Tiger or Accenture: Who Is Worse?

Last Updated Dec 24, 2009 6:43 AM EST

UPDATE: I just received a letter from Jim McAvoy, a PR person at Accenture, taking issue with some details of this post. Here is his letter (in italics), along with my comments.
Dear Mr. James,
Your Dec. 18 BNET post, "Tiger or Accenture: What's Worse?" contains erroneous statements about Accenture.
Your allegations that Accenture is disloyal and that we practice "bait and switch" tactics are unfounded and untrue. Furthermore, your specific claims about our incorporation and relationship with Arthur Andersen are also factually incorrect.
These errors require an immediate correction.
My comment: It seems to me that the mere fact that Accenture dumped Tiger Woods like a hot potato is ample evidence that the company lacks loyalty to those who have helped it. As for the "bait and switch" tactics, those are endemic to the IT consulting business and are among the many causes of failed IT projects such as those identified in this document from OLR Research.

Your statements that Accenture was "originally a U.S.-based company" and that it seeks to "avoid paying U.S. corporate taxes" are incorrect. Accenture is a global organization; it has never been a U.S.-based or U.S.-operated organization and has never operated under a U.S. parent corporation. A General Accounting Office (GAO) report (GAO-03-194R) issued in October 2002, noted the Bermuda incorporation of Accenture Ltd, did not include Accenture on a list of government contractors that undertook a "corporate inversion" - moving from the U.S to another country.
My comment: While it is true that Accenture was never itself incorporated in the United States, it was formerly known as Andersen Consulting, which was itself spun off from Arthur Andersen, which was based in Chicago. As for the move of Accenture's corporate headquarters to Bermuda, I guess that we're supposed to imagine that the move was because the board of directors were addicted to wearing colorful shorts or something. Come on, now... Bermuda is a well known tax haven. As for that GAO report, far from exonerating Accenture, it identifies the firm as one of "four ... top 100 federal contractors that are publicly traded corporations [and] are incorporated in a tax haven country."

Most important of all, Accenture pays, and has always paid, taxes in the countries in which it operates, including the United States. Its incorporation in Ireland, and previously in Bermuda, gives its U.S. subsidiary no tax cost advantage over its U.S. competitors.
My comment: Nowhere did I say that Accenture was breaking tax laws, only pointing out that they have a history of seeking to minimize their tax burden. Accenture's own press release states that the decision was made to move to Ireland because the country has "a long history of international investment and long-established commercial relationships, trade agreements and tax treaties." While I'm no tax lawyer, I'm fairly certain that there just might be a tax advantage from being located in Ireland, where the corporate tax is 12.5%, versus the United States, where the corporate tax is 15% to 39% (federal) with an additional potential kicker of up to 12% (state).

You also claim that Accenture was "part of Arthur Andersen, the company that colluded with Exxon." We can only assume you meant Enron and any attempt to link the formation of Accenture with Arthur Andersen and Enron is factually incorrect.
From its establishment in 1989 until its incorporation in 2001, Accenture, then known as Andersen Consulting, was a separate legal entity from Arthur Andersen and operated independently from that company. In 1990, the United States Securities and Exchange Commission recognized that Accenture's predecessor, Andersen Consulting, was a legal entity distinct from Arthur Andersen.
My comment: Sorry about the "Exxon" typo (which I corrected as soon as a reader brought it to my attention.) However, this attempt to separate Accenture from its roots in Arthur Andersen is really quite absurd. While the two were legally separate (due to a conflict of interest between Arthur Andersen's auditing function and Andersen Consulting's IT business), they were, in effect, co-branded, using the exact same brand equity to promote their services. In addition, both organizations reported to the same corporate overlords, which shared the same brand. Up until the name change in 2000, Andersen Consulting was "basking" in the credibility of being associated of one of the big auditing firms and it's ridiculous to assert anything to the contrary simply because it was legally a different entity.

On November 7, 2003, the federal court in Houston approved the settlement of the class actions on behalf of shareholders and employees of Enron. Accenture was not a party to the settlement agreement, and under the terms of the final settlement with the class plaintiffs, Accenture was released from all claims that were brought by these plaintiff groups. This was final and conclusive proof that there was no connection between Accenture and either Arthur Andersen or Enron.
My comment: Actually, I included the Enron statement to remind readers about Andersen's demise. However, since it looks as if I was trying to tar Accenture with guilt by association, I will change this portion of the post.

I think you will agree that these facts disprove your allegations about Accenture's formation and incorporation, and warrant an immediate correction. Please let me know as soon as possible if you intend to correct these items.
My comment: I've made some changes below that I feel are justified.
THE POST (corrections shown in strikeout (old) and underline (new).

Accenture is busily turning Tiger Woods into a spokesperson-non-grata. After six years with Accenture, Tiger Wood is now being written out of the firm's history -- posters down, ads pulled -- just like an out-of-favor apparachik in a communist dictatorship.

IMHO, Tiger Woods should be relieved at this development. Sure, hawking for the management hackers was probably big money, but Tiger has got enough image problems of his own without being associated with a company that's turned disloyalty into a corporate strategy. Let me explain.

There's no question that Tiger has acted badly. He cheated on his wife and now (with rumors of a divorce confirmed) is condemning two children to grow up in a broken family. But consider for a moment.

His wife is young, beautiful, and very, very rich. And by all accounts, she's no dummy, so there's a good chance she was aware of Tiger's tomcat ways long before she married him. Maybe she thought she'd change him after they were married -- a not uncommon misconception among marriage-minded women. In any case, though no doubt chagrined by the situation, she'll have learned a valuable lesson about assessing someone's character before becoming involved.

And then there are the children. Yes, it's sad they'll grow up in a broken home. But divorce among the super-rich isn't like divorce among us hoi-poloi. Those two kids will have nannies, tutors, multiple homes, frequent vacations, and plenty of parental visits. Chances are they'll probably see about as much as their daddy as they would anyway, since his job involves being on the road most of the time.

More importantly, the problems at Casa-Del-Tiger have virtually no negative impact on society as a whole. Much has been made of Tiger Woods as a role model, of course. And I suppose it's possible that some weak-minded individual might be influenced by his behavior. But people who have the opportunity and inclination to tomcat in Tiger-like proportions probably don't need a role model as an excuse. And it's not as if there aren't other, more positive, mixed-race role models in pop culture right now.

In my view, the entire Tiger Woods brohaha is pretty much a tempest in a tee-off. Salacious, yes, but no big deal in the long run or for most people.

By contrast, let's consider the case of Accenture.

Accenture provides IT consulting and offshoring services, two of the ugliest business models in the world of high tech.

IT Consulting firms are well known for their sharp business practices. For example, these firms often use "bait and switch" sales tactics where they imply the contracted work will be done by the seasoned professionals who cut the deal, and then foist the work onto green-new hires in order to increase margins.

To make matters worse, IT consulting firms seem constitutionally unable to complete an IT project on-time and on-budget. They have turned "feature creep" into an art, so that they can keep extracting more and more money out of their clients, while the promised system is delayed, sometimes indefinitely.

IT consulting firms survive largely because their clients -- the hapless CIOs of the world -- are afraid to complain because 1) it would reveal their own incompetence in hiring the consultant and 2) it would close off a future employment opportunity, since jumping to a company like Accenture is an accepted career path for second-rate IT managers.

Offshoring, of course, is even worse. For the past ten years, we've watched companies like Accenture move high-value engineering, programming and data processing jobs away from the United States, vastly weakening the economy.

And even though Accenture was originally a U.S.-based company (it was part of Arthur Andersen, the company that colluded with Enron), the company locates a corporate headquarters in tax havens (Bermuda, now Ireland) in order to avoid paying U.S. corporate taxes.
And even though Accenture has it roots in Arthur Andersen, a U.S.-based company, it has for many years located its corporate headquarters in the well-known tax haven of Bermuda, thereby causing the U.S. government to identify it as one of four top-100 federal contractors that are publicly traded corporations incorporated in a tax-haven country.
However, even though far more of Accenture's revenue come from the United States than from any other country, Accenture is now headquartered in Ireland, where the corporate tax rate (12.5%) is lower than could be achieved by locating anywhere in the United States.
It seems to me that Accenture is perfectly happy to take money from American corporations in order to move jobs overseas, but not willing to pay its fair share for the infrastructure (legal, telecommunications, etc.) that makes offshoring possible, let alone its fair share of the burden of the unemployment that the company helps to create.

If Tiger Woods knows anything Accenture, he's probably not surprised that they gave him the bum's rush as soon as he was a branding liability. After all, this isn't a company where loyalty is exactly at a premium.

Given a choice, I'd pick the morals of Tiger Woods over the morals of Accenture's board of directors. Tiger's sins are personal and have little or no impact on the wider world. Accenture, by contrast, is one of those predatory firms whose profits are built on corporate ingratitude and questionable practices.

What's really ironic, though, is that the current situation makes Tiger Woods and Accenture an even better match. After all, both Tiger and Accenture, in their own unique ways, have been busily trying to screw a segment of the American public.

But that's just my opinion. How about you?

  • Geoffrey James

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