India’s $254-billion technology outsourcing industry, key to helping bridge an unexpectedly wide current account gap through a period of tepid demand for merchandise goods globally, has significant positives emerging from Accenture’s latest quarterly earnings after the world’s tech-services leader signalled robust GenAI prospects and early signs of demand revival in North America.

“Accenture’s better-than-expected results send positive year-end signals for the Indian IT industry,” said Pareekh Jain, founder of consultancy firm EIIR Trend. “The fact that Accenture grew across all industries and geographies, along with an increase in guidance, indicates that the demand environment is improving. The growth in GenAI orders and headcount are also positive signals.”

Accenture called it a milestone quarter in GenAI with $1.2 billion in new bookings up from $1 billion in Q4FY24. Revenue for Q1FY25 from GenAI stood at approximately $500 million as compared with $900 million in FY24. This is its highest GenAI bookings in any quarter, showing the optimism of increased spending on the new technology by clients.

“Two key takeaways for the Indian IT industry are that Indian service providers are likely to post good Q3 results in January 2025, and there is hope that FY26 (starting April) will outperform FY25 due to a better macro environment and accelerated GenAI adoption,” Jain added.

Accenture, which follows a September-August financial year, upgraded its FY25 outlook to 4-7% growth, from estimates of 3-6% provided in Q4FY24. Its headcount also continued to grow in the September to November period witnessing an increase of around 24,000 employees, with most additions across India.

“Though Accenture maintains that the demand environment is the same, strong consulting revenue and booking growth indicate a positive shift in demand environment for Indian IT firms,” said an ICICI Securities report after the Accenture earnings were announced. “The opportunity lies in large-sized transformation deals, towards which Accenture has made a pivot, leading to its robust growth uptick.”

For Accenture’s Q1FY25 earnings, consulting business recovered strongly however a key concern is the slow growth in outsourcing bookings.Yet, “the uptick in outsourcing growth, financial services, North America and strong hiring momentum are the key positive takeaways for Indian IT,” the ICICI Securities report added.

“The guidance upgrade is due to faster-than-expected execution of the deals won earlier. Improvement in outsourcing growth is positive for the Indian IT Services sector. We maintain a positive stance on the sector, and expect a sustainable strong demand environment, along with opportunities from GenAI, to drive healthy earnings growth over the next three years,” said a Nuvama (formerly Edelweiss) Institutional Equities report.

For Q2FY25, Accenture’s growth guidance is 5-9%, which includes slightly more than 3% growth indicated from inorganic streams – with 4% in H1FY25 and 2% in H2FY25. The Ireland-headquartered firm’s management highlighted that Q1FY25 saw $242 million in investments across five acquisitions.

Accenture CEO Julie Sweet, in a post-earnings conference call, said the overall spending environment is the same and that the clients who really want to go into AI are prioritising spending as opposed to spending more.

“January, February is where we really see what the client budgets are going to be looking at… right now it still generally feels more like a prioritisation within current budgets. And so, we’ll see what happens in January and February,” Sweet said.

India’s $254-billion technology outsourcing industry, key to helping bridge an unexpectedly wide current account gap through a period of tepid demand for merchandise goods globally, has significant positives emerging from Accenture’s latest quarterly earnings after the world’s tech-services leader signalled robust GenAI prospects and early signs of demand revival in North America.

“Accenture’s better-than-expected results send positive year-end signals for the Indian IT industry,” said Pareekh Jain, founder of consultancy firm EIIR Trend. “The fact that Accenture grew across all industries and geographies, along with an increase in guidance, indicates that the demand environment is improving. The growth in GenAI orders and headcount are also positive signals.”

Accenture called it a milestone quarter in GenAI with $1.2 billion in new bookings up from $1 billion in Q4FY24. Revenue for Q1FY25 from GenAI stood at approximately $500 million as compared with $900 million in FY24. This is its highest GenAI bookings in any quarter, showing the optimism of increased spending on the new technology by clients.

“Two key takeaways for the Indian IT industry are that Indian service providers are likely to post good Q3 results in January 2025, and there is hope that FY26 (starting April) will outperform FY25 due to a better macro environment and accelerated GenAI adoption,” Jain added.

Accenture, which follows a September-August financial year, upgraded its FY25 outlook to 4-7% growth, from estimates of 3-6% provided in Q4FY24. Its headcount also continued to grow in the September to November period witnessing an increase of around 24,000 employees, with most additions across India.

“Though Accenture maintains that the demand environment is the same, strong consulting revenue and booking growth indicate a positive shift in demand environment for Indian IT firms,” said an ICICI Securities report after the Accenture earnings were announced. “The opportunity lies in large-sized transformation deals, towards which Accenture has made a pivot, leading to its robust growth uptick.”

For Accenture’s Q1FY25 earnings, consulting business recovered strongly however a key concern is the slow growth in outsourcing bookings.Yet, “the uptick in outsourcing growth, financial services, North America and strong hiring momentum are the key positive takeaways for Indian IT,” the ICICI Securities report added.

“The guidance upgrade is due to faster-than-expected execution of the deals won earlier. Improvement in outsourcing growth is positive for the Indian IT Services sector. We maintain a positive stance on the sector, and expect a sustainable strong demand environment, along with opportunities from GenAI, to drive healthy earnings growth over the next three years,” said a Nuvama (formerly Edelweiss) Institutional Equities report.

For Q2FY25, Accenture’s growth guidance is 5-9%, which includes slightly more than 3% growth indicated from inorganic streams – with 4% in H1FY25 and 2% in H2FY25. The Ireland-headquartered firm’s management highlighted that Q1FY25 saw $242 million in investments across five acquisitions.

Accenture CEO Julie Sweet, in a post-earnings conference call, said the overall spending environment is the same and that the clients who really want to go into AI are prioritising spending as opposed to spending more.

“January, February is where we really see what the client budgets are going to be looking at… right now it still generally feels more like a prioritisation within current budgets. And so, we’ll see what happens in January and February,” Sweet said.