Procurement technology and services provider Ariba has found a heavyweight home for its outsourcing business with Accenture.
Having made the decision, in recent years not to expand its outsourcing business beyond its not-inconsiderable client footprint, Ariba also attempted a partnership with HP’s BPO business which never got off the ground.
Today, Accenture annouced a significant move to incorporate Ariba’s managed services business into its own global procurement and sourcing operations, which adds signifanct category expertise across to both Accenture’s existing European procurment operation in Prague, Czech Republic, but also Ariba’s onshore services center in Pittsburgh.
HfS Research views this move as significant for a number of reasons:
- Many Ariba services and technology clients have been demanding additional global sourcing support for years, where Ariba hasn’t had the capacity to take on the additional business. Accenture provides the scale, technology implementation expertise and existing procurement delivery infrastructure to take advantage of this demand;
- Procurement BPO clients demand more category expertise through direct (not solely indirect) procurement channels. Accenture have bolstered these capabilities with Ariba;
- Ariba’s personnel adds significant institutional knowledge to bolster Accentures sourcing consulting capabilities;
- Accenture has significant added expertise and scale to deliver both direct and indirect sourcing for US-headquartered industrials, manufacturing, CPG and retail customers;
- Accenture now moves ahead of the pack with its Pan-European procurement BPO capabilities;
- Accenture can more effectively stave-off aggressive competition from emerging providers, for example InfosysBPO and TCS, which have been making inroads into global customers;
- Acquisitions in services are more effective than partnerships – especially where institutional knowledge and deep domain skills are concerned. Accenture has picked up a heritage business to re-energize its existing sourcing BPO business, while much of its aggressive competition are settling for niche “tuck-in” acquisitions that add incremental value, but are often not the global scale and competency of an acquisition of this magnitude.