Accenture's upbeat results raises Indian IT stock performance

Outsourcing demand high and consulting business see improvement

The better than expected first quarter number of global consulting and IT services firm Accenture, raised the Indian IT services stock performance. BSE IT index was up 1.6% during intra-day trading. This reconfirmed what analyst and industry players have been saying that CY2014 will be a better year than 2013. 

 

Accenture reported a rise in its outsourcing business, where it competes with Indian IT services players. The company continued to see pressure in its consulting business which dropped by 1% on a year-on-year basis. 

 

However, the management said that its consulting business, which is the bigger segment in terms of revenue contribution, is expected to be either flat to low single digit positive in the second quarter. Consulting booking touched $3.94 billion for the quarter ended November 30, 2013. 

 

“Consulting bookings were the second highest quarter on record and exceeded $4 billion for the first time since quarter 2 fiscal '13. We are encouraged by the bookings that we saw in the first quarter. We're also encouraged by the pipeline that we see going forward in our business. And we see the potential for building momentum in consulting as we go through the year,” said David P Rowland, CFO Accenture in a conference call.

 

A pick-up in consulting business would mean positive sign for Infosys which has a higher exposure to discretionary spends.  

 

The biggest positive of Accenture was the new booking reported during the quarter. The company reported new bookings at $8.7 billion, the third highest quarter on record.  Add to this the company has guided for a growth of 2-6% for the financial year 2014. 

 

The impact of Accenture results was evident on the stock of the leading IT services firm. Tata Consultancy Services (TCS) share price were up 1.3%, Infosys was up 0.48%, Wipro was trending high by 2.28% and Tech Mahindra was 3.43%.