Accenture Closes Procurian Deal: May the 2014 Procurement BPO “Hunger Games” Begin

My kids (at least the older ones) are getting into the world of The Hunger Games. And I’m sure an afternoon during the holiday vacation will be planned to see the rumored-to-be-highly-entertaining sequel. I must admit, I saw the first Hunger Games with them on DVD, and while a good diversion, I can’t say I liked the truly made-for-TV (including the embedded TV) ending. In fight-to-the-death movies, Mad Max is much more my speed. “Two man enter, one man leave” – that sort of thinking, along with political incorrect midgets, overblown hot rods, leather, guns, and explosions for good measure – sort of like a movie version of a Judas Priest concert.

I guess my issue is that in games that are positioned as truly “zero sum” – think about a bid/ask market of any sort with the right sort of rules, standards, and regulations attached such that it can’t be gamed and that’s what I’m referring to in non-movie-buff metaphorical terms – it’s impossible to have an outcome leaving the two opposing parties on equal footing. Such is the case in the world of M&A as well – not necessarily between the two organizations joining forces (because 1+1 can, if only very occasionally, equal 3) but between the parties who competed for a deal and must then react.

Why all this build-up? We think the newly closed Accenture and Procurian deal is going to set off a Hunger Games M&A death match of sorts in the Procurement BPO world – a sector where scale can matter, and always does, among the larger providers. Granted there will be room for niche providers, but when it comes to the true biggies (Infosys, Genpact, IBM, Capgemini, etc.), it will become increasingly difficult to play on the same big-game turf against Accenture now that they have the Procurian asset (see the links below to previous coverage for some of the reasons why).

In this competition to find the last provider standing, we expect some folks to absolutely kill the DNA that has gotten certain folks to where they are today. Knowing Proxima and Xchanging somewhat well (two firms that could not be more different in our view, although on paper that difference would be hard to spot), we’re almost certain a larger provider would not want to put emphasis on the nuance that has gotten both providers to where they are today, albeit with both having taken very different paths (and styles). In other words, we believe that both may become victims (rather than heroines) as others feel they must react to Accenture’s bold move. Good for shareholders of these firms of course, but not for the market.

The danger, of course, is that other BPOs end up living in Bartertown in their pursuit of playing catch-up. And for those who get the metaphor, we all know how Bartertown gets its energy – and that doesn’t have a nice holiday smell to it, now does it.

In any event, our hats go off again to Accenture for a move that is more clever than even Anatoly Karpov could thought of on a chessboard (although IBM eventually has won that game – so don’t count them out in the long term if they can get their act together in terms of what they could really be if they truly leveraged their assets across the silos). Even if Accenture does not realize the synergies expected from the deal (which is highly unlikely), they will drive their larger competitors in 2014 to move in ways unlikely to make the ultimate Thunderdome or Hunger Games competitive multi-tower death matches against the procurement BPO giant anything but a slaughter.

See also (for all the useful detail and less of the fun):

Accenture & Procurian Coverage 

Procurement Services M&A Analysis and Outlook 

Procurement Services and BPO Landscape Analysis 

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