Accenture, the world’s largest software services company, secured $1.2 billion in generative artificial intelligence (Gen AI) orders in the quarter ended November 2024, bringing its total orders in this field to $4.2 billion since September 2023. This is its highest Gen AI order book in any quarter, a sign that customers are increasing their spending on new technology.
Accenture became the first software services company to report Gen AI deal values last June, following its September-August fiscal year, when it won $100 million in funding for pure-play Gen AI projects in the quarter. The Indian information technology (IT) services provider has not yet detailed its revenue from pure Gen AI initiatives.
However, in the company’s post-earnings conference call with analysts Thursday, Chief Executive Julie Sweet noted that the overall spending environment remains unchanged. As a result, companies keen on AI will prioritize spending in this area rather than increasing overall spending.
“Right now, the overall feeling is more of a priority within the current budget; so we’ll see what happens in January and February,” she said. She said companies must focus on spending on data first, then AI itself.
Projects worth $1 billion in August quarter
Accenture reported that its Gen AI program was worth $1 billion in the three months to August 2024, bringing its total orders within a year to $3 billion.
Gen AI orders accounted for 6.4% of the company’s total order bookings of $18.7 billion in the quarter. To put things in perspective, Accenture’s total order bookings from Gen AI are roughly equivalent to the FY24 revenue of LTIMindtree Ltd, India’s sixth largest software services company.
Gen AI entered the board of directors after launching ChatGPT in November 2022.
While Accenture is optimistic about Gen AI’s growth, at least one analyst said it could increase pricing pressure.
“We believe many business segments in the IT services industry are facing pricing pressure, consistent with what has been seen in past quarters. For 2025, we believe BPO and application development and maintenance will continue to face pricing pressure as well as regeneratively driven growth. Quantitative deflationary forces. “In particular, we believe renewals will be challenging as customers will seek and potentially obtain lower renewals than historical norms as the power and capabilities of generative AI increase,” Bachman said. price. “
The stance on macroeconomic policies remains unchanged
While Accenture’s Gen AI orders reflect optimism, the company reiterated its stance on the macroeconomic environment.
“We had a strong start in the first quarter and strong guidance in the second quarter, which was really driven, broad-based and driven by our organic growth. At the same time, you heard Julie say, macro Remain unchanged. The overall environment has not changed.
Accenture’s first-quarter revenue totaled $17.69 billion, a quarterly increase of 7.8%. The company revised its full-year revenue growth forecast to 4-7% from 3-6% in the previous quarter.
The increase in the company’s growth forecast comes with an increase in headcount, which management suggests reflects business momentum.
Accenture had 799,000 employees as of November 2024, an increase of 24,000 from the previous quarter. Most of the recruitment is done in India.
“We did add about 24,000 employees in the first quarter, and that does reflect the momentum we’re seeing in the business,” said Park, who took over as chief financial officer on Dec. 1. To give you a little more context, we’re seeing similar hiring this quarter as last quarter, primarily in India.
Hire based on skills
CEO Sweet attributes recruiting in India to skills-based capabilities.
She said a big reason for companies to move to India is the availability of skills. “Ten years ago, it was about labor arbitrage. Today, it’s about the ability to acquire these skills at scale,” she said.
At least one analyst said Accenture’s results highlighted a resurgence in technology spending.
“Accenture’s results reflect the recent resurgence in technology spending, particularly on GenAI strategy and implementation projects. When you consider that Microsoft Copilot achieved $1 billion in sales in its first year, spending on services in this area will Growth is accelerating, and it makes perfect sense that Accenture is leading the charge.
While annual growth forecasts and headcount increases look optimistic, the company expects its revenue to be negatively impacted by foreign currency fluctuations, compared with previous assumptions of a positive impact. Accenture expects revenue for the quarter ending February 2025 to be US$1.62-16.8 billion.