In a clear sign that inflationary pressures continue to weigh on IT spending, US-based IT major Accenture, on Thursday forecast a full-year earnings and first quarter revenue for FY24 below street’s estimates. The company has guided revenue growth of -2 to 2% in Q1FY24. For the full year, it expects revenue growth to be in the range of 2-5%.
The company follows September-August financial year, and on Thursday posted revenues of $16 billion in the Q4 FY23, down 0.36% quarter on quarter (QoQ). Net profit at $1.4 billion during the period was down 30% QoQ. For the full year, revenue was at $64.1 billion, up by 4.2% and net profit at $7 billion, was marginally up by 1.4%.
Accenture’s numbers are seen as a bellwether for the Indian IT sector, and give an indication of how Indian IT companies’ numbers are likely to fare with the earnings season for the quarter kicking off on October 11.
A significant portion of the Accenture’s employees are located in India as well.
Indian IT was already expected to have a tough FY24, and last quarter, Infosys sharply cut its guidance for the full year. With clients continuing to focus on cost takeout and efficiency deals and pulling back on discretionary spending, it may be signs of worsening stress.
In Q4, Accenture had new bookings of $16.6 billion, a decline of 10%. Of this, $8.5 billion came from consulting and $8.2 billion from managed services.
With IT companies currently operating in a challenging macroeconomic climate, Accenture’s numbers showed that its revenue growth in North America was flat year-on-year, and was up 10% in Europe, and 1% in other growth markets.
By vertical, the biggest impact in Q4 was in communications, media and technology, which fell by 12%. Financial services grew by 3%, health and public service by 13%, products by 6% and resources by 10%.
Accenture CEO Julie Sweet said in a statement the company achieved another “strong year of financial performance”. She added that the company has gotten generative AI bookings of $300 million in the last two quarters.
Attrition levels improved marginally to 14% in Q4. It stood at 13% during the Q3. The utilisation ratio has been stagnant at 91% for the last six quarters.