Global consulting and technology services firm, Accenture, has revealed its revenue growth projections for the 2024 fiscal year, signaling a subdued business climate as clients exercise caution and reduce discretionary spending. The company expects a revenue growth range of 2% to 5% for the upcoming fiscal year, with a particularly muted outlook for the first quarter of 2024, anticipating revenues between $15.8 billion to $16.4 billion, translating into a growth rate of -2% to 2%. These projections could have implications for the September quarter earnings of Indian IT companies.
In the recently concluded 2023 fiscal year, Accenture reported revenues of $64.1 billion, marking a 4% growth in US dollars and an 8% increase in local currency compared to the 2022 fiscal year. It is important to note that Accenture follows a financial year from September to August.
Julie Sweet, CEO of Accenture, acknowledged the challenges posed by the macroeconomic environment during the investor call. She noted that the landscape had proven to be more challenging than originally anticipated at the outset of fiscal 2023. The impact of these challenges varied across different markets, with global caution leading to reduced discretionary spending and slower decision-making. The company also faced significant challenges stemming from the media and technology industries.
Sweet emphasized that despite changes in the pace of spending, the fundamentals remained unchanged, with technology continuing to play a pivotal role. She stated, “Companies will need to reinvest every part of their enterprise—technology, data, and AI—to optimize operations and accelerate growth. To do so, they must build a digital core.” Sweet highlighted significant demand in areas such as cloud migration and modernization, as well as the emergence of generative AI (genAI), which represents a substantial opportunity.
Accenture has seen the early stages of monetization for some of its genAI deals. Julie Sweet mentioned, “We are also rapidly taking an early leadership position in genAI, which will be an important part of the reinvention of our clients in the next decade.” She shared that in the previous quarter, the company had secured 100 projects generating approximately $100 million in sales over four months. Demand for genAI accelerated in the fourth quarter, resulting in an additional $200 million in sales and bringing the total genAI sales to over $300 million for the year. Accenture is also incorporating genAI into its service delivery.
Moshe Khatri, Managing Director of Wedbush Securities, provided insights into Accenture’s performance, stating, “Accenture reported mixed Q4/FY23 results (weaker than expected communication, media, and technology verticals), while FY24 C/C revenue growth guidance pointed to a back-end loaded year.”
As Accenture navigates a complex global economic landscape, its focus on technology and digital transformation remains unwavering. The company’s projections for the 2024 fiscal year reflect a cautious yet determined approach to addressing the evolving needs of its clients while capitalizing on opportunities in the technology and AI sectors.
