Accenture set to move forward leaving behind TCS Infosys Wipro

Bengaluru: It had been now time to change names and overcome four major IT outsourcing industry company that is TCS, Cognizant Technology Solution Corp. , Infosys LTD and Wipro LTD as Accenture Plc. is all set it to take place in top IT world company even Nasdaq listed Cognizant in the financial year 2017-18.

However Accenture is estimated to add $3.63 billion in incremental revenue, a shade less than the new business at the four other large companies put together, according to Mint research based on analyst projections. It’s a development that underscores the tardiness of India’s largest IT companies when it comes to rebooting their traditional business model. Accenture, which follows a September-August financial year, reported strong 11.8% year-over-year dollar revenue growth in the November quarter. Management raised its full-year growth outlook to 6-8% in constant currency (CC) terms, which eliminate the effect of currency movements will directly help it report higher growth. Keith Bachman an analyst with BMO Capital Markets wrote in note in dated 21december“We are raising our FY18 revenue forecast to $38.48 billion from $38.23 billion, representing 7.8% y/y CCgrowth, “Simply put, a 260 basis point improvement on 7.8% constant currency means Accenture, which reported $34.8 billion in revenue last year, will see 10.4% growth to end with $38.48 billion revenue.

Accenture’s strong performance over the last few quarters is in contrast with its smaller Indian rivals. TCS last reported double-digit, year-over-year growth in a three-month period during the March quarter of 2016 while Infosys grew 10.9% in the June quarter last year. Cognizant has fared better than homegrown IT firms but even the Nasdaq-listed firm needs to improve on its current growth when compared to Accenture.

According to analyst TCS does not give a quarterly or yearly outlook; Wipro only outlines a quarterly target. Both TCS and Wipro are estimated to grow at-best 8.2% and 5%, respectively. Infosys expects 6.5%-7.5% dollar revenue growth while Cognizant, which follows a January-December fiscal year, expects to grow at-best 10%. Infosys to grow at-best 6.6% and Cognizant to end with 9.7% growth all data based on analyst view.

While simply seeing growth projections, Accenture will add $3.63 billion in incremental business in this fiscal as against $3.81 billion in new business by TCS, Cognizant, Infosys and Wipro put together.

While at the core of Accenture’s better performance is the strong consulting practice and aggressive investments in new technology areas like cloud computing, data analytics and design capabilities, clubbed as digital technologies: Last year, Accenture spent $1.7 billion to buy 37 companies, considerably more than the $1.58 billion spent by TCS, Infosys and Wipro together since 1 April 2014.

“We have been particularly successful with Accenture Digital, nearly tripling the annual revenue from this business since we launched it four years ago, and we have expanded our capabilities to help our clients with their digital transformations,” Accenture CEO Pierre Nanterme told analysts in a post-earnings call on 21 December.

Digital, the fuzzy and umbrella term which each company uses to classify revenue generated from areas generally classified as social, mobile, analytics, cloud computing and internet of things, accounts for less than a fourth of revenue at Indian IT companies, far less than Accenture, which claimed that 55% of business in the latest quarter came from selling these new technology solutions.

For this fiscal year Accenture has outlined spending of $1.4 billion in acquisitions as per mint reports.