Accenture's strong performance augurs well for Indian IT firms

Bengaluru, 20 March Revision of revenue growth guidance of Accenture for fiscal 2021 augurs well for the Indian IT industry as it indicates uptick in technology spend by global enterprises.

The US-headquartered IT services firm has raised its revenue growth guidance to 6.5-8.5 percent range for the fiscal ending August 31, 2021 on the back of strong second quarter earnings. Accenture had earlier guided for a revenue growth in the range of 4 to 6 percent for the fiscal.

"A broad-based demand recovery and sustained growth momentum in revenue and order booking of the outsourcing business augur well for Indian IT peers," said brokerage firm Emkay in a note.

It also noted that Accenture's Q2 performance and second-time revision of growth guidance reflected strength in demand, especially in outsourcing space.

Meanwhile, Tata Consultancy Services (TCS) on Friday announced second salary hike in six months for its 4.7 lakh strong workforce, reflecting optimism on growth prospects. It becomes the first Indian IT firm to return to the usual increment cycle in FY22.

Despite the management commentary on growth revival in the global IT industry, some analysts remained skeptical about the extent of the uptick.

"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," ICICI Securities said in a research note.

Some experts are of the opinion that while COVID pandemic has led to higher spend in technology-related areas, large IT firms are gaining market share at the cost of smaller peers.