How digital is fueling the growth for Accenture

Thomas George

Today, Digital Technologies are gaining traction for all major players in IT services, which was very much evident in Accenture’s Q3 FY’15 results delivering $7.8billion revenue in the quarter against the industry estimate of  $7.5billion.

The company also made an upward revision of their fiscal year growth guidance to 8-10 percent from its earlier 5-8 percent. This essentially came on the back of an improved demand growth in the digital space. In fact, this is the second time Accenture has revised its annual guidance upward based on its last 9 months' performance and the third consecutive quarter that grew in double digit in constant currency.

The growth in Q3 FY’15 was primarily led by digital technologies, which contribute close to 20 percent of the quarterly revenue. The consulting business grew by 4.7 p.c and the outsourcing business declined 11 p.c in terms of YoY order bookings. In the last quarter, it booked in excess of $100 million from 12 customers and totally around 33 customers in the last 9 months.

New bookings were $8.5 billion for the quarter. It saw continued strong demand for both digital-related services and operations.

“We are clearly benefiting from our recent investments across the different dimensions of our business in digital services, where we grew more than 30 percent in local currency in the quarter. Demand for digital is pervasive across the entire business. And we’re leveraging our digital capabilities in the services we provide to clients in every industry around the world," said Accenture Chairman and CEO, Pierre Nanterme during the earning release.

"Our strong results for the quarter and year-to-date demonstrate that we’re benefiting from the investment we've made in key growth areas such as digital. And I'm very pleased with the leadership position we are establishing in this important part of our business," said he further.

What Accenture did to achieve this growth?

With right strategic vision aligned with the market trends and customers' future needs, company invested and acquired close to 45 companies in 36 months and developed their digital practice, which is a $6 billion business already now and growing at the rate of more than 20 percent in constant currency term.

Accenture also invested in high-end skilled engineering resources, PhDs and Data Scientists to further leverage on the growth momentum and build their digital technologies practice. While doing all these, the company maintained its focus on their core consulting business and grew in that segment also.

We are witnessing the same trends among all leading IT services major such as Infosys, TCS, IBM, CTS, Wipro and Tech Mahindra-as all these companies are building their digital technologies capabilities and practices. It would be interesting to see who surge ahead and take the leading edge in digital space.

Also read:

How services expectation and delivery are changing in the digital world