It seems a frequent affair for the global management consulting firm, Accenture plc (ACN – Snapshot Report) to win outsourcing contracts. Yesterday, Accenture announced that it had been awarded a 6-year outsourcing contract to provide application management services to Germany-based Henkel’s North American operations.
As per the terms of the contract, which is in addition to an existing contract signed last year, Accenture will provide management services to Henkel that are expected to reduce costs and streamline its activities.
Though we remain unclear about the financial impact of the deal on Accenture’s revenue stream, we continue to believe that the company’s solutions will attract a series of contracts and customer wins across various industries spanning over several years.
Last year for instance, Accenture won a 7-year outsourcing contract from Scandinavian Airlines for providing financial management services. We believe this is a good growth opportunity for Accenture in the aviation segment, where it operates through its subsidiary, Navitaire. The latter provides technological support to more than 75 airlines worldwide.
Furthermore, Accenture enhanced its Mobility services with the strategic acquisition of Nokia Corp.’s (NOK – Analyst Report) Symbian service unit. The Symbian operating system is the world’s most widely used platform for smartphones. The acquisition helped Accenture to develop innovative solutions for mobile devices, which in our view, will attract major handset manufacturers.
According to the U.S. research firm Gartner Inc., global spending for IT services will witness a boost in 2010 with an anticipated 4.5% increase from 2009. With a major part of revenue coming from the consulting business, we expect Accenture to be a major beneficiary.
With about 181,000 employees around the world, the company delivers a wide range of consulting, technology, and outsourcing services to its clients in diverse industries. Accenture has extensive relationships with the world’s leading companies and governments, and operates in over 120 countries.
Accenture reported an unexciting second quarter, with EPS of 60 cents missing the Zacks Consensus Estimate of 61 cents and revenue declining by 2.1% compared with the year-ago quarter. However, the company reported strong bookings of $6.52 billion with equal contribution from consulting and outsourcing businesses.
Despite improving trends noticed in Accenture’s businesses, we would remain cautious until revenue growth shows more sustained momentum.
Source:http://www.zacks.com/stock/news/35644/Accenture+Wins+Outsourcing+Contract
