Weighed down by cut in technology budgets, high inflation and other macro-economic uncertainties, IT major Accenture on Thursday forecast a tepid revenue growth for FY23 in the range of 8-11% in local currency. It also forecast the first-quarter revenue to be below estimates.
“Accenture’s business outlook for FY23 assumes that the foreign-exchange impact on its results in US dollars will be approximately negative 6% compared with FY22,” the company said.
This could set the tone for a lukewarm earnings season by peers like Tata Consultancy Services (TCS), Infosys, HCL Technologies, and Wipro, in the Indian IT services industry. Margins have shrunk for most of these companies due to due to higher employee costs, low graduate uptake, limited increase in pricing, travel expenses, and high onsite inflation.
The Dublin-headquartered company’s revenue for the fourth quarter grew 15% in US dollar terms to $15.4 billion in line with consensus Bloomberg estimates, which pegged the revenue at $15.38 billion. The revenues were within the guidance range of $15-15.5 billion. The company’s net income for the fourth quarter increased 17.4% to $1.69 billion from $1.44 billion a year ago. Accenture, whose fiscal year ends on August 31, announced its fourth-quarter earnings after Indian market hours on Thursday.
The operating margin for the fourth quarter stood at 14.7%, an expansion of 10 basis points, in line with consensus estimates.
“Our exceptional performance in FY22 is a testament to our ability to create enduring 360-degree value for all our stakeholders: Clients, people, shareholders, partners and communities. The depth, breadth and relevance of our services uniquely position us to help our clients achieve resilience, agility and growth across every part of the enterprise,” said Julie Sweet, chair and CEO, Accenture.
The demand for technology continues to be strong especially in areas like cloud, data, artificial intelligence (AI), and security which are fundamental to a strong digital core, Sweet said in an earnings call.
Accenture’s consulting revenues for the fourth quarter stood at $8.33 billion, an increase of 14% in US dollar terms compared with the same quarter of the previous fiscal. A higher consulting revenue implies higher discretionary spend. Interestingly, none of the Indian IT services providers disclose their consulting revenue as it is only a fraction of the total revenues.
The outsourcing revenues stood at $7.09 billion, an increase of 16% in US dollar terms compared with the same quarter of the previous fiscal.
In terms of geographies, North America grew 18% annually in US dollar terms to $7.52 billion while Europe grew 12% to $4.80 billion. The growth markets grew 13% in US dollar terms to $3.10 billion.
The annualised voluntary attrition for the fourth quarter remained flat at 20% from the preceding three months. The total number of employees as of August 31 stood at 721,379.