Outsourcing upturn offsets consulting decline at Accenture


15 April 2003 A crash in consultancy revenues during its latest quarter undermined a relatively upbeat financial performance elsewhere at IT services giant Accenture.

Consulting revenues in the company’s second quarter to the end of February tumbled 15%, resulting in a company-wide drop in net revenues of 3% to $2.83 billion, although the strengthening of the euro against the dollar over the period meant that represented a 9% decrease in local currencies.

Accenture, which operates its business largely along vertical industry lines, endured a mixed quarter across different sectors. Revenues from the communications and high-tech sector grew 5% to $786.4 million, and revenues from government contracts were up a robust 12% to $323.7 million.

Those positive performances were offset by a 5% fall in revenues from the financial services sector, a 10% drop in its ‘products’ operating group and a 12% decline in the ‘resources’ unit segment.

While consultancy revenues have tanked, the company has managed to re-balance its operational focus with a rise in outsourcing contracts. For the quarter, outsourcing represented 29% — or $820 million — of total revenues.

Geographically, revenues in the Europe, Middle East and Africa (EMEA) region were up 2% to $2.62 billion, but down 13% when calculated in local currencies. Business in the Americas was down 9% to $2.74 billion — a 6% decline in local currencies. The Asia Pacific was flat at $397.9 million.

Despite that erosion, tight cost controls allowed Accenture to report a solid rise in profits. Net income jumped to $118.7 million from $10.6 million in the same quarter last year.

Furthermore, CEO Joe Forehand believes that the trading environment is improving. He cited as proof the strong growth in new contract bookings during the quarter of $4.75 billion, its second-highest ever figure.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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