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Strong demand for digitisation, IT services fuel Accenture to strong Q322 results

Strong demand for digitisation, IT services fuel Accenture to strong Q322 results
Photo Credit: 123RF.com
24 Jun, 2022
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Global information technology (IT) services company Accenture beat analyst estimates to post a very strong quarterly financial result for its third quarter (Q322). The Ireland and US-based company, which works on the September to August financial year cycle, reported quarterly revenue of $16.16 billion, beating analyst estimates of $16.03 billion on Wall Street. It also reported a 23% rise in operating income, which grew to $2.6 billion this quarter.

Analysts and experts believe that a rampant demand for digitisation of enterprises across the world, along with digitisation of legacy infrastructure across various industries, fuelled Accenture to a strong quarter in Q322.

A statement by Japanese financial securities group, Nomura, said that Accenture’s quarterly performance was “aided by demand for transformational services and cloud adoption”. Indian brokerage firm Motilal Oswal Financial Services said that Accenture has indicated strong spends in sectors catering to digital transformation, cloud services, sustainability and security, indicating key areas for IT companies to grow in.

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Experts thus believe that despite multiple factors such as a global economic downturn, geopolitical conflicts, employee attrition and volatile foreign exchanges, the IT and IT services sectors have not seen a direct slowdown. This, in turn, showcases the IT sector deeming digital transformation to be imperative to businesses, and areas of investments such as security are being looked at with increasing importance.

Going forward, it remains to be seen how the Indian IT sector reacts to the financial figures reported this quarter by Accenture. Earlier this month, experts said in a Mint report that the economic slowdown in USA would not likely have as big an impact on Indian IT firms as it did during the 2007 recession.

Kashyap Kompella, chief executive of RPA2AI Research, told Mint that technology and tech services firms could decrease their overall spends by about 10-15%, and said that while long-term, multi-billion-dollar IT projects may see a slowdown or a pushback in timelines, regular projects should continue at a regular rhythm.

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Jayanth Kolla, co-founder at Converge Catalyst, also said that while regular projects are likely to remain consistent, experimental tech implementations – which includes deployment of AI across business areas – could see a slowdown.

Incidentally, a Nasscom report from June 23 said that AI investments by businesses in India are set to grow at a 30% compound annual growth rate (CAGR) to reach $881 million by next year.