TBR 1Q11 Accenture Report


Published on

Technology Business Research is a different kind of research company. Our bottoms-up approach provides a look at the technology industry unlike anything you’ve seen before. We analyze company performance in professional services, networking and mobility, computing and hardware, and software on a quarterly basis, leveraging our data to create industry benchmarks and landscapes that provide a business perspective on leaders and laggards and their business plans. We are experts in the business of technology.

Accenture will continue to expand its market share in key geographies (both developed and emerging) and verticals as demand improves. The firm is now seeing a strong comeback in consulting & SI with revenue and signings building. TBR expects this momentum to continue as Accenture attracts clients with its strong transformational value proposition. In addition, the firm will see more outsourcing opportunities, which will add to the consulting expansion. ccenture’s strong offerings portfolio, coupled with its differentiated talent and skill sets, will help it attract clients as they continue to look for opportunities to recover from the downturn.

Published in: Technology, Business
1 Like
  • Be the first to comment

No Downloads
Total Views
On Slideshare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

TBR 1Q11 Accenture Report

  1. 1. Technology Business ResearchAccelerating Customer Success Through Business Research TBR T E C H N O L O G Y B U S I N E S S R ES E AR C H , I N C .
  2. 2. PROFESSIONAL SERVICES BUSINESS QUARTERLYSMAccentureFirst Calendar Quarter 2011Second Fiscal Quarter 2011 Ended Feb. 28, 2011 TBR OUTLOOK – POSITIVE TBR SCORE (0-10 SCALE)  5.95Publish Date: April 14, 2011Author: Elitsa Bakalova (elitsa.bakalova@tbri.com), PSBQ AnalystContent Editor: Alison Crawford, PSBQ Senior Analyst TBR T E C H N O L O G Y B U S I N E S S R ES E AR C H , I N C .
  3. 3. Contents TBR Company Analysis Company Data Models 3 Executive Summary 25 Income Statement 6 Strategy Overview 26 Balance Sheet 8 Corporate SWOT Analysis 27 Service Line Model 9 Scenario Discussion 28 Operating Group Model 12 Financial Model Strategy 29 Geographic Model 16 Go-to-Market & Services Strategies 30 Operating Expense Model 20 Alliance & Acquisition Strategies 31 Headcount Model 22 Geographic Analysis 32 Financial Strategy Graphs 23 Resource Management Strategy 34 Go-to-Market Graphs 35 Resource Management Graphs 37 Acquisitions Table 38 Portfolio of Services Table 39 Services Announcements 41 Quarterly Signings Tables 50 Strategic Alliances Tables 52 Org. Structure 53 Worldwide Locations Table 55 About TBR3 Accenture 1Q11 | Professional Services Business Quarterly ©2011 Technology Business Research, Inc.
  4. 4. Executive Summary TBRAccenture is prepared for a full year of growth as it continues investingto capture business momentum around the globeTBR Position Accenture Objectives • Accenture will continue to expand its market share Achieve profitable growth (grow revenue 11.0% to in key geographies (both developed and emerging) 14.0% in local currency and reach operating margin of and verticals as demand improves. 13.6% to 13.7% in FY11) • The firm is now seeing a strong comeback in • Accenture is investing in growth and in the consulting & SI with revenue and signings building. functionality to run as a high-performance business (e.g., focus on operational efficiency, higher TBR expects this momentum to continue as offshore leverage, automation for service delivery, Accenture attracts clients with its strong etc.). Given such measures, TBR expects the transformational value proposition. In addition, the company to reach its FY11 revenue growth and firm will see more outsourcing opportunities, which profitability targets (profit targets are not too will add to the consulting expansion. aggressive in our view). • Accenture’s strong offerings portfolio, coupled with Expand business from three dimensions: core its differentiated talent and skill sets, will help it business, outside of core in complementary service attract clients as they continue to look for areas, and in emerging and developed markets opportunities to recover from the downturn. • Growth in Accenture’s core business (consulting, technology and outsourcing) will be augmented by ACCENTURES 1Q11 PERFORMANCE VS. EXPECTATIONS (in $ millions) Consensus Guidance Range Actual increased traction in high-growth areas (e.g., Net Revenue $5,570 $5,600 - $5,800 $6,054 analytics, cloud computing); however, competition Operating Margin N/A 13.6% - 13.7% (FY11) 12.7% in those high-growth areas is increasing, which Non-GAAP EPS $0.69 $0.7- $0.9 $0.75 could create challenges for Accenture’s expansion. Recruit people to expand onshore and Global ACCENTURES 2Q11 GUIDANCE AND EXPECTATIONS Delivery Network to accommodate demand (in $ millions) TBR Estimate Consensus Guidance Range • Accenture is on track to achieve its goal of hiring Net Revenue $6,300 $6,000 - $6,200 $6,300 - $6,500 Operating Margin 13.4% N/A 13.6% - 13.7% (FY11) more than 64,000 people globally during FY11. The Non-GAAP EPS N/A $0.85 $0.8- $0.95 firm’s strength lies in its ability to quickly train and deploy people, allowing it to generate operational efficiencies and meet increasing market demand.4 Accenture 1Q11 | Professional Services Business Quarterly ©2011 Technology Business Research, Inc.
  5. 5. Executive Summary TBRAccenture’s scores reflect its expanded revenue base, stable financialperformance metrics and high utilization TBR Company Average Standard CALENDAR QUARTER RESULTS TBR SCORING SUMMARY:FINANCIAL METRICS Score Figure in Class Deviation/2 1Q10 2Q10 3Q10 4Q10 1Q11Operating Margin 5.52 12.7% 9.4% 6.5% Financial Model Strategy: 5.91 5.96 6.03 6.23 6.29Current Ratio 4.61 1.55 1.77 54.4% Go-to-Market & Services Strategies: 6.23 6.68 6.31 6.46 6.35Debt-to-Asset Ratio 3.87 0.71 0.57 12.8% Resource Management Strategy: 5.10 5.03 4.97 5.19 5.22Return on Assets (TTM) 6.59 15.6% 8.1% 3.5% TOTAL AVERAGE TBR SCORE: 5.75 5.89 5.77 5.96 5.95Return on Equity (TTM) 8.26 56.3% 17.8% 11.8%TOTAL AVERAGE TBR SCORE 6.29 TBR Company Average StandardGO-TO-MARKET & SERVICES METRICS Score Figure in Class Deviation/2Revenue (in $ Millions) 7.61 $6,054 $2,400 $1,401Revenue Growth YTY 5.16 16.9% 14.3% 16.9% Accenture continues to outperformBacklog/Revenue 6.30 2.49 1.96 0.37 its peers through its financial metricsDay Sales Outstanding 6.68 45.67 65.69 11.88 largely due to its stable operatingTOTAL AVERAGE TBR SCORE 6.35 income and net income. Accenture’s revenue stabilization continued TBR Company Average Standard through 1Q11, leading the firm toRESOURCE MANAGEMENT METRICS Score Figure in Class Deviation/2 outperform its peers in the Go-To-Gross Margin 5.11 31.7% 31.0% 5.9%Operating Expenses as a % of Revenue 5.22 18.9% 20.0% 5.0% Market & Services metrics.Revenue per Employee (TTM) 4.08 $112,550 $178,720 $71,920Operating Income per Employee (TTM) 4.86 $15,188 $18,405 $22,335Utilization Rate 8.10 86.0% 77.2% 2.8%Turnover 5.38 14.0% 15.0% 2.7%TOTAL AVERAGE TBR SCORE 5.22Key Represents an area where Accenture is currently challenged versus peers Represents an area where Accenture is outperforming its peers Represents an area where Accenture is neither significantly outperforming nor underperforming its peers 5 Accenture 1Q11 | Professional Services Business Quarterly ©2011 Technology Business Research, Inc.
  6. 6. Executive Summary TBRWhile there are pockets of uncertainty in some verticals and geographies,Accenture will see improved growth during 2011TBR assessment of Accenture’s two-year strategic outlookKey takeaways Strategic outlookFinancial: Accenture’s revenue will continue to • Though the economic environment in Europe remainsimprove through FY11 as recovery in the IT services mixed as countries recover from the downturn atmarket solidifies and spreads geographically. different rates, stabilization in North America andGo to market: Accenture will strengthen its offerings growth opportunities in emerging countries in APAC isportfolio and vertical expertise through organic helping Accenture position for long-term revenue gains.investments as well as alliances and acquisitions. • Accenture’s investment in business development, go toResource: The company will continue hiring (the goal market (strengthening core business with new offerings,is to hire 64,000+ people in FY11), manage utilization investing in new business initiatives with high-growthand attrition and increase its offshore leverage. potential such as analytics, cloud computing, etc.) and hiring efforts will help the company take advantage of ACCENTURES REVENUE, GROWTH AND PROFITABILITY opportunities that arise. TBR $30.0 • Accenture’s strong vertical expertise and $27.50 $25.0 $24.80 25% transformational value proposition will help it gain $22.21 15% traction in a wide range of industries. The company will $20.0 see more work in the recovering financial services In $ Billions $15.0 5% industry, both in outsourcing and consulting & SI as well $10.0 $5.18 $5.57 $5.42 $6.05 $6.05 $6.30 $3.00 $3.40 $3.93 -5% as in products, resources and communications & high- $5.0 $0.65 $0.80 $0.71 $0.83 $0.77 $0.84 tech. While pockets of uncertainty will continue to $0.0 -15% challenge growth in the public sector, Accenture will see 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 CY10 CY11 CY12 Est. Est. Est. expansion in the global healthcare vertical and will Total Revenue (Net Revenue) Operating Income continue to invest in IT to improve the quality of Revenue Growth Y/Y Operating Margin healthcare. SOURCE: ACCENTURE AND TBR6 Accenture 1Q11 | Professional Services Business Quarterly ©2011 Technology Business Research, Inc.
  7. 7. Strategy Overview TBRAccenture is seeing success (e.g., revenue and signings growth) as a resultof its increased focus on delivering value to clientsFunction Key Strategies TBR Assessment  Accenture’s value proposition of well-balanced offerings combining consulting & SI and outsourcing with Increase Accenture’s business innovative high-growth service offerings (e.g., analytics, momentum by focusing onOverall cloud computing, mobility, etc.) is proving attractive to delivering value to the client clients. Continuous improvement in the firm’s top line and signings as well as a healthy bottom line signify it has been successful in executing its strategy. Deliver profitable growth:  An uptick in FY11 guidance from 8% to 11% in local • Grow FY11 revenue by 11% to currency provided in 4Q10 demonstrates improved 14% in local currency, faster than environment and growth potential.Financial the market  Efficiency on the OPEX side is driving operating margin • Reach operating margin of 13.6% improvement. This trend will continue as Accenture to 13.7% in FY11, up year-to- works toward its operating margin goal, which TBR sees year by 10 to 20 basis points as not overly aggressive and thus achievable.  Accenture is experiencing a growth recovery in its core business (consulting, technology, outsourcing) and is Expand business from three gaining traction in high-growth service areas such as dimensions: core business as analytics, cloud computing and smart energy. The firm’sGo to primary growth engine, outside of combined reach in developed and emerging markets isMarket core business in growth service proving successful. Economic stabilization in North areas, and in emerging and America and growth opportunities in Brazil allowed developed markets Accenture to post record-high revenue in the Americas, growing 21.4% year-to-year. Key:  Working: Short-term impact expected on bottom/top line  Not working: No major impact or differentiation expected7 Accenture 1Q11 | Professional Services Business Quarterly ©2011 Technology Business Research, Inc.
  8. 8. Strategy Overview TBRAccenture continues to invest in hiring and training to addressmarket demandFunction Key Strategies TBR Assessment  Alliances are key to the development of Accenture’s portfolio, especially in new service areas and verticals • Make strategic alliances to with high-growth potential, such as cloud computing, expand in new areas of analytics and healthcare offerings (e.g., public health technology and vertical- solutions with Plexis). Accenture will continue to utilizeAlliances & partners to augment its offerings and capabilities. specific offeringsAcquisitions  Accenture is strong at identifying and integrating small- • Leverage tuck-in acquisitions scale acquisitions that help fill gaps in its portfolio. TBR to fill gaps in its portfolio expects additional tuck-in acquisitions during FY11, as Accenture looks to supplement its organic growth and augment its portfolio, IP and vertical expertise. • Recruit people to expand  Accenture will continue to increase headcount to GDN and invest in training to capitalize on market growth. The company is building out accommodate for demand resources in its GDN, particularly in lower-cost regions (e.g., the Philippines, India). Service areas with improving • Develop and increase demand, such as consulting & SI, also are seeing staffResources & leverage of global delivery increases as a response to returning discretionaryInvestments capabilities spending. Hiring and training will dilute gross margin in fiscal 2H10, but they are necessary to drive growth. • Invest in automation to offer  The development and shifting of service delivery to the differentiated, less risky GDN – especially for outsourcing and, increasingly, SI – implementations with more and use of assets to automate delivery will support rapid ROI Accenture’s long-term profitability and attract clients. Key:  Working: Short-term impact expected on bottom/top line  Not working: No major impact or differentiation expected8 Accenture 1Q11 | Professional Services Business Quarterly ©2011 Technology Business Research, Inc.
  9. 9. Corporate SWOT Analysis TBRAccenture’s well-developed resources and capabilities allow it to winnew growth opportunities Corporate SWOT Analysis Strengths Opportunities • Transition of executive power in CEO succession (new • Target growth opportunities in emerging markets CEO as of Jan. 1) • Increasing demand for analytics to support • Broad Global Delivery Network and developed Accenture’s growth presence in low-cost locations 1 • Expansion of Global Delivery Network in Latin • Leverage of a standard framework for building and America due to demand for services delivered from delivering services the region • Alliance relationships with 150+ partners • Stabilizing consulting/SI demand will drive growth in • Strong vertical market focus and expertise Accenture’s consulting & SI business. • Core competency to attract, hire, train, deploy and • Growth potential of cloud computing can help retain skilled talent Accenture gain traction. • Accenture’s Technology Labs turn technology into business results Weaknesses Threats • Price competitiveness is limited in commoditized/sole 1 • Uneven economic recovery in Europe will challenge sourcing deals – unlike in large/complex Accenture’s near-term performance in the region. engagements. • Indian vendors are becoming more active in business • Recruiting and training costs tied to hiring as well as consulting, analytics and remote management ITO. wage and salary increases used as means to hold off • Competition from other MNCs (e.g., IBM, HP/EDS, rising attrition are having a temporary negative etc.) and European firms for top clients 1 impact on cost of services. • Competition for lower-cost labor by other MNCs as well as Indian and European vendors may challenge hiring in India and the Philippines.9 Accenture 1Q11 | Professional Services Business Quarterly ©2011 Technology Business Research, Inc.
  10. 10. Scenario Discussion TBRAccenture will achieve double-digit growth in FY11 as demandfor consulting & SI improvesScenario Discussion: Positive revenue, signings and demand trends indicate growth for AccentureScenario SWOT Assessment • TBR believes Accenture will see growth during the rest of FY11 Strength: balanced combination of consulting, (ends in August) as its core business segments, outsourcing and SI and outsourcing offerings (core business) consulting & SI, as well as key verticals, such as products, financial Weakness: prices tend to be higher than its services, communications & high-tech, sustain growth recovery competitors (based on type of engagement) driven by improving demand trends. Opportunity: improving consulting & SI • Accenture is experiencing strength in outsourcing, where cost demand is creating business prospects optimization is playing a key role. While outsourcing growth is expected to slightly moderate during fiscal 2H11, the consulting & Threat: high competition in Accenture’s core SI arena is gradually recovering from the economic downturn. business areas as vendors strive to capture demand and stabilize revenue growth levels • Consulting & SI bookings reached its second-highest level ever as management and IT consulting as well as SI fueled expansion across a range of verticals. Positive demand trends coupled with ACCENTURES NET REVENUE AND GROWTH intensified hiring efforts in consulting & SI will allow Accenture to TBR $30 40% gain traction in its larger service line (accounted for 58% of Net Revenue Growth Y/Y (in $) $25 $23.4 $21.6 $21.6 $24.3 revenue in 1Q11 and 57.4% in FY10). $19.7 $20 20% 18.3% • Accenture will gain additional momentum entering 2Q11 (fiscal In $ Billions $15 18.7% 12.8% 3Q11) as it looks to build wallet share among clients for higher- $10 0% -0.1% value transformational consulting services, the firm’s key $5 -7.7% differentiator, which will ultimately bring more work in areas such $0 -20% FY07 FY08 FY09 FY10 FY11 Est. as SI and outsourcing. Net Revenue CAGR FY07 - FY10: • As Accenture strives to sustain its growth, the company will see Net Revenue Growth Y-t-Y 3% (in U.S. dollars) increased competition from other MNCs, European and Indian SOURCE: ACCENTURE AND TBR vendors that, in a similar fashion, are looking to regain traction with clients and expand their market shares. 10 Accenture 1Q11 | Professional Services Business Quarterly ©2011 Technology Business Research, Inc.
  11. 11. Scenario Discussion TBRAccenture will face continuous competition at its lower-cost headcountand local market expansion plans Scenario Discussion: Expansion in India will strengthen Accenture’s lower-cost delivery capabilities and create avenues for local market growth Scenario SWOT Assessment • Expansion of Accenture’s lower-cost resources is Strength: well-developed presence in low-cost strengthening its Global Delivery Network (GDN), allowing locations (47% of total headcount in 1Q11) the company to provide services at competitive prices. Weakness: concentration of resources in India • India and the Philippines, where Accenture is currently and the Philippines creates operational risk investing, are the firm’s two dominant lower-cost delivery Opportunity: demand for offshore service locations (made up ~66% of Accenture’s near/offshore delivery and economic growth in emerging headcount in 1Q11) and will remain so in the long term. markets (for local market expansion) • Accenture will continue to add people in the two countries Threat: competition for talent and pricing but will face intensified competition for talent, which is pressures from MNCs and Indian vendors currently driving up attrition and may drive up salary levels and negatively affect cost of services.TBR ACCENTURES GDN HEADCOUNT AND GROWTH • While the greater focus for the two regions is on global 130,000 service delivery, offshore expansion is allowing Accenture to 30.0% establish resources that also serve the local market. 110,000 Headcount Growth Y/Y 20.0% • With a new managing director in India (Avinash VashisthaHeadcount 90,000 will replace Harsh Manglik, the current country managing 70,000 10.0% director), Accenture is ready to expand in India (TBR estimates India comprises ~$250 million in annual revenue). 50,000 0.0% • The firm is making progress in winning local clients in India as 30,000 -10.0% well as other emerging high-growth markets, but 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 Near/Offshore GDN competition in the region is increasing (e.g., other MNCs, Near/Offshore Growth Y/Y GDN Growth Y/Y European and Indian vendors), which could challenge Total Headcount Growth Y/Y Accenture’s expansion efforts. SOURCE: ACCENTURE AND TBR 11 Accenture 1Q11 | Professional Services Business Quarterly ©2011 Technology Business Research, Inc.
  12. 12. Scenario Discussion TBRAccenture’s ability to tailor analytics offerings to demand createsavenues for growth Scenario Discussion: Gaining traction in areas like predictive analytics will support revenue growth Scenario SWOT Assessment • TBR estimates Accenture is seeing $1.0 billion in business Strength: analytics offerings from strategy to opportunities in analytics. While TBR believes Accenture’s execution, vertical expertise, client relationships analytics business is still smaller than the aspired size, the Weakness: expanding but still relatively small business is growing despite intensified competition. predictive analytics business • Accenture will see more traction in the long run due to its Opportunity: increasing demand in emerging, ability to lead the market by using its research capabilities fast-growth market segment to identify key trends and adjust its offerings. Threat: high competition from other MNCs, • Accenture is seeing demand for predictive analytics European and Indian vendors embedded in decision-making. To address demand, Accenture has developed offerings, assets and intellectual Accenture’s Analytics Offerings property to help clients gain insights for future actions from Cross- Drive business outcomes from their data, optimize decision processes and improve functional enterprise analytics, outcomes. analytics organizational effectiveness • A key differentiator is Accenture’s ability to move from Functional Transform functions or insights to decisions to outcomes by providing a holistic- analytics business processes (e.g., sales service approach that starts with strategy (Accenture’s core and marketing, customer strength lies in its consulting business) and ends with service, procurement, etc.) execution (implementation, outsourcing). Industry- Specific solutions across a • In addition to building analytics capabilities at the client, specific wide range of industries Accenture provides analytics as a service, built on its own analytics platform (on a subscription or utility basis). This flexible Information Business intelligence, portals & service that can be scoped to the client’s needs, reduces management content management, data up-front costs and accelerates speed to outcome. management and architecture • A robust network of alliance partners and tuck-in Source: Accenture and TBR acquisitions help Accenture fill portfolio gaps.12 Accenture 1Q11 | Professional Services Business Quarterly ©2011 Technology Business Research, Inc.
  13. 13. Financial Model Strategy: Revenue TBRAccenture will maintain growth momentum throughout 2011 Revenue Performance and Strategies 1Q11 Net Revenue: $6.1 billion, 16.9% YTYTBR ACCENTURES NET REVENUE, GROWTH AND PROJECTIONS • Accenture’s revenue exhibited year-to-year growth for Net Revenue Growth Year-to-year 20.0% $30 $22.2 $24.8 $27.5 15.0% the fourth consecutive quarter in 1Q11, driven by $25 16.9% 8.3% 12.3% 13.1% 10.0% increasing demand for both outsourcing and consulting $20 11.6% 10.9% engagements.In $ Billions $15 5.0% -1.7% 5.3% 6.1% 0.0% • Strong bookings in the U.S., Canada, and Brazil across $10 $5.2 $5.6 $5.4 $6.0 $6.1 $6.3 Accenture’s service lines additionally contributed to $5 -5.0% top-line performance in 1Q11. $0 -10.0% 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 CY10 CY11 CY12 Net Revenue Est. Est. Est. Revenue and Growth Outlook Revenue Growth Year-to-year NOTE: Annual revenue and projections are for calendar 2010, 2011 and 2012, respectively. • Continually improving demand for services supporting cost optimization and growth, IT transformation, ACCENTURES TRAILING 12-MONTH REVENUE virtualization and ERP implementation will supportTBR $26 sustained revenue growth in 2Q11 and the rest of $23.4 $24 $23.1 $23.8 2011. $22.4 $22.2 $22 $21.6 $20.9 $20.8 $21.3 $21.6 • Consulting & Systems Integration will be a key driver of In $ Billions $20 growth through 2011 as clients intensify their $18 investments in growth and transformation. FY09 FY10 $16 • Accenture will intensify efforts to build out its global $14 service delivery capabilities and expand into high- 2Q08- 3Q08- 4Q08- 1Q09- 2Q09- 3Q09- 4Q09- 1Q10- 2Q10- 3Q10- growth geographies, supporting the diversification of 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 its revenue base. Est. SOURCE: ACCENTURE FINANCIALS AND TBR13 Accenture 1Q11 | Professional Services Business Quarterly ©2011 Technology Business Research, Inc.
  14. 14. Financial Model Strategy: Operating Groups TBRWhile temporary challenges remain in the public sector, the restof Accenture’s verticals will see expansion in the near term Operating Group Performance and Strategies Communications & High-Tech experienced TBR ACCENTURES REVENUE BY OPERATING GROUP positive growth for consulting and outsourcing (IN $ BILLIONS) CHT services related to cost takeout, customer 100% $0.85 $0.93 $0.86 $0.93 $0.96 $1.02 $1.3 Billion acquisition and retention, and web development. % of Net Revenue 75% $0.93 $1.00 $1.01 $1.13 $1.17 $1.18 New demand for wireless services engagements $1.08 $1.15 $1.12 $1.30 $1.27 $1.32 also drove growth within the segment. 50% $1.11 $1.18 $1.16 $1.28 $1.27 $1.32 FS regained strength in outsourcing and 25% Financial continued to see traction in consulting & SI in $1.21 $1.31 $1.27 $1.40 $1.37 $1.45 Services 0% (FS) post-merger integration, banking and insurance 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Est. $1.3 Billion replatforming, risk and regulatory compliance and Health & Public Service Resources Financial Services Communications & High-Tech business transformation. Products SOURCE: TBR AND ACCENTURE HPS is seeing growth in healthcare (e.g., cost Health & reduction, back-office transformation, health ACCENTURES OPERATING GROUP PROFITABLITY Public administration and electronic medical records). TBR Service Repositioning of the public sector business, 19.0% (HPS) especially in EMEA, and increased volumes in % of Net Revenue 17.0% $1.0 Billion outsourcing and SI with the U.S. federal sector 15.0% 13.0% will help Accenture improve performance. 11.0% 9.0% Products Products growth was largely driven by consulting 7.0% services across verticals and an increase in $1.4 Billion 5.0% transformational ERP projects in North America. 3.0% 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Est. Resources was the fastest-growing, up 26.0% Communications & High-Tech Financial Services Resources year-to-year due to strong growth in consulting & Health & Public Service Products Resources $1.2 billion SI (ERP, operating model design and rollout, SOURCE: TBR AND ACCENTURE supply chain optimization, smart grid).14 Accenture 1Q11 | Professional Services Business Quarterly ©2011 Technology Business Research, Inc.
  15. 15. Financial Model Strategy TBR Consulting & SI will be the near-term revenue driver as demand continues to improve and clients initiate transformational projects Service Line Performance and Strategies • Consulting & SI saw strong performance ACCENTURES SERVICE LINE REVENUE in verticals such as resources, financial TBR services, communications & high-tech (IN $ MILLIONS) $7,000 25.0% and products. Growth Year-to-Year $6,000 20.0% In $ Millions $2,478 $2,589 $5,000 $2,346 $2,326 $2,544 15.0% • Consulting & SI will continue to regain $4,000 $2,244 $3,000 10.0% Consulting & SI: growth momentum during FY11 as $2,000 $3,225 $3,568 $3,509 $3,648 5.0% $3.5 billion, up demand stabilizes. $2,932 $3,094 0.0% $1,000 $0 -5.0% 19.7% year-to- • Consulting will be driven by cost take- 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Est. year out, revenue growth, compliance, Outsourcing C&SI application modernization, virtualization C&SI YtY Growth Outsourcing YtY Growth and adoption of cloud computing. SOURCE: TBR AND ACCENTURE • SI will be driven by ERP (implementation of SAP, Oracle and Microsoft platforms), ACCENTURES SERVICE LINE REVENUE AND package enhancements and analytics.TBR PROFITABILITY • Outsourcing was driven by verticals such 75% as resources, communications & high-% of Net Revenue 56.6% 57.9% 57.1% 59.0% 58.0% 58.9% 60% 43.4% 42.9% tech and financial services. 45% 42.1% 41.0% 42.0% 41.1% Outsourcing: • Outsourcing reflected demand for cost 30% 15.0% 16.5% 15.0% 15.1% 14.0% 14.8% take-out, improving operational efficiency $2.5 billion, up 15% and outsourcing of business processes. 0% 9.4% 11.6% 10.7% 11.6% 11.0% 11.4% 13.4% year-to- 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Est. year • Outsourcing growth is expected to slightly Consulting & SI Revenue Outsourcing Revenue slow down during fiscal 2H11 as Consulting & SI Operating Margin* Outsourcing Operating Margin* Accenture regains strength in consultingSOURCE: TBR AND ACCENTURE * Operating margin is a TBR estimate & SI driven by its transformational value proposition, which will drive business. 15 Accenture 1Q11 | Professional Services Business Quarterly ©2011 Technology Business Research, Inc.
  16. 16. Financial Model Strategy: Expenses TBRAccenture will achieve its operating margin target for FY11by driving efficiency on the SG&A side 1Q11 Operating Expenses: $1.2 billion TBR OPERATING EXPENSES AS A PERCENTAGE OF SALES Cost of Aggressive hiring, salary increases and 22.0% Revenue subcontractor use boosted cost of services, 17.0% 12.0% 12.8% 12.9% 12.1% $4.1 but this was a necessary step to help drive 12.0% 11.7% 11.6% billion growth turnaround and long-term expansion. 7.0% 8.0% 7.4% 8.0% 7.2% 7.0% 6.4% 2.0% 0.1% 0.1% 0.0% 0.0% 0.0% Accenture was able to manage its SG&A 0.0% SG&A -3.0% expenses despite business development 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Est. Expense efforts (SG&A expenses as a percentage of Sales and Marketing General and Administrative $1.1 Reorganization cost (benefit) revenue fell 110 basis points from 20.0% in billion SOURCE: ACCENTURE AND TBR 1Q10 to 18.9% in 1Q11). • Hiring and training will continue to impact ACCENTURES GROSS AND OPERATING PROFIT gross margin in fiscal 2H11; however, salaryTBR AND PROJECTIONS increases and bonuses were all absorbed in 40% 1H11, alleviating margin pressures from pay Gross and Operating Margin 32.7% 34.7% 34.0% 32.2% 31.7% 32.0% 30% increases. • As the pricing environment stabilizes, Margins 20% Accenture will absorb higher cost of services 14.4% 13.7% and 12.6% 13.2% 12.7% 13.4% with higher pricing and more efficient Outlook 10% resource mix. • Efficiency on the opex side is driving operating 0% 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Est. margin improvement, a trend that will Gross Margin Operating Margin continue as Accenture works toward its SOURCE: TBR AND ACCENTURE operating margin goal of 13.6% to 13.7% for FY11, which TBR sees as achievable.16 Accenture 1Q11 | Professional Services Business Quarterly ©2011 Technology Business Research, Inc.
  17. 17. Go-to-Market & Services Strategies: Sales Strategy TBRAccenture’s emphasis on client relationship building will continue to boostsignings and revenue in the long runSales Strategy & Customer SegmentationTBR Assessment Accenture’s Sales Strategy Accenture is strongly focused on Accenture’s global sales organization is comprised of a traditional building client relationships. The use of sales channel supported by a small direct sales channel. senior executives (partners and • Internal/Traditional sales channel: Responsible for the bulk of principals) in the bulk of sales activities Accenture’s sales. The sales function is tasked to the firm’s helps create long-lasting customer partners, associate partners and managers (or senior executives) – relations (e.g., diamond clients), 4,500 people globally. Each client has account executives account growth and revenue benefits. responsible for the relationship, business development, etc. • Direct sales channel: Covers new clients with whom Accenture Accenture’s Sales Structure does not yet work, and is comprised of: o Equally small and direct sales team in BPO that targets SMBs. Internal/Traditional Sales (Accenture’s Senior o Direct sales team in applications outsourcing (~80 sales Executives; 4,500 people) directors) and ITO that works with client senior executives. • Third-party advisors: These advisors work with clients to score Direct Sales deals for Accenture and constitute only a minor portion of the (~150 people, TBR company’s sales force. estimate) Accenture’s Customer Structure Source: Accenture and TBR. Accenture defines its “diamond,” or “foundation,” clients as those Outside with $100+ million, long-term, established accounts that have a Advisors strong relationship with the company. The number of Accenture diamond clients across the globe reached 100 at the end of FY10. • The United Kingdom, a key region for Accenture’s business, has ~20 Client diamond clients. Diamond clients are also located in emerging markets (e.g., one in China, four in Brazil).17 Accenture 1Q11 | Professional Services Business Quarterly ©2011 Technology Business Research, Inc.
  18. 18. Go-to-Market & Services Strategies: Service Line Deep Dive TBRIndustry-specific offerings allow Accenture to broaden its client base Accenture’s Services Line Deep Dive TBR Assessment While consulting & SI slightly led in terms of revenue contribution in 1Q11, overall Accenture has a well- balanced business mix that combines strong vertical expertise with high-value transformational offerings, ACCENTURE REPORTED 1Q11 SERVICE LINE DEEP DIVE implementation and cost-optimization capabilities. ITO, 4.3% This allows the company to target a wide range of clients and achieve account growth along the services Outsourcing, BPO, 24.4% continuum. 42.0% Service Lines Deep Dive Strategies AO, 13.3% • C&SI: place strong emphasis on cost take-out, growth and transformation, ERP, package enhancements and analytics to increase bookings • ITO: emphasize remote infrastructure management to C&SI, 58.0% accommodate strong demand as clients become C&SI, 58.0% increasingly attuned to transferring assets due to lighter capital costs (cost optimization is a key client priority) • BPO: benefit from providing a combination of horizontal offerings (e.g., demand for F&A) and industry-specific solutions (e.g., healthcare, insurance) • AO: bundle AO with other outsourcing services; provide client value and use IP for AO service delivery18 Accenture 1Q11 | Professional Services Business Quarterly ©2011 Technology Business Research, Inc.
  19. 19. Go-to-Market & Product Strategies TBROutsourcing demand remains, and consulting & SI has improved itscontribution to bookings, which will support near-term revenue growthSignings & Pipeline TBR ACCENTURES TTM NEW BOOKINGS AND Y/Y GROWTH• Improving demand is positioning Accenture for revenue $30,000 25% Year-to-year Growth growth during the rest of FY11. While there may be 20% (In $ Millions) $25,000 TTM Bookings 15% pockets of uncertainty in geographies like Japan due to $20,000 10% the recent natural disasters, TBR expects Accenture’s $15,000 5% 0% bookings will land somewhere in the middle of its $10,000 -5% expectations range of $25 billion to $28 billion in FY11. $5,000 -10% -15%• Consulting & SI demand is heating up, with consulting 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Est. signings growing 12.1% year-to-year in 1Q11 and TTM Outsourcing Year-to-Year Growth TTM Consulting returning to levels experienced in FY08 before the SOURCE: TBR AND ACCENTURE recession. Accenture is showing its strength in all three Key 1Q11 Customer Wins areas, including management and technology consulting and SI, and TBR expects this trend to Company TBR Assessment continue during the rest of FY11. Such deals will help Israel Electric This consulting & SI deal showcases support near-term revenue performance. Corporation Accenture’s ability to work with• Accenture’s strong transformational capabilities and its Israel clients in different business areas as mix of cost improvement and growth offerings will help Two years it covers six different projects. The it gain traction with clients in consulting & SI as well as deal extends Accenture’s relatively outsourcing. Demand for innovation will help small market presence in the Middle Accenture gain traction outside its core business in East. areas such as cloud computing, analytics, etc. RSA This insurance BPO deal showcases• Accenture is seeing more larger-sized deals (signed U.K. Accenture’s ability to build strong eight deals over $100 million in 1Q11), which will help Four years relationships with its clients and support long-term revenue generation. expand existing business. The original deal was signed in 2003 and will extend until 2016.19 Accenture 1Q11 | Professional Services Business Quarterly ©2011 Technology Business Research, Inc.
  20. 20. Go-to-Market & Services Strategies: Pricing TBRPricing is stabilizing and slowly improving, allowing Accenture to expandits revenue and improve contract profitability in the long term Pricing Environment & Strategies Accenture’s market and pricing environment remains competitive; prices are now more stable across a broader • As the economic environment stabilizes across share of its business and geographies, allowing the the globe, TBR believes Accenture is seeing company to sustain the recovery in its growth. pricing stability in the Americas, APAC and some countries in Europe (e.g., Germany, the Nordics). ACCENTURES U.S. GOVERNMENT HOURLY RATES In such regions, we believe Accenture is able to TBR (05/10-05/11) test and push slight price increases with clients SKILL LEVEL/EXPERIENCE that are broadening their IT investments.TITLE 1 2 3 4Business Integration Analyst $91 $100 $114 $123 • At the same time, TBR believes pricing pressuresBusiness Integration Consultant $111 $125 $139 $153 still exist in regions in Europe that lag inBusiness Integration Manager $157 $177 $183 $202 economic recovery and have tight public sectorBusiness Integration Senior Manager $236 $274 $303Business Integration Associate Partner $316 $347 $378 $417 spending (e.g., the Netherlands, the U.K., Spain).Business Integration Partner $494 N/A N/A N/A • During 1Q11, Accenture experienced lowerClient Financial Management Assistant $64 N/A N/A N/AClient Financial Management Analyst $81 $91 N/A N/A contract profitability year-to-year largely inClient Financial Management Specialist $110 $121 N/A N/A consulting & SI but also in outsourcing (i.e., inClient Financial Management Manager $157 N/A N/A N/A the health & public service vertical). AccentureClient Financial Management Senior Manager $231 N/A N/A N/A was unable to fully recover the higher annualClient Financial Management Associate Partner $340 N/A N/A compensation increases and subcontractor costsExecutive Assistant $64 $73 $83 N/ANOTE: Net rates (discount deducted). with better pricing and more efficient resourceSOURCE: TBR AND GENERAL SERVICES ADMINISTRATION. mix. TBR expects contract profitability will The hourly billing rates above are based on Accenture’s General Purpose Commercial IT stabilize and improve in 2H11, as all salary Equipment, Software and Services government contract with the U.S. General Services increases and bonuses were absorbed in 1H10, Administration, launched in 2010. while the pricing environment is improving.20 Accenture 1Q11 | Professional Services Business Quarterly ©2011 Technology Business Research, Inc.
  21. 21. Alliance & Acquisition Strategies TBRAccenture will remain steadfast in supporting organic growthvia small-scale strategic acquisitions through FY11 Acquisition Assessment Recent Acquisitions Accenture will be looking to make more small-scale CAS Computer Anwendungs- und Systemberatung AG acquisitions given its ability to fund such transactions • In January, Accenture completed the acquisition of as well as its history and expertise in integrating Germany-based CAS Computer Anwendungs- und companies. Systemberatung AG (CAS). Accenture gained 234 Accenture Acquisition Strategy employees in Germany, the U.K., the U.S. and Australia. • Accenture’s main goal is to grow its business organically; however, the company supplements • Accenture will strengthen its existing software organic growth with acquisitions when it finds the capabilities by adding CAS’ customer relationship right transaction in terms of price and capabilities management (CRM) and mobility software focused on that will be added. retail execution and trade promotions for the consumer products industry. • Accenture is successful at finding and integrating small-scale, tuck-in acquisitions that are not • By increasing the functionality of the software post- disruptive to overall business performance. acquisition in areas such as digital merchandising, distributors’ management and analytics, Accenture • The acquired companies help Accenture fill in gaps in will be able to expand its client base and geographic its offerings and capabilities, augment its assets and reach to LATAM, China and India. drive overall competitive differentiation. • The bundling of consulting & SI services with the software will help Accenture gain broader revenue opportunities and provide higher-value to the client.21 Accenture 1Q11 | Professional Services Business Quarterly ©2011 Technology Business Research, Inc.
  22. 22. Alliance & Acquisition Strategies TBRAlliances are a strong contributor to Accenture’s competitiveness anddiverse set of service offerings Alliance Assessment Recent Alliances • TBR expects Accenture will expand its partnership NetApp base of technology developers to broaden its • Accenture and NetApp are expanding their existing offerings with high-growth potential and vertical- relationship for the joint development, marketing and specific solutions. delivery of solutions focused on datacenter • Alliances will continue to be vital, allowing Accenture optimization and virtualization, cloud computing and to provide services and solutions in high-growth application optimization. This will help Accenture areas. TBR believes Accenture will continue this trend solidify its strategy of growing in high-growth areas, as a means to gain global traction for its services. such as cloud computing. Accenture Alliance Strategy • The agreement is a win-win situation for both parties • Accenture’s internal organization, the Accenture as Accenture will provide consulting & SI resources to Alliances Group with 300 dedicated alliance NetApp to strengthen its implementation capabilities. professionals, is responsible for forming alliances and Plexis partnerships to provide the company with new • Accenture and Plexis announced a joint solution to channels, incremental revenue streams and access to optimize the efficiency, cost and reliability of emerging technologies. Medicaid Management Information Systems. The • Alliances complement and extend Accenture’s Accenture Public Health Platform combines solutions and capabilities. Accenture’s SI, project management and software • Alliances and partners are centered on the company’s development capabilities with Plexis’ software. client service business (consulting, SI, outsourcing, • The alliance is a good example of how Accenture etc.). The company has an alliance network of more augments is offerings with partner software. than 150 partners. Accenture will be able to gain share in the growing healthcare market.22 Accenture 1Q11 | Professional Services Business Quarterly ©2011 Technology Business Research, Inc.
  23. 23. Geographic Analysis TBRAccenture will continue its geographic expansion in the major andemerging markets across the majority of its verticalsGeographic Revenue Strategies ACCENTURES REVENUE AND YtY GROWTH Accenture reported record-high revenue from TBR BY GEOGRAPHY United its Americas geography in 1Q11 driven by 40.0% States/ strong growth within the U.S., Canada and Revenue Growth Year-to-Year $6.0 30.0% Brazil. This shows Accenture can not only grow Net Revenue in $ Billions $5.0 20.0% Americas $4.0 10.0% in major markets that are strong in economic $3.0 0.0% $2.7 billion recovery but can also capture fast-growth $2.0 -10.0% opportunities in emerging markets. $1.0 -20.0% $0.0 -30.0% Performance in EMEA was subdued due to 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Est. EMEA uneven economic recovery among the Asia Pacific Axis Title EMEA countries in Europe; however, growing local Americas EMEA YtY Growth Americas YtY Growth APAC YtY Growth $2.6 billion economies are supporting business in the SOURCE: TBR AND ACCENTURE region.TBR ACCENTURES SEQUENTIAL GROWTH BY GEOGRAPHY Despite being the smallest revenue 20% APAC contributor, APAC outpaced Accenture’s otherNet Revenue Grwoth Sequentially 15% 10% $787 geographies in year-to-year growth terms in 5% million 1Q11. Accenture continues to invest in the 0% expansion of its footprint in the geography. -5% -10% -15% Accenture continues to aggressively pursue -20% Emerging & opportunities in six key emerging markets 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Developed (BRIC, South Korea, Mexico) and other high- Est. Americas Sequential Growth EMEA Sequential Growth Markets growth geographies to diversify its revenue APAC Sequential Growth base and increase its global presence.SOURCE: TBR AND ACCENTURE23 Accenture 1Q11 | Professional Services Business Quarterly ©2011 Technology Business Research, Inc.
  24. 24. Resource Management Strategy: Headcount TBRAccenture will continue aggressively hiring to encourage geographicexpansion into emerging marketsHeadcount Strategies & Investments • Hiring is helping Accenture address market growth and Total headcount in 1Q11: 215,388 improving demand. Accenture will continue hiring in ~22% of people FY11, at similar levels as in FY10 – on track to reach ~34% of people hiring goal of more than 64,000 people across the GDN are in North are in EMEA America and onshore. • Accenture is positioning India as a key lower-cost service delivery location. Accenture has 60,000 people in India, or ~50% of the GDN headcount, which stood at~4% of people ~40% of people 122,100 in 1Q11. are in South are in APAC o In 1Q11, Accenture opened a new delivery center for America technology in Kolkata, India. The center will provide application development and management and infrastructure support. ACCENTURES HEADCOUNT • Accenture continues to pursue hiring initiatives in the TBR Total headcount: 215388 (+18.7% YTY) Philippines, its second-largest offshore location. The 200,000 company is increasing its local workforce to 25,000 by 101,400 August to improve its BPO-heavy service delivery 150,000 Nearshore & Offshore capabilities in the region. TBR estimates the Philippines Total Headcount 79,200 Headcount had ~21,000 people in 1Q11. 100,000 Other GDN locations and onshore • Accenture is investing in onshore recruiting efforts to 50,000 102,236 113,988 enhance its cadre of client-facing management consulting, technology consulting and technology 0 architect expertise. 1Q10 1Q11 Calendar Quarter24 Accenture 1Q11 | Professional Services Business Quarterly ©2011 Technology Business Research, Inc.
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.