Narayan AmmachchiWhile Accenture’s outsourcing revenue is growing, the IT consulting side of the business is slowing down, despite the company investing billions of dollars in bolstering its digital assets.
For the second quarter of fiscal 2017, Accenture posted $3.91 billion in outsourcing revenue, an increase of 7% from the same period last year. In contrast, its consulting division posted a meager 3% revenue growth.
As of now, digital offerings, including cloud and security-related services, account for more than 45% of Accenture’s total revenue.
Interestingly, outsourcing contracts signed by the firm during the second quarter equaled the IT consulting contracts in terms of value. New bookings for the quarter totaled $9.2 billion, with consulting bookings of $4.6 billion and outsourcing bookings of $4.6 billion.
Industry analysts were expecting the company to make more money from IT consulting. In July 2016, Accenture’s Chairman and CEO Pierre Nanterme said that he was finding more demand for consulting services than for outsourcing.
Accenture expects 5% growth for its outsourcing services in fiscal 2017. Analysts say the company can easily meet its target if the momentum pf order signing is continued.
In the past couple of years, Accenture has not invested much into outsourcing units, but it has poured billions of dollars into its digital arm. Even last month, the company said it would invest around $1.5 billion in digital acquisitions this year.
The company has purchased as many as five digital technology firms this month alone, the biggest acquisition being OCTO Technology.
In addition, it is setting up innovation centers – digital labs and studios – across the United States to develop disruptive technologies, and investing millions of dollars in re-skilling its American workforce.
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