The IT services company Accenture predicted lower-than-expected second-quarter revenue on Tuesday, citing clients’ cautious spending as a continuing concern due to macroeconomic uncertainties.
Analysts predict that spending on IT services will stay restrained in the near future because companies normally announce their yearly budgets after February. Accenture has acknowledged that decision-making about budgets is taking longer than expected, particularly in the internet and media sectors.
While revenues from North America, the company’s largest market, dropped 1% to $7.56 billion in the first quarter, Accenture’s revenue from the communications, media, and technology sector group declined 10%.
“We continued to see lower discretionary spend, which impacts our consulting type of work,” CEO Julie Sweet told analysts in an earnings call. “If you look around the environment, there are not a lot of green shoots on the economic side.”
Tata Consultancy Services, the top exporter of IT services from India, revealed lower-than-expected quarterly results in October, and Infosys lowered its full-year revenue projection because customers remained reluctant to invest in discretionary projects. These businesses compete with Accenture in the outsourcing market.
Before the bell, shares of Accenture dropped 2.6% in trade.
The company restated its revenue growth and profit projections for the upcoming fiscal year 2024, citing the “back half of our year” as the time when significant deals related to digital transformation should be realized.
Sales of generative artificial intelligence (GenAI) topped $450 million in the first quarter, and by 2024, the company anticipates that clients will move from testing to project scale.
Accenture projects $15.40 billion to $16 billion in revenue. LSEG polled analysts, and they predicted revenue of $16.29 billion.
Its sales increased 3% to $16.22 billion in the first quarter that concluded on November 30.
