Why Accenture’s Revenue Forecast May Be Good News For Entire Industry
Indian IT firms may see growth in fiscal 2020 to grow as strong or outpace that of the current year looking at the commentary of their global peer Accenture, which raised its forecast on the back of increasing client budgets for outsourcing and consulting deals.
Last week, Accenture raised its revenue growth forecast by 0.5% to 6.5% to 8.5% for the year ahead as customers globally continue to spend on technology to disrupt their business or improve services to their clients.
“Accenture management indicated the potential of slower economic growth. Client budgets may grow at a slightly slower pace compared to 2018. However, this slower growth has not translated in a weak growth outlook. Accenture revenue growth for FY 2019 will be similar to FY 2018,” wrote Kawaljeet Saluja, IT analyst at Kotak Institutional Equities.
Two large Indian IT services companies – Tata Consulting Services and Infosys – will begin the results season with Q4 numbers and commentary for this year on April 12. TCS has already indicated that it could grow double digits this fiscal as it begins executing large billion-dollar deals that it signed last year.
Banking and financial services sector (BFSI), which garners the largest share of revenue for most of the IT firms, is expected to see some improvement this year.
“Accenture had cited its expectation of improved BFSI growth in 2HFY19. While 2QFY19 growth was 2% YoY CC, the confidence for that outlook remains intact and is supported by order bookings in the recent period. India-based peers such TCS and Infosys have seen an improved performance over the past 2-3 quarters, leaving Cognizant to recover its growth in the vertical,” wrote Ashish Chopra, research analyst, Motilal Oswal.
Analysts said that Accenture is seen catching up with Consulting after six quarters and that bodes well for demand, not just in Digital but also in run-the-business or traditional services.
While Europe is likely to see tepid growth, North America will revival. “We believe that IT spending will be muted in the capital markets segments, especially in Europe. We expect steady spending in the traditional banking segment in North America though there may be spending caution from a couple of large clients,” wrote Saluja of Kotak.―Gadgets Now
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