Entering the SAP lions den
Even with 4,500 global resources in consulting and a substantial systems integration supporting cast, HCL Axon will still be dwarfed by the likes of IBM and Accenture. Leveraging the onshore market entry philosophy and targeting 40% of revenues to be subsequently delivered offshore by integrating the factory may aid in offsetting some of these gaps.
A differentiator will be the combined entitys continued commitment to flexible and innovative contracting terms (with a major manufacturer) and its Business Benefits Realisation offering, providing an impressive set of governance and realisation tools.
Axons high level of dependence upon discretionary spend (above 70 per cent) has not been an issue, with impressive utilisation rates to date, but this will only remain as long as demand for SAP-attached services remains high. Should this market shift, we may see some integration concerns arise and possibly more direct HCL control.
The culture killer
Even with the sense of this reverse-merger, putting all HCL employees under Axon, there will be short-term cultural ramifications of such an integration programme amongst such a diverse onshore/offshore mix of people. Preserving the value of the acquired brand, maintaining morale and retaining staff expertise is always the most difficult component of melding a consulting organisation into that of a delivery-focused service provider. HCL has made substantial efforts in this space and maintained a low churn rate to date. Whether this is due to current market conditions or HCLs efforts is difficult to ascertain, but fitting the roving solutions architect ambassadors into a factory culture will not be easy until all can see the value through the delivery of the promised pull-through.
Jens Butler is principal analyst with Ovum.
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