A partnership paradigm: Accenture and Vodafone’s shared services 2.0 strategy

Accenture and Vodafone’s joint venture, announced in late 2023, has piqued the interest of industry experts. In a strategic move, Vodafone is divesting part of its global business services to Accenture. This decision differentiates it from other enterprises that are starting their shared services or global business services in lower-cost locations. This innovative partnership will create a commercial shared services entity, with new leadership taking the reins at the start of Q2 2024. The entity will work toward executing the shared vision and outcomes for both parties.

HFS promotes a new way of creating value through purpose-driven partnerships between enterprise clients and service providers. The enterprise pays for performance measured based on business value and efficiency attributes. This shared vision and outcome can drive a successful partnership, promising significant benefits for both parties.

Vodafone’s new leadership embarks on strategic transformation in its turbulent times

Vodafone Intelligent Solutions (VOIS), a shared service center of Vodafone Group, provides application development, testing, operations, analytics, cyber security, and business services to its parent company and partners in eight countries (Albania, Egypt, Hungary, India, Romania, Spain, Turkey, and the UK). With over 31,700 employees (33% of the group’s full-time employees), VOIS delivers a $1.1 billion value.

Despite its strong presence in the telecom sector across Europe and Africa, Vodafone has encountered many challenges recently, including underperformance in Germany, rising energy costs, competition, and leadership transitions. To address these issues, Vodafone’s new CEO, Margherita Della Valle, who assumed office in April 2023, unveiled a strategic roadmap in May 2023 centered around three pillars: customers, simplicity, and growth. She appointed a new CFO, Luka Mucic, on September 1, 2023. Vodafone is transforming by divesting various businesses worldwide, including in Ghana, Hungary, Italy, and, most recently, Spain.

Vodafone plans to reduce staffing by 11,000 by 2026, speeding up cost savings by $1.1 billion and consolidating VOIS entities into a single commercial shared services entity with Accenture. This joint venture will remove barriers in shared operations, provide market-competitive services to Vodafone operating companies, and accelerate the transformation.

Vodafone’s partnership with Accenture is a pivotal element of this strategy. It streamlines operations, drives growth, and enhances the customer experience, thereby overcoming the challenges and propelling Vodafone on a path to success.

Is Accenture’s strategic $160 million investment in VOIS aimed at commercial success?

Accenture delivers comprehensive value to its clients, employees, and partners through innovative delivery models and partnerships. As part of a new joint venture, Accenture has invested approximately $160 million to acquire a minority equity stake in the Vodafone Group. This strategic partnership further strengthens Accenture’s portfolio with expanded offerings in the telecom sector:

• Accenture will acquire an equity stake in the single VOIS commercial entity, including its investments, talent, governance, leadership, and profit-and-loss sharing. The joint venture will be based on the agreed-upon business plan, commercial transformation road map, and scope of services.
• The new joint venture will provide services to Vodafone Group and subsidiaries based on agreed service levels, pricing, and commercial terms with the relevant total cost of ownership. The entity will bear the risk of achieving the pricing and outcomes contracted commercially with third parties.
• Accenture will source the services to transform and commercialize the joint venture into an industrial shared service company.
• Accenture will be awarded subcontracts and service agreements based on its role as a joint venture transformation and investment partner with appropriate risk and reward mechanisms.

In addition, Accenture will expand its market access into Vodafone’s partner ecosystem. The partnership is expected to deliver innovation, digital solutions, and deep artificial intelligence (AI) solutions to the Vodafone Group and foster novel opportunities to develop new solutions and services in the group and telecom industry.

Vodafone and Accenture’s captive drives the next-gen global business services for all enterprises

HFS strongly believes that the success of a partnership between a client and a provider depends on their shared objectives and mutual trust. At the same time, we believe that global business services will be sustained only if they identify new sources of value. Comprehensive documentation of key performance indicators (KPIs) can help enhance efficiency, performance, and outcomes, thereby improving collaboration in commercial terms.

Vodafone and Accenture’s commercial entity is expected to bring value to both companies, their employees, joint customers, and shareholders:

• For Vodafone, the new entity will offer improvements in profit-and-loss performance, operations, divesting shared services, equity injection, predictability, quality and price competitiveness, employee and customer experience, return on capital employed, productivity, and scale. Most importantly, Vodafone can leverage Accenture’s competitive IT services and Gen-AI capabilities. With these capabilities, VOXI by Vodafone, a human-like customer interaction chatbot, was launched in March 2024.
• The partnership will create career opportunities for existing employees and upskill and job rotation for people in both companies.
• For the joint venture customers, there will be cost certainty and predictability, access to the industrial transformation partner, quality and price competitiveness, and faster delivery to the market.
• For shareholders, the joint venture will create a flexible environment for headcount containment and deconsolidation, the ability to serve partner markets, and a boost to execution with improved customer experience.

Nothing worth having comes easy. The success of this upcoming collaboration will largely depend on effective leadership, careful planning, and flawless execution of its shared objectives. The joint venture should be able to overcome the cultural disparities between the two companies, integrate intricate technologies, and closely monitor the progress of both financial and non-financial metrics. It should start generating revenue, profits, employee and customer net promoter scores, and shareholder returns on investment.

The Bottom Line: Enterprises should pinpoint an effective strategy for optimizing their shared service centers, enhancing their value to all stakeholders. Choosing an appropriate partnership with a service provider is a prime strategy for achieving this goal, especially in shared service centers.

Unstable macroeconomic conditions, the adoption of newer technologies, and changing business dynamics will pose many challenges for enterprises. Addressing these complex problems is often complicated, time-consuming, and may not be competitive. To tackle these issues, business leaders may explore various solutions, such as mergers, acquisitions, and partnerships.