I would say that we're not big yet. The 5,000 number sounds big, but not when you cover the geographies that we cover. In a few countries, we have what I would describe as mature practices, but we're really a high-growth consulting firm in just about every country that we operate in today.

CM: At what rate are you currently growing? Hill: We grew about 40 percent year over year going from '04 to '05. And we're now on track to grow about 30 percent from '05 to '06. And the idea behind Avanade when we started the company was that Microsoft was going to create a great opportunity for some services player by introducing a whole new technology platform. That started in the year 2000 around Windows 2000, and then developed with a platform called .NET, and we thought that large enterprises were going to become very interested in implementing that platform. CM: But has the nature of what Avanade does evolved over time? Hill: We launched Avanade literally days before the NASDAQ crash, so the business case for Avanade was built in 1999. But our customers in 2001 and 2002 were very focused on cost reduction and really trying to control IT spend to drive efficiency in IT spend. By the way, I do hear a lot, "Too bad, guys." Kind of, "Bad time to launch a services company." But the reality was that it actually made us become very focused and very serious about customer satisfaction, about customer retention. It allowed us to build that into our DNA very early in Avanade. And I think that it's actually served us pretty well. I mean, I feel sorry for anybody who launched a services company in '98, right? Because they were sort of somewhere else, and most of those guys are actually out of business or have been rolled up into something else at this point.

CM: But some parts of the business plan have had to be tweaked, correct?

Hill: There are actually things that have changed in the six years. We wouldn't have expected to have 2,000 people spread around the world in India or the Philippines. And we're focused much more on driving value for customers now than we were when we started out. Frankly, we didn't have any customers when we started, of course. CM: Well, with that 5,000 workforce today, what percentage resides in low-cost labor markets around the world? Hill: Primarily for us, offshore equals India, and we have a smaller team in the Philippines. And I think that for a young, high-growth company, this has not been that hard, because starting back in 2000, we were building a workforce from scratch. The kind of talent that we're able to find in India is actually very good, and again, the kind of work that we do in India is consistent with the kind of work that we do in our onshore location. So it's not like we're trying to build sort of a second-class workforce there, but that the projects that those folks are helping us with are very much front-and-center, leading-edge, Microsoft-based technology engagements.

Obviously, in IT there's a huge pressure on cost, and all IT buyers are becoming more comfortable with multisite projects. I mean, particularly for large projects, it's somewhat of a standard, particularly in the U.S. and the UK. About 2,000 people of our global workforce are in India or the Philippines, and I think that we certainly see us crossing the milestone where half the workforce is in those delivery center locations. CM: What can you tell us about the client portfolio today? Is it constituted with different-size clients? Hill: I would say that in general it's Fortune 1,000. We are in the emerging areas. If you look at Microsoft's history over the last 20 years, when their technology is younger, it's the midmarket that leverages it first, and then it sort of grows up into the enterprise. And actually, their infrastructure developer platforms would have been that way in the '90s, and I think that the business application space is starting that way. But probably 80 to 90 percent of our revenue comes from Fortune 1,000 companies. They're banks, they're insurance companies, they're airlines, they're manufacturing companies and government entities and those kinds of concerns. CM: Are you adding certain skills over the past 18 months that perhaps hadn't been part of your skill sets in the past? Hill: I'd say that Microsoft is sort of climbing up the stack toward being much more of a business-based platform. Microsoft's now the third largest ERP vendor in the world, which is lost on many. And now they have this business intelligence platform in the new version of SQL that shipped earlier this year. So what that's meant for us is that the level of business acumen that we have to have has increased pretty significantly. I think that at our core we really are an engineering and development firm, but we very much in the last year and a half to two years have started to grow out our business skills to pursue some of these new areas that Microsoft is now covering. CM: Given its association with Microsoft and Accenture, Avanade lives in the shadow of a giant technology company. However, we're told that to thrive or to achieve a vibrant culture, consulting firms need to set themselves apart and be truly independent. Has Avanade's culture in some way been undermined? Hill: I would say that at the core we have a group of folks who are very passionate about what they do. It's actually a term we use a lot in Avanade. And we are passionate about Microsoft technology and applying technology to customer issues. It was a unique opportunity for Avanade to build something from the ground up. We were reasonably well funded. We knew when we started that we would be global, and I still stand by what I've said for years, which is that we were the world's first global start-up. I think that in the first year we opened in 11 countries, and we built the knowledge infrastructure right from the start to look and act like a global company. We work in this environment where the pace of change is very intense, so I think that we have an intense knowledge culture. And we hire people who are attracted to that and are passionate about it. And if they're not, then they're probably not going to do well here. So I think that's one thing. But the point that you brought up was, well, there's Microsoft and Accenture. We have these two big parents. One of the key elements in our leadership profile is to be able to work in a partner-centric world, because we work with Microsoft, either Microsoft or Accenture, sort of every day. And that's built into our DNA, as well.

CM: Can you offer some more details as to how your relationship with Microsoft brings forth opportunities? Hill: We've worked with Microsoft to design an architecture that helps Microsoft CRM scale beyond its sort of natural design point. So this reveals the availability of assets and solutions to us, and this is really beginning to make a difference. And it is engineered rather than accidental. So we think that we've got a lot of opportunity to bring that to bear. CM: You operate separately, we know, but you do share offices with Accenture in different parts of the world? Hill: Accenture and Microsoft — we leverage our parents in any way we possibly can, and I think particularly in areas where our customers don't care. So our customers don't care about where our offices are. They really don't. So we share infrastructure with both parents around the world, fiscal infrastructure. We rely on Accenture for other, what I would call G&A, services in some countries, and it's a great deal for us. CM: We'd have to believe that there are sort of the rules of engagement here, where when there might be some overlapping opportunities between Accenture and Avanade, an Accenture consultant doesn't end up shooting an Avanade consultant in the foot . . . Hill: It just often comes down to, Can you add value to this customer situation or not? Have you got the best skills? What solutions can we bring to bear? And we just don't find ourselves spending any time talking about the rules of engagement. Because both of our parents are big, and they're global. So the Accenture folks have learned and are learning, hey, if it involves Microsoft technology, we want to engage Avanade. They will help us win the deal. They will help us add more value. When it comes to the Microsoft side, if it's about large-scale, mission-critical, sort of highly engineered solutions, they know, really, that a great partner or the best partner in this situation is going to be Avanade. Let's figure out how to leverage them into this deal. CM: What sets Avanade apart when it comes to recruiting top talent? Hill: If you have an interest in being the best in the business in and around Microsoft technology, you want to work here. The second point is whether you want to work close to the edge around leading-edge solutions. We're still a reasonably small, high-growth company, and on the whole, if you have a choice, it makes for a pretty fun place to work.

Five Thousand Strong, Avanade Boasts of a Singular Achievement

Related Stories

Recommended For You