Market researcher Everest Group expects that in 2012 the IT outsourcing market will be driven by cloud computing and M&A activity. Although it seems that the economic crisis will still loom large in the first half of the year, by this fall, increased business confidence is expected to boost the growth in the outsourcing segment. Meanwhile, cloud computing will be a driving force among IT outsourcers. The researcher expects acquisitions within cloud computing and believes that demand will mature so that technology departments move beyond evaluation to focus on governance of the cloud. Accenture’s recently announced results could be indicative of this emerging trend.
Accenture’s (Nasdaq:ACN) Q1 revenues grew 17% over the year to $7.07 billion driven by 20% growth in the Communications & High Tech and Product segments. Revenue from resources grew an impressive 18%, Financial Services revenues grew 14%, and Health & Public Services revenues grew 13% over the year. Overall, consulting revenues grew 14% to $4.1 billion, while outsourcing revenues grew 21.0% to $3 billion. The market was looking for revenues of $7 billion.
EPS for the quarter of $0.96 was also ahead of the previous year’s $0.81 and the Street’s target of $0.94.
During the quarter, Accenture repurchased 5.3 million of their common outstanding shares at a cost of $285 million. They also paid a semiannual cash dividend of 67.5 cents per share.
At 87%, utilization for the quarter was significantly ahead of the previous quarter’s 85%. Attrition fell to 12% compared with 14% reported a quarter ago and 15% a year ago. The company ended the quarter with a global headcount of 244,000, with at least another 60,000 employees expected to join worldwide this year.
For the current quarter, Accenture projected net revenues of $6.5 billion-$6.8 billion. They expect to end the year with revenues of $27.29 billion-$28.05 billion and EPS of $3.76-$3.84. The market was looking for EPS of $3.83.
Accenture’s Expanding Offerings
In line with the current trend, Accenture expanded their market offerings and recently tied up with AT&T to release a cloud-based solution for the health care field. Accenture’s Medical Imaging Solution will help healthcare providers to access medical images on the cloud faster and lower data storage costs. The solution will also help professionals to store images for a longer time and thus speed up clinical decision making. The solution will be in line with the growing demands of sharing electronic medical records in the U.S.
The stock is trading at $52.95 with a market capitalization of $36.8 billion. It touched a 52-week high of $63.66 in July 2011.