News

Published: June 21, 2024
Updated: June 21, 2024

Accenture Lowers Revenue Forecast Amid Economic Uncertainty

Revised Revenue Outlook

Accenture, the global IT services provider, has revised its revenue forecast for fiscal year 2024 due to economic uncertainty impacting client spending on consulting services. The company now anticipates full-year revenue growth to be in the range of 1.5 percent to 2.5 percent, down from its earlier projection of 1 percent to 3 percent. This adjustment follows an initial forecast of 2 percent to 5 percent made in the first quarter.

Market Reaction

In premarket trading, Accenture's shares rose by over 6.5 percent on the New York Stock Exchange, indicating positive investor sentiment despite the lowered forecast.

Significance for Indian IT Sector

Accenture's performance is a key indicator for the Indian IT industry, providing insights into expected trends and outcomes. The company's results are particularly relevant as a significant portion of its workforce is based in India. This context sets the stage for the upcoming earnings season for Indian IT companies, starting with Tata Consultancy Services (TCS) on July 11.

Q3 Financial Performance

For the third quarter, Accenture reported revenue of $16.5 billion, a slight decrease of 1 percent year-on-year. The company secured new bookings worth $21.1 billion, marking a 22 percent increase. The operating margin remained steady at 16.3 percent year-on-year.

Geographic and Vertical Insights

Revenue from North America increased by 1 percent to $7.83 billion, while the Europe, Middle East, and Africa region saw a 2 percent decline to $5.78 billion. Revenue from other markets decreased by 4 percent to $2.86 billion. Among business verticals, the products segment remained flat at $4.98 billion, the Health & Public Service vertical grew by 8 percent to $3.52 billion, but the financial services vertical dropped by 8 percent to $2.89 billion.

AI and Workforce Developments

Accenture's new Generative Artificial Intelligence (Gen AI) bookings exceeded $900 million in the quarter, bringing the total Gen AI bookings for the fiscal year to date to $2 billion. The company’s headcount increased by 7,882 employees in the quarter, reaching a total of 750,200, with an attrition rate of 14 percent.

CEO Julie Sweet highlighted that the company's workforce includes approximately 55,000 skilled data and AI practitioners, with plans to double this number by the end of FY26. She noted that scaling Gen AI projects remains challenging for clients, as successful implementation requires extensive changes in processes, employee reskilling, and the development of new capabilities around responsible AI.

Despite the revised revenue forecast, Accenture's strategic focus on AI and its strong market position suggest potential for long-term growth. The company's ability to adapt to changing economic conditions and its investment in AI technology will be crucial in maintaining its leadership in the IT Sector.