Accenture bets on outsourcing business to drive growth

Sep 28, 2012 |

Reuters

Bengaluru

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Accenture Plc forecast full-year earnings ahead of analyst estimates as it bolsters its outsourcing business to offset a slowdown in consulting, sending its shares up 5 per cent in after-market trading.

Outsourcing revenue rose 10 per cent to $3.1 billion while consulting revenue fell 4 per cent to $3.74 billion in the fourth quarter.

Accenture, which has about 257,000 employees worldwide, expects revenue growth in its outsourcing business to continue to outpace that of consulting, Chief Financial Officer Pamela Craig said on a conference call.

"They're clearly gaining market share ... Outsourcing would be a bigger part of the business going forward," Barclays Capital analyst Darrin Peller said.

The company, which competes with Cognizant Technology Solutions Corp and Infosys Ltd, expects earnings of $4.22 to $4.30 per share in fiscal 2013.

Analysts on average were expecting $4.15 per share, according to Thomson Reuters I/B/E/S.

Accenture targets new bookings, a key indicator of future sales, in the range of $31 billion to $34 billion in fiscal 2013. New bookings in fiscal 2012 were $32.2 billion.

"The underlining trend in the industry are sort of average, when other companies report earnings, especially Infosys and Wipro, the results won't look this good," Peller said.

Accenture said its fourth-quarter profit fell due to higher tax rates. Accenture's effective tax rate was 32.8 per cent for the quarter, compared with 27 per cent a year earlier.

Net income fell to $636 million, or 88 cents per share, from $683 million, or 91 cents per share.

Revenue rose 2 per cent to $6.84 billion.

Revenue from Europe, Middle East and Africa fell 4 percent while that from Asia Pacific rose 11 percent. Revenue from Americas rose 5 percent.

Analysts had expected earnings of 88 cents per share on revenue of $6.76 billion.

Accenture shares rose to $68.34 in trading after the bell. The stock, which gained about 26 per cent in the last year, closed at $65.38 on the New York Stock Exchange on Thursday.

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