By Prabhakar Mundkur
The acquisition of Wongdoody for the Infosys Consulting Group could mean two things:
1. Infosys is serious about the consulting business which has hitherto been a bit of a weak spot for them.
2. The threat of the consulting-creative shop is closer back home for the communication groups in general.
Not surprising. When Salil Parikh took over as CEO, many industry analysts predicted that he would strengthen the Infosys consulting business given his experience in consulting with Capgemini. His other strength was that he had worked in Europe for Capgemini, again a weak spot for Infosys whose primary strength has been the US.
It did seem certain that Infosys could get more acquisitive and this was something that perhaps Salil Parikh would understand better than anyone else at Infosys. Capgemini’s successful consulting business accounted for 4% of its revenue. In comparison, Infosys has been struggling with the consulting business although they took a view to revive it in 2016. So the acquisition of Wongdoody makes more than good sense. No doubt the sale of Panaya and Skava announced recently will help fund this acquisition. It is indeed a smart move by Infosys to add value to its existing offering.
The Infosys-Wongdoody combine is yet another emerging threat to the large communication groups like WPP, Omnicom and Publicis who have seen a slew of consulting groups joining the fray to acquire creative and digital capabilities.
Scott Sorokin, the global head of Infosys’ digital arm is known to have said: “Their creative excellence and reputation for driving engaging digital customer experiences that operate at the intersection of advertising, retail, technology, and design precede them. I’m personally excited to work closely with the Wongdoody team to strengthen our customer experience capabilities and bring new thinking, talent, and innovation to our global clients.†For Wongdoody applying their creativity and design capabilities in new ways with Infosys’s technological capabilities creates a win-win situation for both.
Large communication groups like WPP had been initially dismissive of the threat from the consultancy business. Sir Martin Sorrell is famously known to have said consultancies can’t buy “culture”. But with the sudden resignation of Sorrell, one looks forward to a new leader at WPP who can push back the emerging consulting threat for communication groups in general. And of course, push back the threat for WPP which has seen its stock price plummet by 35% from its 2015 high.
But what is happening in the meantime to the advertising agency and the communication groups? Advertising agencies for a long time now have devalued their own services by charging less than they are worth. Add to this the unfair price competition with every agency trying to undercut every other agency. Their current weaknesses have allowed them to let clients disrupt their business model.
The Chief Disruptor of the agency business model seems to be not the agencies themselves but a client. Mark Pritchard, Chief Brand Officer for P & G, has pooled three of his agencies into one creative agency called People First. Responsible for creating the Tide Super Bowl commercial in 2018 which was certainly not the best Tide commercial to date, it is keeping industry observers busy while they wait in great expectation to see what good comes out of it. But one thing that disruptors like Pritchard seem hell-bent on doing is to disrupt what they call the Mad Men model. Who would have thought that one famous television serial could have created so many demons around us wanting to decimate the quintessential character of the advertising business?
You may not want to believe it. But to sum up, with all the emerging threats on the communication groups, including clients like Pritchard who want to disrupt their business models, the threat of consulting groups taking over a slice of the business from communication groups might be closer home than we think.