Accenture earnings forecast puts lens on Indian IT rivals
: Accenture Plc will add over $4.37 billion in incremental revenue in the fiscal year ending August 2018, by far the highest year-on-year growth by an information technology (IT) outsourcing company in over two decades.
Accenture expects to clock revenue of $9.8-10.05 billion in the June-August quarter.
The company, which has already added $29.42 billion in the nine months to July 2018, expects its full-year revenue at $39.22-39.47 billion. This translates into a dollar revenue growth of 12.5-13.26%. The IT firm follows a September-August financial year.
Put simply, Accenture’s projected incremental revenue of $4.37-4.62 billion for the financial year, will be just a shade lower than the combined $4.78 billion revenue of Tata Consultancy Services Ltd (TCS), Cognizant Technology Solutions Corp., Infosys Ltd, Wipro Ltd and HCL Technologies Ltd.
If Accenture grows at the upper-end of guidance, then the company’s new revenue growth will be just a few hundred million dollars lower than the annual sales of Tech Mahindra Ltd at $4.77 billion.
Only twice before have two companies added more than $2 billion in new business in a year, according to a Mint research.
In 2015, Nasdaq-listed Cognizant had added $2.15 billion in incremental revenue in 2015, while Mumbai-based TCS added $2 billion in new business in the year ended March 2015.
Last December, Mint had first reported that Accenture was on its way to script history by growing faster than TCS, Cognizant, Infosys and Wipro.
The company’s impressive performance is significant for two reasons.
BENGALURU ACCENTURE EXPECTS TO CLOCK REVENUE OF $9.810.05 BN IN THE JUNEAUGUST QUARTER
One, its ability to clock double-digit growth on an already large base (it had ended last year with $34.85 billion in revenue) should make the shareholders question the managements of the of the other five home-grown IT firms. Save for Noida-based HCL Technologies, all IT companies reported single-digit growth in the year ended March 2018.
TCS will kick off the earnings season when it reports its firstquarter results on Tuesday, while Infosys will put the numbers out in public domain on Friday.
TCS does not give annual or quarterly guidance, but the management expects to report double-digit growth in the current financial year. Infosys expects 9% dollar revenue growth.
If TCS manages 11% dollar revenue growth and Infosys grows at 9%, this would translate into the two firms adding $2.1 billion and $985 million, respectively, in incremental revenue.
If Cognizant adds $1.49 billion at 10%, the three companies’ incremental revenue would add up to $4.57 billion.
At the heart of Accenture’s performance is its strong consulting practice and aggressive investments in new technology areas such as cloud computing, data analytics and design capabilities, which are clubbed as digital technologies.
Over the last three years, Accenture has spent $3.4 billion to buy 70 companies, considerably more than the $1.58 billion spent by TCS, Infosys and Wipro put together, since April 1, 2014.
Accenture said 60% of its business, or $6.18 billion, in the March-May quarter was from the new technology solutions, which was far higher than the $4.1 billion in digital revenue from TCS, Cognizant, Infosys, Wipro and HCL Technologies.
“Revenues for ACN’s “New” strategic initiatives, which includes digital, cloud and security, grew strong double digits for the May Q...[W]e believe ACN (Accenture) is the best run player in our IT services coverage,” Keith Bachman, an analyst with BMO Capital Markets, wrote in a note dated June 28 .