Real Profitability Part IV: The Verdict

In yesterday's post I showed the absolute and relative revenue, profit and R&D figures of Tata Consulting Services and Wipro
The day before that, I showed the absolute and relative revenue, profit and R&D figures of Accenture, Atos Origin, Logica and Capgemini
The day before even that, I started this series by showing the absolute and relative revenue, profit and R&D figures of The Big Three Google, Microsft and Apple and The Big Four Oracle, SAP, IBM and HP

Today, it's time to pass the verdict - that is, make up my mind, and see what's on yours

I fully realise that I'm somewhat comparing apples to oranges here, or, as we say in Dutch, comparing apples to pears - let's just dub this a compearison then and get over it shall we?

• Google sells digital billboards: in 2009, 97% of their revenue came from advertisements
• Microsoft sells software: in 2009, 82% of their revenue came from software
• Apple sells hardware: in 2009, 64% of their revenue came from hardware, and an additional 29% from "related products and services" to those
• Oracle sells software: in 2009, 81% of their revenue came from software, the rest from services
• SAP sells software: in 2009, 76% of their revenue came from software, the rest from services
• IBM sells services: in 2009, 57% of their revenue came from services, 22% from software and 17% from hardware
• HP sells everything: in 2009, 38% of their revenue came from services, 32% from printers+, 11% from server hardware, and 12% from client hardware
• Accenture sells services: in 2009, 100% of their revenue came from services
• Atos Origin sells services: in 2009, 100% of their revenue came from services
• Logica sells services: in 2009, 100% of their revenue came from services
• Capgemini sells services: in 2009, 100% of their revenue came from services
• TATA CS sells services: in 2009, 100% of their revenue came from services
• Wipro sells services: in 2009, 80% of their revenue came from services, and another 10% from IT products

Now, I'll present to you average figures over the years 2004-2009/10. Yes I'm counting 2010 in as well, maybe that'll rock the boat a little but hey...
Are you ready for the Big Bang? Fasten your seatbelts please

To please the lower margins, I've added a few decimals for the system integrators. Rounding Logica to 4K per-person profit and Capgemini to 3K would distort the figures too much

So what's to say?
Well, first of all, if you're working for the Big Three I'd say you are in an excellent position to do the obligatory EOY salary bargaining. When working for the Big Four, not so much I'd say. When working for the classical system integrators - they'd probably ask you to give back some of the money they gave you previously. When "in India", you stand a good chance

How about cost?
Huge, for some. Google is spending 600 thousand dollars per employee on what? Microsoft, 320, and Apple a whopping 750 thousand dollars. I checked of course, but didn't get much further than cryptic "cost of revenue / sales" single balance lines.
Oracle 130, SAP 140, IBM 200, HP 450 - wait, what?! -, Accenture 110, Atos 105, Logica 80, Capgemini 105, and our nimble Indians beat the living daylights out of everyone with a shocking total cost per employee of, respectively, 42 for Tata and 40 for Wipro

Given those figures, Microsoft is the Big Boss of The Big Three - by far. The Big Four? That pyramid there should be easily inverted in a few years, at least HP has fat chances of turning some cost into profit me thinks. The classics? Logica is surprisingly lean there, if the others can make more revenue at the same cost, they would all end up equally. Capgemini can't take much of a swing or it'll be up for sale - in fact, I'm predicting it will be bought before January 2013. Tata and Wipro clearly have the future there, and will keep crushing the competition

For those of you wondering why I left in 2010 and started my own consulting and advisory business in System and Business Application Integration - you get it now, don't you?