Accenture results signal consulting, BFSI rebound

Consulting and outsourcing major Accenture Plc's result for the first quarter ended November 30 signals both good and tough times for the Indian information technology players.

The upswing in its consultancy deals, strong demand from banking, financial services and insurance (BFSI) vertical and gross hiring of 45,000 reaffirm the industry view of a recovery in topline growth in FY11.

At the same time, Dublin-based company's doubts over pipeline conversion and its plans to scale up employee strength at global delivery centres (GDC) may threaten the competitive prowess -- labour arbitrage accrued due to high employee base in low cost centres -- of Indian software majors like Tata Consultancy Services (TCS), Infosys, Wipro, HCL, MindTree and others.

The latest quarter result shows Accenture's reported revenues (excluding reimbursements) of $5.4 billion met the lower end of its guidance. Its outsourcing and consulting revenues were up 1.3% and 7.6% on a quarter-on-quarter (QoQ) basis at $2.26 billion and $3.12 billion, respectively, after declining over the last few quarters.

Accenture's QoQ consulting bookings jumped 20% implying that system integration and package implement projects were on the roll again.

Sandeep Muthangi, analyst with institutional brokerage IIFL, pointed in a note on Friday that Accenture's quarterly addition of $640 million of consulting bookings in the first quarter is the highest in the past 19 quarters.