Accenture is now back on par with Tata Consultancy Services (TCS) in terms of headcount, after the New York-based information technology company hired 80,000 people in the financial year ended August 31.
At the end of its fourth quarter, Accenture employed 3,05,000 people, while TCS reported 3,05,431 people on its rolls at the end of June. TCS had outstripped Accenture in terms of headcount last year. The Indian company will report updated headcount figures when it releases its second-quarter results in October.
TCS is increasingly being compared with Accenture, as analysts say the Mumbai-headquartered company now operates on a different level from the rest of its India-based rivals, particularly in terms of sales and delivery effectiveness. But the company still lags Accenture in certain metrics such as revenue productivity. Accenture posted revenue of $30 billion in its financial year, while TCS reported $13.4 billion.
But the increasing headcount levels are a double-edged sword in the IT industry, where large employee numbers often induce a slowdown in growth. However, analysts are expecting TCS to buck that trend. "TCS has made scale and asset an ally in its impressive journey so far... Accenture has noticeably slowed down on revenue growth in the last couple of years as its workforce crossed 250,000 employees," Viju K George, analyst with JPMorgan, said in a July note.
Accenture is also bulking up its digital unit. The company said the unit was now big enough to break out revenues separately and had posted revenue of $5 billion in FY14, a jump of 17% from the previous year.
"Our sense is this is an area of competitive advantage for the company with healthy bill rates and supportive budgets. Importantly, cross selling into the chief marketing officer expands Accenture's addressable market substantially," James Friedman, analyst at US brokerage Susquehanna Financial Group, said in a note. Accenture said its digital unit now has 28,000 employees, up from 23,000 when it set up the unit in December. TCS does not break out headcount numbers for its digital unit.
But CEO N Chandrasekaran has said TCS' digital business will generate at least $5 billion in revenue in the next 4-5 years and that it was growing faster than the rest of the company. "They are close in some ways but they have a lot of catching up to do in revenue and productivity. Accenture benefits from having a strong consulting backbone that TCS is currently building," an analyst with a Mumbai-brokerage said.
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