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May 6, 2008 at 1:09 PM

New CEO at Microsoft’s consulting joint venture, Avanade

Beginning Sept. 1, Adam Warby, will become the second CEO of Avanade, an 8-year-old Seattle-based IT consulting company founded by Microsoft and Accenture. Warby, who has served as executive vice president of sales and marketing, and general manager of the company’s European and Americas markets, will replace Mitch Hill, who has led the company since the beginning, Avanade announced today.

The IT consultancy is headquartered in Seattle and has more 4,200 employees and 3,600 employees contracted from Accenture in 22 countries. It is focused on the Microsoft platform and was born of Microsoft’s need to gain a foothold in the lucrative consulting business.


The new CEO, Warby, will be based in London, though Avanade will maintain its Seattle headquarters. (It is one of the primary tenants of the new Schnitzer West building, under construction at 818 Stewart in downtown Seattle.) The 47-year-old came to Avanade from Microsoft, where he was general manager of Enterprise Services.

The company filed its first financial report in 2006 because, although it is not publicly traded, it had granted stock options to more than 1,100 employees. And any business with more than 500 security holders must file with the SEC

Hill’s fiscal year 2007 compensation, including stock option awards and bonus, was $1,586,347, according to the company’s latest proxy filing.

Warby’s compensation, including stock option awards and bonus, was $966,440.

In its most-recent quarterly report, Avanade reported sales for the three months ended Feb. 29, 2008, of $210.5 million, up 23 percent from the year-earlier period. Profit fell 44.6 percent to $11 million.

Management had this to say in its business overview:

“We continue to experience pricing pressures from competitors as well as from clients facing pressure to control costs. The growing use of offshore resources to provide lower-cost service delivery capabilities within our industry is a source of pressure on our revenues and operating margins.”

“[D]ecreases [in operating income] were principally due to lower margins resulting from staffing inefficiencies, primarily in the United Kingdom, Australia and Canada.”

A bit on Avanade’s history from a story about Avanade, announced in March 2000, shortly after Steve Ballmer took over from Bill Gates as Microsoft CEO:

The deal plugs a hole in Microsoft’s strategy to make Windows 2000, its latest software to run corporate computer networks and Internet sites, the preferred software for businesses. While the company does offer consulting, much of it is done on a smaller scale or through partnerships with computer retailers.

Consulting is seen as a growing part of the e-commerce game, and companies such as Sun Microsystems, IBM and database-software maker Oracle have cashed in on such services.

“We’ve never been able to form a partnership to serve this market super, super well,” said Microsoft Chief Executive Steve Ballmer.

The pact gives Microsoft a powerful ally in its effort to sell Windows 2000 in the lucrative market of corporate computer networks, analysts said. Andersen is the world’s No. 2 accounting and consulting firm.

(Accenture, Microsoft’s partner in Avanade and majority owner of the joint venture, was initially called Andersen Consulting. It began as a separate technology consulting outgrowth of accounting giant Arthur Andersen, but severed ties and changed its name in 2001.)

Update, 2:50 p.m.: This post originally described Avanade as a Microsoft subsidiary. It is actually a “consolidated subsidiary” of Accenture; and Microsoft holds a minority ownership interest in the Company.

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