QUOTE AND NEWS
The Hindu Business Line  1 hr ago  Comment 
In recent years, golfer Tiger Woods made headlines for being dropped by a clutch of brands when news of his infidelity broke. Among those who dropped him were Gillette, Accenture, AT&T a...
TheStreet.com  Sep 1  Comment 
NEW YORK (TheStreet) -- In another win for working parents, Accenture is the latest company offering more family-friendly benefits to its employees. The new program offers more workplace flexibility and the option for new mothers to ship...
The Economic Times  Aug 31  Comment 
Accenture is looking to acquire mid-sized consultancy firms in India that are focused on productside finance, human resource and supply chain.
CNNMoney.com  Aug 26  Comment 
Consulting firm Accenture said it's expanding parental benefits to help employees ease back into work after having a child.
Yahoo  Aug 26  Comment 
Accenture, the large professional-services firm, is announcing today that it is allowing mothers and primary caregivers to work locally during the year after they return from parental leave, instead of traveling for out-of-town engagements. Ellyn...
Market Intelligence Center  Aug 25  Comment 
After closing Monday at $92.67, Accenture Ltd (ACN) presents an attractive opportunity to get a 5.94% return in just 52 days, which is an annualized return of 41.72% (for comparison purposes only). To enter this trade, sell one Oct. '15 $95.00...
Forbes  Aug 20  Comment 
Accenture has been struggling with the impact of the high U.S. dollar as currency effects largely offset growth in revenues and signings in reported results. This is evident from its fiscal Q3 results. In Q3, Accenture reported that its...
newratings.com  Aug 17  Comment 
HOUSTON (dpa-AFX) - Accenture (ACN) Monday said it has entered into an agreement to acquire Schlumberger Business Consulting or SBC, the management consulting unit of oilfield services provider Schlumberger (SLB). Terms of the acquisition were not...
The Hindu Business Line  Aug 17  Comment 
Graduates, undergraduates, and post-graduate students across the country have been invited to submit innovative ideas for using technology to transform India. Accenture, in partnership with Yahoo!...
Wall Street Journal  Aug 14  Comment 
Donald Trump earned millions for extolling ACN, which has weathered regulatory investigations in three countries.




 
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Accenture (NYSE: ACN) is a management and technology consulting firm. In addition to consulting clients on a range of management, operational and technological issues, Accenture also provides its clients with outsourcing services. Accenture has operations in over 49 countries with170,000 employees.[1] Accenture has expanded its business to include a large number of employees in rapidly developing, low-cost nations. Accenture employs around 50,000 employees in India, China and the Philippines with plans to triple the number within next 3 years. These employees work for significantly less pay than the company's U.S. workforce, allowing Accenture to profitably provide low cost outsourcing services. However, in recent years, the firm has faced increasing competition from Indian firms specializing in systems integration and outsourcing. In addition to competing with Accenture for clients, these firms compete with Accenture for employees. As a result the salaries of skilled employees in India have risen rapidly over the last 5 years. In the face of increasing competition, Accenture will find it challenging to continue to grow its employee base in India.

Company Overview

Business & Financial Metrics[2]

In 2009, Accenture generated a net income of $1.59 billion on revenues of $23.17 billion. This represents a 6.0% decrease in net income and a 8.5% decrease in revenues from 2008, when the company earned $1.69 billion on $25.31 billion in revenues.

Business Segments[3]

Accenture offers its expertise to clients in 17 industries. These industries are divided into five five operating groups as outlined below.

  • Communications & High Tech - Communications, Electronics & High Tech, Media & Entertainment, 20.8% of total revenue
  • Financial Services - Banking, Capital Markets, Insurance, 18.7% of total revenue
  • Products - Automotive, Consumer Goods & Services, Health & Life Sciences, Industrial Equipment, Retail, Transportation & Travel Services, 23.9% of total revenue
  • Public Service - 12.9% of total revenue
  • Resources - Chemicals, Energy, Natural Resources, Utilities, 16.7% of total revenue

Services

Accenture offers its clients three types of consulting services.

Management Consulting Accenture offers its clients tradition Management Consulting services similar to McKinsey & Co or The Boston Consulting Group. Through management consulting Accenture tries to improve the performance of clients through analysis of their business model and any business challenges they may face in the execution of the model. This is often referred to as strategic consulting. Accenture operates its management consulting division under six separate service lines: Customer Relationship Management, Finance & Performance Management, Talent and Organization Performance ,Strategy, Supply Chain Management, and Process & Innovation Performance.

Systems Integration and Technology Accenture offers its clients technology related services including system integration and technology consulting similar to International Business Machines (IBM). Accenture assists clients in incorporating new technologies in order to increase efficiency in their operations.

Outsourcing Accenture also provides its clients with extensive Business Outsourcing services. Through outsourcing Accenture aims to allow its clients to focus on their area of expertise by allowing outside firms to deal with non-essential areas of their operations.

Trends and Forces

Skilled Talent is Becoming Expensive

As a consulting firm Accenture's most important resource is its workforce. Given ACN's focus on technology, its success is especially dependent on its ability to hire and retain technically skilled individuals, such as engineers, researchers, programmers and accountants. Moreover, the company has emphasized the growth of its labor force in India. Over the past ten years as companies have moved to India, the demand for engineers have driven costs up. Continued salary inflation, will make Accenture's continued rapid expansion more difficult. It will also place pressure on the company's margins.

Offshore Competition Will Weaken Accenture's Margins

Accenture faces growing competition from Off-shore service providers whose revenues have grown upwards of 30% a year. Such companies offer similar services at extremely competitive prices. For example, the average cost per employee at Infosys Technologies (INFY) is $34,000 while Accenture has an average employee cost $110,000. While these numbers are skewed by Accenture's upper level management in the United States, they reflect the large advantage of Indian firms. These firms compete with Accenture mostly outsourcing and systems integration areas.

Large Exposure to Developing Markets: Potentially High Risk or Reward

Accenture is more exposed to developing markets than most of its large American competitors. One third of Accentures's workforce is located offshore while the percentage for International Business Machines (IBM) is 18%, Electronic Data Systems (EDS) is 12%, Computer Sciences (CSC) is 9%.[4] By placing a high proportion of its operations in developing countries, Accenture can be hit hard by the unpredictability of government regulations of the private sector.

Competition

Accenture faces a range of competitors across its three main services areas.

Management Consulting

In Management Consulting, Accenture competes with traditional strategic consulting groups like McKinsey & Co. and The Boston Consulting Group.

Systems Integration and Technology

In technology services, Accenture faces large competitors like International Business Machines (IBM), specifically its Global Services Business Unit. IBM leads Accenture by a large margin in terms of revenue, profitability, and scale. Other smaller competitors include Electronic Data Systems Corporation Electronic Data Systems (EDS) and Computer Sciences (CSC).

Outsourcing

Outsourcing has grown in importance for Accenture in recent years. While this is a quickly growing market, competition has become quite fierce, especially from Indian companies. Accenture's competitors include:

References

  1. Accenture 2007 10K, Item 1A , pg.33
  2. ACN 2009 10-K pg. F-5  
  3. ACN 2009 10-K pg. 48  
  4. Credit Suisse: Initiation, pg.22
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