India was the right market because of talent in silicon engineering: Accenture on recent acquisitions

Sanjana B Updated - August 11, 2024 at 10:37 PM.
Ram Ramalingam, Global Lead - Software and Platform Engineering, Accenture Technology

Accenture, a global IT leader, recently made two strategic acquisitions in the silicon space, both of which have offices in Bengaluru. Ram Ramalingam, Global Lead - Software and Platform Engineering, Accenture Technology, highlighted India’s significance in silicon engineering, making it an ideal market for the company’s expansion.

“Accenture started its silicon business in 2018 with a particular focus. We were working with semiconductor companies, and with high-tech businesses in multiple other services but were not into chip design five years ago. We are very focused on bringing in differentiated and not commoditised talent and want to be end-to-end – from concept to design, to manufacturing commercialisation and post-commercialisation. We wanted to do the whole nine yards on silicon design and that is how we started this business,” Ramalingam told businessline.

Synergies between acquired companies

In 2022, Accenture acquired XtremeEDA, a silicon design services company in Canada. The company brought in specific talent in advanced processing and mixed signals. This was Accenture’s first step, and it continued to grow in that business.

In July this year, Accenture announced it had acquired Excelmax Technologies, an India-based semiconductor design services provider, and Cientra, a silicon design and engineering services company with offices in Bangalore, Hyderabad and New Delhi.

Commenting on this, he said, “It was time to scale our business. The talent in India is big in silicon engineering, so we thought it was the right market. While looking at the acquisitions, after a lot of due diligence, we felt these two companies synergised in multiple things. They work on advanced process nodes; one of them has built a test chip on a two-nanometer process node. They had a wide range of talent in areas like field-programmable gate array (FPGA), thermal power management, and custom application-specific integrated circuits (ASIC). The third part is the culture. These two companies naturally fit in with our culture and how we want to scale the business.” While Accenture could have just acquired one company and waited, it found that both had synergies, which is why they were acquired together, he also said.

Growth opportunities in silicon business

Stating that the silicon business has matured, Ramalingam pointed out that currently, most hyperscalers have some form of custom chip designs. “Even automotives built custom ASICs so there was an opportunity for us. Another dimension is the silicon-to-software aspect. Accenture’s software business was always known in the market. But if you look at other traditional silicon players, there are more software programmers than silicon engineers. We identified the synergies between silicon and software and saw the potential in downstream in bringing in advanced analytics in the silicon design and the manufacturing process,” he added.

Alongside, silicon is expected to become powerful in the world of GenAI. A lot of Accenture’s customers are building their custom ASICs, with hyperscalers investing and traditional silicon players doubling down. “We see an opportunity in silicon – the complete end-to-end. The power of bringing in data and AI here is phenomenal. Bringing in automation in manufacturing and design to ensure we get the chips out on time is a big challenge in the industry. AI and analytics will help with this.”

In India, there is a lot of funding in the silicon business for setting up fab and advanced packaging plants. Both require a lot of capital project involvement, which is a part of Accenture’s Industry X offering. According to data, the global semiconductor market size, which was valued at $611.35 billion in 2023, is projected to grow from $681.05 billion in 2024 to $2062.59 billion by 2032, with a CAGR of 14.9 percent during the mentioned period. “There was a slight downturn in 2019, but after that, there has been a good pickup for the industry. We want to ensure we are at the core of this business and in the work with our AI refinery with NVIDIA. These things need a good understanding of how traditional silicon players work or how to build custom models. This is a growth business for Accenture. India, as always, plays a critical role as we grow this business,” Ramalingam said.

Modernisation path

Accenture’s software and platforms business consists of two key areas - first, it collaborates with CIO organisations on custom software, where it builds IT-specific software solutions. The second area encompasses R&D and product development for Accenture’s clients, which includes its silicon design practice.

Commenting on the platform business, he said “There was a time when everybody wanted to embrace the platform business model. Over time, they realised that not every business needs to become a platform business. But the essential components of a platform business are required to run things internally.”

Adding that the enterprise side is where most of Accenture’s business is, he said, “The core elements of digital transformation can be categorized into three areas – first, where customers still have a tech stack modernisation, as in they are still in the old tech stack. They want to ensure they are ready for the future and want to get their tech stack ready. A company needs deep technology skills and to talk to the customer about how to move their operating model. Talent and culture play an important role in tech stack modernisation. The second part is progressive modernisation. Third, end-to-end platform modernization is when a customer aims to become a digital native company or completely transform into a platform company. Essentially, a new business model is being created, paving the way for new revenue streams and customer base.”

Ramalingam stated that in deep industry expertise, you need a different experience, which Accenture Song offers. Accenture Technology provides a technology domain to build platforms and operate the platform right. The company’s Consulting and Strategy wing offers different talents for different operating models. “Accenture has a play in every part of the modernisation path. Whether you go upstream or downstream, the best value for us always comes when the customer is looking for an end-to-end transformation. GenAI and other tools will accelerate this digital transformation and that is how we see this industry.”

Published on August 11, 2024 17:05

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