/Accenture’s strong bookings could mean better deal pipeline for IT firms

Accenture’s strong bookings could mean better deal pipeline for IT firms

With large consulting and IT services firm Accenture reporting strong deal bookings, Indian IT services providers are bound to see a strong deal pipeline, analysts have said.

Last week, Accenture reported significant growth in outsourcing and consulting deals, with total new bookings worth $ 16 billion in the quarter to February.

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Analysts suggest this could mean a strong deal pipeline for those Indian IT services companies that have built capabilities in digital technology-led services.

Accenture deal bookings and performance show that there has been a significant increase in demand and companies realize they need digital channels, business models and monetization. For Accenture all these factors have played a key role in bookings growth, said Ray Wang, chief analyst, Constellation Research.

“I see the same happening for the firms that have built strong digital practices and have the ability to cross-sell into accounts. There is a lot of demand for cybers, cloud, AI, but digital (transformation) is a key driver,” he said.

The market is set for a strong year ahead, said Peter Bendor-Samuel, chief executive of IT advisory firm Everest Group.

The top five Indian IT services firms – , Infosys, , , – have reported strong performance during the third quarter (October-December), with Infosys leading the pack, signing $ 7.13 billion worth large deals during the period.

IT research firm Gartner said in a forecast in January that worldwide IT spending is projected to total $ 3.9 trillion in 2021, an increase of 6.2% from 2020.

“We see the overall market set for a strong year with almost every sector likely to do well,” said Bendor-Samuel.

One of the key factors driving this is that firms are looking to move away from experimentation post-Covid-19 and focus on large digital programmes that can deliver substantial business value quickly, he said.

“It is also going to be a year of big contracts… These large deals add to the competitive dynamic,” Bendor-Samuel added.

ICICI Securities, however, wrote in a report that the industry needs to watch whether there would be consolidation.

“While Accenture’s recent strength in outsourcing has often been perceived as the lead indicator for Indian IT by consensus, it needs to be seen whether it is coming at the expense of market share consolidation,” said Sudheer Guntupalli and Hardik Sangani in the report.

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