be held on a date within the next three to four months.
The reason of changing the headquarters to Ireland was quite obvious since Ireland, a member of the European Union, offers a sophisticated, well-developed corporate, legal and regulatory environment. It also has a long history of international investment and long-established commercial relationships, trade agreements and tax treaties with European Union member states, the United States and other countries where Accenture does business. In addition, Ireland offers a stable political and economic environment and has the financial and legal infrastructure to meet Accenture’s needs, both today and in the future.
Accenture does not expect any material change in its operations, financial results or tax treatment as a result of the change in its place of incorporation. The company will continue to be registered with the U.S. Securities and Exchange Commission (SEC) and be subject to the same SEC reporting requirements as it is today. Accenture’s shares will continue to trade on the New York Stock Exchange under the ticker symbol “ACN.”
If conditions of the proposed transaction are satisfied, including approval by Accenture’s shareholders and the Supreme Court of Bermuda, Accenture plc, an Irish company, will replace Accenture Ltd as Accenture’s parent company. Accenture expects the move to take effect shortly after shareholder approval.
Movement of jobs outside the U.S.
Accenture has been criticized repeatedly by Lou Dobbs of CNN and others for moving many jobs outside the U.S., resulting in loss of work and employment for some U.S. citizens. This is because Accenture utilizes Global Delivery Centres in South Asia and Southeast Asia (such as Bengaluru (formerly Bangalore), Pune, Hyderabad, Chennai, New Delhi and Mumbai in India, and, Manila and Cebu in the Philippines) to reduce cost and increase profit margin in outsourcing deals with major U.S. companies. This enables Accenture to perform work (such as software development and call centre support) at a greatly reduced employee cost as compared to U.S. employees.
As a balance to the criticism about movement of jobs outside the U.S., Accenture's employee population in the U.S. has increased from 28,000 in 2005[11] to 33,000 in 2008.[12] According to the map of Accenture’s Delivery Centre locations,[13] the Delivery Centres are evenly distributed across the world with 7 centres in Europe, 7 centres in South East Asia and 7 centres in North America. There is at least one operation in Africa: on the island-nation of Mauritius.[14]
Loss of sensitive data
In September 2007, Accenture was implicated in a high-profile case of loss of sensitive data (sometimes referred to as a "data spill") on individual American citizens. The information was contained on a backup computer tape being used in the development of a government information system for the state of Ohio which was stolen on June 10, 2007.[15] The stolen tape contained the names and Social Security numbers of: every Ohio state employee, more than half a million people, who were owed tax refunds by the state of Ohio; 602 Ohio Lottery winners who had not cashed their winnings; 84,000 welfare recipients; tens of thousands of other individuals. It also contained taxpayer identification numbers for Medicaid providers and bank account information for school districts and local governments.[16]
In addition to the Ohio data, the tape also contained a small amount of information related to the state of Connecticut, also an Accenture client, including "information on nearly every bank account held by state agencies – including checking accounts, money market accounts, time deposit accounts, savings accounts, trust fund accounts, treasury and certificates of deposit – which could total billions of taxpayer dollars. The tape lists agency names, account numbers, bank names and types of accounts ... the account numbers of numerous state procurement cards – known as ‘P-Cards’ – most of which were fortunately out of date ... the names and Social Security numbers of dozens of Connecticut taxpayers ... [and] numerous detailed documents from the development and implementation of the CORE-CT project," according to a press release by Connecticut governor Jodi Rell on September 16, 2007.[15] Governor Rell stated that the Connecticut data was being used in Ohio by Accenture to aid in the development of a similar state government information system.[15]
The tape was stolen from the car of 22 year old Jared Ilovar, a $10.50 an hour intern in the Ohio Office of Budget and Management, who had been assigned to nightly take home a backup computer tape and return it the next day, as part of a data security program . Ilovar was quickly terminated by Ohio governor Ted Strickland during the storm of public indignation after the theft became public on June 15. Ilovar was fired when he refused to resign, stating that he had been made a scapegoat for this questionable policy when his car, along with four others, was broken into outside his apartment complex outside Columbus, Ohio.[17] In a statement to the Columbus Dispatch, Ilovar said:
I was a victim of a random car theft, and now I am the scapegoat for the state of Ohio. On the subject of instructions, I was never instructed by my employer on how to properly secure, store or watch over the data tapes at night. ... I was the newest person in the door, so I inherited the job of taking the data tapes out of the building. That was the extent of my instructions.
[17][18]
Connecticut State Controller Nancy Wyman reported that Accenture would pay for two years of identity theft protection for the 57 Connecticut residents and one from out of state whose lost data originated in her office.[16]
Subsidiaries
- Avanade began as a joint venture between Microsoft and Accenture, but is now well over 80% owned by Accenture. It provides IT consulting services and solutions for the Microsoft software platform.
- Navitaire [2] is a subsidiary of Accenture, providing specialized solutions to airlines.
- Accenture National Security Services is a subsidiary of Accenture that provides services directly to United States government in the national-security space. Its customers include the Department of Defense, the Department of Homeland Security, the Department of Justice (DOJ)[3], and other agencies that focus on national defense and law enforcement. This Accenture subsidiary was specifically incorporated as a US subsidiary to meet a congressional mandate that defense contractors be based in the US.
- Accenture Defense Group is a subsidiary of Accenture, providing document management services, information technology software systems and business process improvement strategies. Clients are multinational governments, government suppliers of "WarFighter" goods and services, corporations, and also include transnational organisations such as the European Space Agency.[4] [5]
- Accenture Technology Solutions is a subsidiary of Accenture, providing technology solutions to the client. The solutions work is mainly offshored to low-wage developing countries like India, The Philippines and Romania - Accenture India Delivery Centre, Accenture Delivery Centers in the Philippines and Accenture Bucharest Delivery Center.
- Accenture SAP Solutions is a subsidiary of Accenture, providing SAP computer software to clients. It has taken Coritel BPM SAP resources and turned it into a new unit called: ASAPS.
Visual identity
The typeface used in the Accenture wordmark is Rotis Semi-sans. The right-pointing carat character over the t is intended to indicate the company's orientation to the future. The character is similar to an accent mark in music. The corporate descriptor for Accenture is "High performance. Delivered.", which replaced the previous slogan "Innovation. Delivered." in 2004.
Tiger Woods is a celebrity spokesperson for the company. The campaign uses the service mark "Go on. Be a Tiger," and the ancillary statement "We know what it takes to be a Tiger."
Competitors
Accenture's primary competitors are IBM, Capgemini, Deloitte Consulting, Ernst & Young, and PricewaterhouseCoopers.
See also
References
- ^ Accenture Completes Change in Place of Incorporation
- ^ Yahoo! - Accenture Ltd Company Profile
- ^ Fortune Global 500 - Accenture Company Profile 2008
- ^ Company Description Accenture website; retrieved April 7, 2009
- ^ Accenture: The Growth of a Global Leader; Accenture website; retrieved June 19, 2007
- ^ Arbitrator's Ruling Goes Against Accounting Arm: Consultants Win Battle Of Andersen; International Herald Tribune
- ^ Accenture IPO gains in first trades - Jul. 19, 2001; CNN Money
- ^ Information on Federal Contractors That Are Incorporated Offshore; United States General Accounting Office; October 1, 2002
- ^ Con. Larua DeLauro's Statement on Award of Homeland Defense Contract to Accenture
- ^ http://newsroom.accenture.com/article_display.cfm?article_id=4830
- ^ Source from United States Senate
- ^ Accenture United States
- ^ Accenture Global Delivery Network
- ^ Accenture Delivery Center in Mauritius
- ^ a b c Governor Rell Says Review of Data Lost in Ohio Shows ‘Unfathomable’ Breach of Information Security, State of Connecticut press release, September 16, 2007
- ^ a b More Identities Go Astray., Hartford Courant, September 15, 2007
- ^ a b Intern says he's now Ohio data theft 'scapegoat', Toledo Blade, July 26, 2007
- ^ - Jared Ilovar's statement, Columbus Dispatch, July 25, 2007
External links
